LA Property & Casualty common mistakes
LA Property & Casualty · Understand the traps and how to avoid them.
On a commercial property coinsurance question, they compute the penalty ratio upside down (required insurance ÷ limit carried) or subtract the deductible before applying the coinsurance penalty.
The correct ratio is counterintuitive, and exam writers choose numbers so the inverted calculation still yields a plausible-looking dollar answer, so the error is not self-evident.
What to do instead
Before calculating, write the formula on scratch paper: payment = (limit carried ÷ insurance required) × loss, then subtract the deductible, capped at the policy limit. Drill one 80%-coinsurance example with required $200,000, carried $100,000, and an $80,000 loss until the sequence is automatic.
They treat flood, surface water, or earth movement damage as covered by the homeowners form, or read the 'accidental discharge of water' coverage as covering rising water.
The HO-3 does cover accidental discharge from plumbing and appliances, and candidates overgeneralize that grant to all water losses; Louisiana's coastal exposure makes the distinction high-stakes.
What to do instead
Memorize the water exclusion list in the HO forms: flood, surface water, waves, tidal water, overflow of a body of water, and spray from any of these. Flood requires a separate NFIP or difference-in-conditions policy, and earth movement is separately excluded.
They recite Louisiana's compulsory auto liability minimums as 25/50/25, or assume Louisiana is a no-fault state when answering fault/coverage questions.
Numbers from neighboring states and the general 'no-fault' reputation of some states bleed into recall, and the limits are rarely used in daily practice.
What to do instead
Lock in the statutory minimums: $15,000 per person / $30,000 per accident bodily injury and $25,000 property damage. Louisiana is a tort (fault) state, not a no-fault state, and uninsured/underinsured motorist coverage must be offered.
On agency authority items, they select 'express authority' for any customary act a producer performs, or deny that the insurer is bound when the producer exceeded written authority.
The three authority types are studied together, and the fact patterns deliberately make apparent authority feel like the trap answer when it is often correct.
What to do instead
Apply the test: express = granted in writing or spoken by the insurer; implied = reasonably necessary to carry out express authority; apparent = a third party reasonably believes the producer has authority based on the insurer's conduct. If the insured's reliance was reasonable, the insurer is bound.
They confuse twisting, rebating, misrepresentation, and coercion when the item asks them to name the unfair trade practice in a scenario.
All four are unfair trade practices with overlapping facts, and the stem typically includes both a policy lapse and a false statement, which fits more than one label.
What to do instead
Build a one-line contrast and match on the act, not the result: twisting = inducing a lapse or replacement through misrepresentation; rebating = giving value not stated in the policy; misrepresentation = false statement about coverage or terms; coercion = forcing or threatening to force a purchase.
For business income losses, they compute the loss from the date of damage rather than after the waiting period, or they calculate lost profit only and omit continuing normal operating expenses.
The waiting period and the period of restoration start at different times, and candidates intuitively equate business income with lost profit.
What to do instead
Use: business income = net income (including continuing normal operating expenses) for the period of restoration, beginning 72 hours after the direct physical loss. Treat extra expense as a separate coverage with its own limit and no coinsurance.
They jump from breach of duty straight to damages, skip the causation element, or apply contributory negligence as a complete bar instead of Louisiana's comparative fault.
Negligence feels intuitive, so candidates answer from everyday logic rather than reciting the elements the exam is testing.
What to do instead
Recite duty, breach, actual cause, proximate cause, and damages every time. In Louisiana, fault is apportioned under pure comparative fault (La. C.C. art. 2323) and defendants may be jointly and solidarily liable; contributory negligence is not a complete bar.
They treat a claims-made liability policy as if it responds to the date of the occurrence, or they ignore the retroactive date when deciding whether a claim is covered.
Occurrence and claims-made triggers read similarly in short fact patterns, and the retroactive date is easy to skim past.
What to do instead
Check the trigger language first: occurrence = injury during the policy period; claims-made = claim made during the policy period and after the retroactive date. Note whether an extended reporting period applies before selecting an answer.
They assume an injured worker can sue the employer in tort, or they confuse the Part One workers compensation limit with the Part Two employer's liability limit.
Exclusive remedy is stated once and then dropped, while Part Two looks like an ordinary liability limit that must apply to all benefits.
What to do instead
Remember that exclusive remedy bars employee tort suits against the employer except for narrow intentional-tort situations. Part One pays statutory benefits with no dollar limit; Part Two is a separate liability limit, typically $100,000 each accident / $500,000 disease policy limit / $100,000 disease each employee.
They pay an actual cash value amount on a replacement cost policy (or vice versa), and they mishandle recoverable depreciation and the requirement that repair or replacement actually be completed.
ACV and replacement cost are simple definitions, but the scenario adds depreciation, a holdback, and a limit question that shifts attention away from the valuation clause.
What to do instead
Use: ACV = replacement cost minus depreciation at the time of loss; replacement cost pays the full repair or replacement up to the limit only after the work is completed, with depreciation withheld until then. On a dwelling total loss, first confirm the valuation clause and whether the limit is adequate.