ND Property & Casualty common mistakes
ND Property & Casualty · Understand the traps and how to avoid them.
Treating an insurance license and an insurer appointment as the same event - answering 'the producer applies to the state for an appointment' or 'the state appoints the producer at licensing time.'
Study outlines list licensing and appointment in the same chapter, so candidates memorize one composite sentence instead of two separate events with different actors.
What to do instead
Build a three-row timeline table with columns for the actor and the filed document: (1) license issued by the regulator to the individual, (2) appointment filed by the appointing insurer, (3) termination noticed by the insurer to the regulator within the required window. Recite it as 'state licenses the person, insurer appoints the producer.'
Applying the life-insurance rule for insurable interest (interest must exist at policy inception) to a property loss, and denying or affirming a property claim based on whether the insured still owned the item when the policy was written.
Insurable interest is taught once as a single definition, and the time-of-test distinction gets collapsed into one rule.
What to do instead
Anchor the contrast in one line: life = interest at inception only; property = interest at the time of loss. Then test yourself with the moving-van scenario - furniture destroyed in transit is a valid property claim even though ownership predates the policy.
Computing an actual cash value settlement by subtracting only the deductible from replacement cost, or by subtracting depreciation but then forgetting the deductible.
Two subtraction steps look like one, and practice questions often ask only for the loss amount, so the deductible step never gets rehearsed.
What to do instead
Write the formula as a fixed chain - replacement cost minus depreciation equals ACV; ACV minus deductible equals the payable amount - and run every practice loss through all three boxes, including a total-loss case where the deductible is applied once, not per item.
Labeling medical bills and lost wages as general damages and disfigurement or pain and suffering as special damages.
Both are 'compensatory,' so candidates stop at the umbrella term and never fix which sub-bucket is which.
What to do instead
Use the accounting test: special damages are receipts and pay stubs (calculable, past and future expenses and lost earnings); general damages are the ones a jury estimates (pain and suffering, disfigurement, loss of consortium). Punitive damages go in a third bucket and are not compensatory at all.
Assuming a Dwelling policy automatically includes personal liability and medical payments to others, or assuming a DP-1 covers theft of personal property.
Candidates carry the Homeowners structure - where liability is built into the form - over to Dwelling forms, which are property-only unless endorsed.
What to do instead
Memorize the structural difference, not the forms: Dwelling forms (DP-1/DP-2/DP-3) are property-only and need a liability endorsement; Homeowners forms (HO-2/HO-3/HO-5) bundle property and liability. Separately flag that DP-1 excludes theft and that burglary/theft coverage on the basic form requires an endorsement.
Paying a claim for long-term water damage caused by a slow, repeated leak from a bathroom fixture, or conversely denying a claim for a burst pipe because 'water damage is excluded.'
The word 'water' appears in both the coverage grant for accidental discharge and the exclusions for seepage and repeated leakage, and candidates match on the keyword instead of the mechanism.
What to do instead
Sort every water loss by mechanism before deciding: sudden and accidental escape from a plumbing system or appliance is covered; continuous or repeated seepage over time is excluded. Practice by writing a one-word verdict next to ten short water scenarios - 'burst' versus 'seeped' - until the trigger word is automatic.
Assuming the at-fault driver's own auto policy is primary when the driver was operating a borrowed car, or assuming a permissive user has no coverage because they are not a named insured.
The policy's definition of 'insured' includes permissive users, but the separate question of which policy pays first is a different rule, and candidates answer one question with the other.
What to do instead
Separate the two questions in writing: (1) Who is an insured? Named insured plus resident family members plus anyone using the covered auto with permission. (2) Which policy is primary? The policy on the vehicle, with the driver's own policy excess. Apply the two-step order to every 'borrowed car' fact pattern.
Applying a coinsurance penalty to a loss under a policy written on a reporting form or with an agreed value, or computing the penalty using the loss amount rather than the insurance requirement.
The penalty formula has three variables and candidates memorize it as 'did over should, times loss' without noting which policy forms switch it off.
What to do instead
Write the calculation as a five-line drill: value times coinsurance percentage equals the requirement; limit divided by requirement equals the factor; factor times loss equals the payment; then subtract the deductible. Add a note under it that reporting forms and agreed value suspend the penalty, and that the factor can never exceed 1.00.
Applying the 'damage to your work' exclusion to a products-completed operations claim, or answering that a claims-made policy responds based on when the injury occurred.
The exclusions sit next to each other in the form and both use the word 'work,' and the occurrence versus claims-made trigger is learned as a label rather than as a date test.
What to do instead
For exclusions, trace whose property was damaged: the cost of repairing or replacing the insured's own defective product or work is excluded, but damage that product or work causes to other property, and resulting bodily injury, is covered. For triggers, write two dates on every scenario - date of injury and date of the claim - and note which policy period each must fall in for an occurrence form versus a claims-made form with a retroactive date.
Describing Part One of a workers compensation policy as the part that responds to an employee lawsuit, or describing Part Two as unlimited.
Parts One, Two and Three are numbered without descriptive names in many outlines, so candidates assign them by order of importance rather than by function.
What to do instead
Attach a name to each number: Part One is Workers Compensation - statutory benefits, no dollar limit, pays regardless of fault; Part Two is Employer's Liability - the tort exposure for suits outside the statutory system, written with a dollar limit; Part Three is Other States Coverage. Rehearse as 'One is the statute, Two is the lawsuit, Three is the map.'