MD Property & Casualty common mistakes
MD Property & Casualty · Understand the traps and how to avoid them.
Computes a property coinsurance penalty by multiplying the loss by the coinsurance percentage, instead of comparing the carried limit to the required limit based on the value at the time of loss.
The word 'coinsurance' is familiar from health insurance, where it means a fixed share of every claim, so candidates import that meaning into property policies.
What to do instead
Drill the property formula: required limit = coinsurance percentage × replacement cost at loss; payment = (carried limit ÷ required limit) × loss, capped by the policy limit. Work underinsured, adequately insured, and overinsured examples.
Treats actual cash value and replacement cost as interchangeable, or applies depreciation to a replacement-cost loss without checking the valuation clause.
Candidates memorize 'ACV means depreciated' and 'RC means no depreciation' but do not connect those definitions to the specific policy form, loss settlement provision, and whether repair or replacement has occurred.
What to do instead
For each property form, locate the valuation and loss settlement clauses. Practice ACV = replacement cost − depreciation; RC = repair/replacement cost without depreciation up to the limit; and note when functional obsolescence or market value matters.
Mixes up occurrence-basis and claims-made liability triggers when answering timeline questions.
Both forms use words like 'occurrence' and 'claim,' and candidates overlook the retroactive date, the claims-made reporting requirement, and extended reporting periods.
What to do instead
Map each trigger on a timeline: occurrence policy = injury or damage date; claims-made policy = claim made or reported during the policy period, with coverage only for acts after any retroactive date. Practice with dates that fall before, during, and after the policy.
Applies generic cancellation and nonrenewal rules to Maryland questions instead of using Maryland-specific notice and prohibited-reason rules.
Study guides often teach a national framework, and candidates treat notice periods and cancellation grounds as universal.
What to do instead
Build a Maryland-specific chart for personal auto, homeowners, and other property/casualty lines covering cancellation, nonrenewal, premium increase, nonpayment, and who must receive notice. Verify each period against the current Maryland statute or regulation before relying on it.
Assumes a homeowners policy covers all business property, water backup, ordinance or law costs, or earth movement because the peril is not obviously listed as excluded.
Candidates memorize broad 'open peril' language for HO-3 and skip the exclusions section and common endorsements.
What to do instead
For each HO form, list the open-perils exclusions and the endorsements commonly needed to add back coverage. Practice classifying scenarios as covered, excluded, or covered only by endorsement.
Confuses named insured, additional insured, loss payee, and mortgagee rights, then picks an answer that gives the wrong party coverage or notice rights.
These roles are often studied as definitions only, without contrasting what each party can do under the policy.
What to do instead
Create a four-column comparison: who is covered, whose acts matter, who receives notice, and who receives loss payment. Apply it to entity endorsements, certificates of insurance, and mortgage clauses.
Treats the commercial general liability general aggregate as if it were a per-occurrence limit, or ignores products-completed operations aggregate erosion.
Candidates see several dollar limits on the declarations page and assume the largest number applies to every claim.
What to do instead
Practice reading a CGL declarations page: each occurrence limit, general aggregate, products-completed operations aggregate, damage to premises rented, and medical expense. Track how multiple claims erode each limit.
Calls any water damage 'flood' or assumes a homeowners policy covers surface water, sump overflow, or sewer backup without an endorsement.
The distinction between sudden accidental discharge from a plumbing system and flood or backup is subtle, and candidates rely on everyday language rather than policy definitions.
What to do instead
Compare the water-damage exclusion, the flood definition, and the water-backup endorsement side by side. Classify scenarios by source of water and whether an endorsement or NFIP policy is needed.
Memorizes Maryland producer-licensing and continuing-education numbers without linking them to the triggering event, such as appointment, termination, address change, or renewal.
Candidates isolate numbers from the rule that requires the action, so they apply the right number to the wrong event.
What to do instead
Build an event-to-requirement table: license renewal, CE completion, appointment, termination reporting, address change, and CE record retention. For each, state who must act and what proof is required, then verify current Maryland requirements.
Selects an answer because the peril or cause is 'generally covered' without tracing the chain from proximate cause to exclusion and exception.
Candidates skip the causation step and match keywords in the fact pattern to a coverage label, missing intervening exclusions or exceptions to exclusions.
What to do instead
Use causation-chain drills: identify the initiating peril, any intervening cause, the applicable exclusion, and any exception that restores coverage. Write one sentence explaining why each distractor fails before choosing.