MT Property & Casualty cheat sheet

Montana's insurance regulator is the Commissioner of Securities and Insurance, an elected statewide official serving a four-year term who enforces the Montana Insurance Code.

Insurers must hold a Montana certificate of authority (be admitted) to transact insurance; nonadmitted insurers may be used only through surplus lines procedures.

Domicile classes: domestic = chartered in Montana; foreign = chartered in another state; alien = chartered outside the United States.

A producer must hold a current license for the line of authority and be appointed by the insurer before soliciting, negotiating, or selling; commissions may be paid only to licensed, appointed producers.

Premiums collected are held in a fiduciary capacity and must not be commingled with the producer's personal or business funds.

Prohibited unfair trade practices include misrepresentation, false advertising, twisting, rebating, coercion or boycott, and unfair claim settlement practices.

Producers must complete continuing education each two-year license term, including a required ethics component, and renew before expiration to avoid a lapsed license.

The Commissioner may examine insurers and producers, issue cease-and-desist orders, impose fines, and suspend or revoke licenses for violations.

The Montana Property and Casualty Insurance Guaranty Association pays covered claims of insolvent member insurers within statutory limits and deductibles; nonadmitted surplus lines insurers generally are not members.

Risk management techniques: avoidance, loss prevention and reduction, retention, transfer through insurance, and sharing.

Insurable risks are accidental, definite and measurable, calculable, non-catastrophic, and spread over a large number of homogeneous exposure units.

Hazard types: physical (condition of property), moral (dishonest intent), and morale (carelessness or indifference toward loss).

Insurance contract characteristics: contract of adhesion, aleatory, unilateral, conditional, personal, and based on utmost good faith.

Four elements of a valid insurance contract: offer and acceptance, consideration, legal purpose, and competent parties.

Insurable interest must exist at the time of loss in property insurance and at the time of application in life insurance.

ACV = replacement cost minus depreciation; alternative valuation methods include replacement cost, agreed value, and stated amount.

Coinsurance formula: (limit carried / limit required) x loss = payment, then subtract the deductible.

Reinsurance is insurance for insurers: treaty reinsurance covers a class of business automatically, while facultative reinsurance is negotiated policy by policy.

Homeowners forms: HO-2 broad named perils, HO-3 open perils on the dwelling with named perils on contents, HO-5 open perils on both, HO-4 renters, HO-6 condominium unit owners, HO-8 older homes.

Standard ISO HO-3 percentages: Coverage B equals 10% of Coverage A, Coverage C equals 50% of A, Coverage D equals 30% of A; Coverage E is typically $100,000 and Coverage F $1,000.

Typical ISO HO-3 special limits include $200 for money, $1,500 for securities, $1,500 for theft of jewelry, $2,500 for theft of firearms, and $2,500 for theft of silverware.

Property coinsurance commonly requires insurance to 80% of replacement cost; an agreed value endorsement suspends the coinsurance requirement.

Causes of loss forms: basic, broad (basic plus perils such as weight of ice and snow and accidental water discharge), and special (open perils, with the insurer bearing the burden of proving an exclusion applies).

Standard property exclusions include flood, earth movement, ordinance or law, neglect, intentional loss, and off-premises power failure.

NFIP flood policies are separate from homeowners coverage, normally carry a 30-day waiting period, and are sold only in participating communities.

Business income pays lost net income plus continuing expenses during the period of restoration; extra expense pays costs that let the insured resume operations sooner.

A businessowners policy packages property, liability, and business income for eligible small businesses, usually on a replacement cost basis without a coinsurance clause.

Negligence requires duty, breach, proximate cause, and damages; res ipsa loquitur permits an inference of negligence when the injuring instrumentality was under the defendant's exclusive control.

Negligence defenses: contributory negligence (complete bar), comparative negligence (damages reduced by the claimant's percentage of fault), and assumption of risk.

CGL occurrence form coverages: A bodily injury and property damage, B personal and advertising injury, C medical payments; limits include each occurrence, general aggregate, and products-completed operations aggregate.

Claims-made liability policies respond to claims first made during the policy period and depend on an accurate retroactive date; occurrence policies respond to injury or damage occurring during the policy period.

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

Montana minimum auto liability limits are 25/50/20 ($25,000 per person, $50,000 per accident bodily injury, $20,000 property damage), and insurers must offer uninsured motorist coverage.

Workers compensation: Part One statutory benefits, Part Two employers liability, Part Three other-states coverage; statutory benefits are the employee's exclusive remedy against the employer.

Umbrella policies sit above underlying auto, general liability, and employers liability coverage, may drop down to fill gaps, and often impose a self-insured retention.

Liability limits are written as split limits (per person, per occurrence, property damage) or as a combined single limit covering all damages from one accident.