MD Property & Casualty cheat sheet

Insurable interest in property is measured at the time of loss; in life insurance it is measured at the time of application.

Indemnity formula: Actual Cash Value = Replacement Cost − Depreciation; the insured may never recover more than the actual financial loss.

Property coinsurance formula: payment = (limit carried ÷ limit required) × loss − deductible, where the required limit is typically 80% of replacement cost.

Elements of an insurable risk: many similar exposure units, accidental loss, definite and measurable loss, calculable probability, losses that are not catastrophic, and an affordable premium.

Hazard types: physical (icy steps, faulty wiring), moral (intentional fraud), morale (carelessness such as leaving keys in an unlocked car).

Proximate cause is the unbroken chain of events beginning with a covered peril; if the initiating peril is covered, the resulting loss is covered.

Contract characteristics: insurance is aleatory, unilateral, conditional, a contract of adhesion, and is based on utmost good faith.

Negligence requires four elements - duty, breach, proximate cause, and damages; missing any one defeats the liability claim.

Subrogation transfers the insured's right of recovery against a third party to the insurer after payment, preventing double recovery.

HO-3 default limits: Coverage A dwelling; B other structures = 10% of A; C personal property = 50% of A; D loss of use = 30% of A.

HO form selection: HO-3 for owner-occupants, HO-4 for renters, HO-6 for condo unit owners, HO-8 for older homes whose replacement cost exceeds market value.

Open perils (special) covers all risks of direct physical loss except exclusions; named perils (basic/broad) covers only the perils listed, which shifts the burden of proof.

Dwelling policy forms: DP-1 basic, DP-2 broad, DP-3 special; DP-1 and DP-2 insure the structure and contents on a named-perils basis.

Loss valuation options: actual cash value, replacement cost, functional replacement cost, and agreed value; ACV reduces the payment by depreciation.

Standard property exclusions: earth movement, flood, ordinance or law, neglect, intentional loss, war, and nuclear hazard.

Additional coverages commonly built in: debris removal, preservation of property, trees and shrubs, reasonable repairs, and collapse.

Business income covers lost net income plus continuing expenses during restoration; extra expense covers costs incurred to resume operations sooner.

NFIP flood policies carry a 30-day waiting period before coverage takes effect, except when a lender requires flood coverage at a loan closing.

CGL occurrence form responds to injury or damage that occurs during the policy period; claims-made responds to claims first made during the period, subject to a retroactive date.

Maryland minimum auto liability limits are 30/60/15: $30,000 per person and $60,000 per accident bodily injury plus $15,000 property damage.

Maryland requires uninsured/underinsured motorist limits equal to the liability limits unless the insured signs a written waiver; PIP of at least $2,500 is required but waivable in writing.

Maryland follows contributory negligence: negligence by the claimant to any degree bars recovery entirely, so a liability claim succeeds only with a fault-free claimant.

Workers compensation is the exclusive remedy for work-related injury in Maryland; benefits include medical care, temporary and permanent disability, and death benefits.

HO Section II: Coverage E personal liability (commonly a $100,000 minimum) responds to legal liability; Coverage F medical payments to others pays regardless of fault.

Medical payments coverage pays medical and funeral expenses of injured third parties without regard to fault; liability coverage pays only when the insured is legally liable.

A businessowners policy (BOP) packages commercial property, general liability, and business income for small businesses in eligible low-hazard classes.

Products-completed operations coverage responds to liability arising out of the insured's product or completed work after it leaves the insured's premises.

The Maryland Insurance Administration, headed by a Commissioner appointed by the Governor, licenses insurers and producers and enforces the Insurance Article.

Producers must hold a license for each line sold and be appointed by the insurer; appointments and terminations are filed with the Commissioner.

Premiums collected are held in a fiduciary capacity, must be kept in a separate account, and may not be commingled with the producer's own funds.

Prohibited unfair trade practices include misrepresentation, twisting, rebating, false advertising, coercion, unfair discrimination, boycott, and defamation.

Rebating - offering anything of value not stated in the policy to induce a sale - is illegal in Maryland.

A producer must notify the Commissioner of a change of name or address within 30 days and must report administrative actions taken by a regulator.

Private passenger auto policies require 45 days' written notice of cancellation or nonrenewal; only 10 days' notice is required for nonpayment of premium.

The Maryland Auto Insurance Fund (MAIF) is the residual market for drivers who cannot obtain auto coverage; the Maryland Property Insurance Availability Program (JIA) serves owners who cannot buy basic property insurance.

Unfair claim settlement practices include failing to acknowledge or act on a claim promptly, refusing to pay without a reasonable investigation, and misrepresenting policy provisions.