IL Property & Casualty cheat sheet

Illinois producers complete 24 hours of continuing education every two years, including 3 hours of ethics, before biennial license renewal.

A producer must notify the Illinois Department of Insurance of a change of address within 30 days.

Rebating-offering any part of premium or commission to induce a sale-is an illegal unfair trade practice in Illinois.

Premium funds held by a producer are fiduciary funds; commingling them with personal or business funds is prohibited.

The Illinois Insurance Code is codified at 215 ILCS 5 and is administered by the Director of the Department of Insurance, who is appointed by the Governor.

Twisting is misrepresentation that induces a policyholder to lapse or surrender existing coverage; churning is replacing policies to generate commissions-both are prohibited.

Only licensed, appointed producers may solicit or negotiate insurance for an insurer; non-admitted insurers are accessed under surplus lines rules.

Illinois requires member insurers to participate in the Illinois Insurance Guaranty Fund, which pays covered claims of insolvent member insurers.

Indemnity: a loss payment should return the insured to the pre-loss financial position, no better and no worse.

ACV = replacement cost − depreciation; replacement cost pays the cost to repair or replace with new property of like kind and quality.

Coinsurance penalty = (insurance carried ÷ insurance required) × loss, then subtract the deductible; insurance required = coinsurance percentage × value at risk.

Insurable interest must exist at policy inception for life insurance and at the time of loss for property insurance.

Utmost good faith imposes duties on both parties: no concealment, no material misrepresentation, and honest answers on the application.

A binder is temporary evidence of coverage, effective until the policy is issued or the binder expires.

Moral hazard is dishonesty such as arson for profit; morale hazard is carelessness; physical hazard is a tangible condition.

Occurrence policies respond to injury or damage that happens during the policy period; claims-made policies respond to claims first made during the period, subject to a retroactive date.

Named-peril forms pay only for listed causes; open-peril (special) forms pay for all direct physical loss unless excluded.

Under a coinsurance clause the insured must carry at least the stated percentage (commonly 80%) of value, or claims are reduced proportionally.

ACV = replacement cost − depreciation; replacement cost makes no deduction for age or wear.

Direct loss is damage to property; indirect (consequential) loss includes business income, extra expense, and loss of use.

Blanket coverage applies one limit across multiple locations or items; specific coverage insures each item separately.

Flood and earth movement are excluded under standard property forms and require separate or endorsed coverage.

Ordinance-or-law coverage pays the extra cost to rebuild to current code after a covered loss.

Inland marine covers property in transit, mobile property, and property of others; crime forms cover employee dishonesty and theft.

Negligence requires duty, breach, proximate cause, and damages-all four must be proved.

Compensatory damages pay medical bills, lost wages, and pain and suffering; punitive damages punish egregious conduct and are often uninsurable.

Split limits (e.g., 25/50/20) apply per person, per accident, and per accident for property damage; a combined single limit is one total per occurrence.

An aggregate limit is the maximum payable in a policy period; the per-occurrence limit caps any single claim.

Strict liability applies without proof of fault (e.g., ultra-hazardous activities); absolute liability applies in certain statutory situations.

Vicarious liability holds one party responsible for another's acts, typically an employer for an employee's scope-of-employment negligence.

An umbrella policy sits over underlying liability policies and can drop down to cover gaps; a following-form excess policy only responds above the underlying limit.

A certificate of insurance evidences coverage but does not amend, extend, or alter the policy.

HO-2 covers the dwelling and personal property for broad named perils; HO-3 covers the dwelling open-peril and personal property named-peril; HO-5 covers both open-peril.

HO-4 is for tenants and HO-6 for condo owners; neither insures a building structure the insured does not own, though HO-6 covers building items within the unit.

Standard limits: Coverage B other structures 10% of A; Coverage C personal property typically 50% of A; Coverage D loss of use typically 30% of A.

Section I is property (Coverages A–D); Section II is liability (Coverage E personal liability, Coverage F medical payments to others).

Replacement-cost settlement on the dwelling generally requires insurance equal to at least 80% of replacement cost.

HO-3 excludes earth movement, flood, ordinance or law, neglect, intentional loss, and nuclear hazards; endorsements add some back.

Special limits cap coverage for money, securities, jewelry theft, silverware theft, and firearms theft unless the items are scheduled.

Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) insure owner-occupied residential property of one to four units.

PAP parts: A liability, B medical payments, C uninsured/underinsured motorists, D damage to your auto, E duties after an accident, F general provisions.

Illinois minimum liability limits are 25/50/20; uninsured motorist coverage must equal the bodily injury liability limits.

Coverage D has two parts: collision and other-than-collision (theft, fire, vandalism, weather, animals, glass breakage), each with its own deductible.

A newly acquired auto has automatic coverage for 14 days if the insured already has physical damage coverage on at least one auto.

A temporary substitute auto is a non-owned vehicle used because the covered auto is out of service and is treated as a covered auto.

Exclusions include intentional or expected injury, racing, livery use, use without a reasonable belief of permission, and vehicles with fewer than four wheels.

Medical payments covers the insured and passengers regardless of fault, up to the stated limit, usually per person.

A named driver exclusion bars coverage for a specific person and is often required for high-risk drivers.

CGL provides Coverage A bodily injury and property damage, Coverage B personal and advertising injury, and Coverage C medical payments.

CGL limits include each occurrence, general aggregate, products-completed operations aggregate, personal and advertising injury limit, damage to premises rented, and medical expense limit.

CGL exclusions include expected or intentional injury, contractual liability, pollution, auto, workers compensation, professional services, and damage to the insured's own property.

A claims-made CGL responds to claims first made during the policy period subject to a retroactive date; an extended reporting period covers later claims.

Business income pays lost net income and continuing expenses; extra expense pays costs to continue operations and shorten the shutdown period.

Commercial property coinsurance applies a penalty like property coinsurance; a reporting form lets the insured report values periodically and pay a deposit premium.

A businessowners policy (BOP) packages property, business income, and general liability for eligible small businesses.

Surety bonds involve the principal, obligee, and surety; the surety guarantees the principal's performance or payment.

Workers compensation is no-fault and provides the exclusive remedy against the employer for work-related injury or disease.

Benefits include all reasonable medical care, temporary total disability, permanent partial disability, permanent total disability, death benefits, and rehabilitation.

Temporary total disability usually pays two-thirds of the worker's average weekly wage, subject to state maximum and minimum weekly amounts.

Illinois has a 3-day waiting period; benefits may be paid retroactively to the first day if disability continues beyond the statutory period.

A workers compensation policy has Part One (workers compensation), Part Two (employers liability), and Part Three (other states coverage).

Employers liability (Part Two) responds to tort suits by injured workers or third parties when the exclusive remedy does not apply.

Premium = payroll per $100 × classification rate × experience modification factor.

Sole proprietors and partners are generally excluded unless they elect coverage; corporate officers are generally included.