NE Property & Casualty cheat sheet

McCarran-Ferguson Act (1945): primary regulation of insurance is left to the states, and federal antitrust law applies only to the extent the states do not regulate.

The Nebraska Department of Insurance, headed by a Director appointed by the Governor, licenses producers and insurers and enforces the state's unfair trade practice statutes.

A Nebraska producer license renews biennially and requires 24 hours of approved continuing education per two-year term, including 3 hours of ethics.

Rebating: offering any part of the commission, or any inducement not stated in the policy, to persuade a buyer to purchase coverage; prohibited as an unfair trade practice.

Twisting: misrepresenting or making an incomplete comparison of policies to induce a policyholder to lapse, surrender, or replace existing coverage.

A producer holds premium in a fiduciary capacity; commingling collected premiums with personal or general business funds is prohibited.

Admitted (authorized) insurers hold a certificate of authority and are protected by the state guaranty association; nonadmitted insurers are not admitted and generally are not guaranty-association members.

Surplus lines: coverage written by a nonadmitted insurer after admitted insurers decline the risk, placed only through a licensed surplus lines producer.

Domicile classifications: domestic = chartered in this state; foreign = chartered in another state or U.S. jurisdiction; alien = chartered outside the United States.

Risk is uncertainty about loss. Pure risk (loss or no loss) is insurable; speculative risk (chance of gain or loss) is not.

Peril = the cause of loss (fire, windstorm, collision). Hazard = a condition that increases the chance or severity of loss: physical (icy stairs), moral (dishonesty), morale (carelessness).

Tests of insurability: a large number of similar exposure units, accidental losses, definite and measurable loss, losses not catastrophic to the insurer, and an affordable premium.

Principle of indemnity: the insured is restored to approximately the pre-loss financial position and cannot profit from a loss. It underlies actual cash value, policy limits, other insurance, and subrogation.

Insurable interest timing: property insurance requires insurable interest at the time of loss; life insurance requires it only at policy inception.

Utmost good faith: a material misrepresentation or concealment on the application permits the insurer to rescind or deny; statements are representations, not warranties, unless the policy states otherwise.

Contract of adhesion: the insurer drafts the policy, so ambiguities are construed against the insurer. An aleatory contract exchanges unequal values contingent on chance.

Subrogation: after paying a loss, the insurer acquires the insured's right to recover from the negligent third party, preventing double recovery by the insured.

Risk management techniques: avoidance, loss prevention (reduces frequency), loss reduction (reduces severity), retention, and transfer by insurance.

Homeowners coverages: A dwelling, B other structures, C personal property, D loss of use, E personal liability, F medical payments to others.

Actual cash value = replacement cost minus depreciation. Replacement cost settlement typically requires the insured to repair or replace within a stated time period after an initial ACV payment.

Commercial coinsurance payment = (limit carried / limit required) x loss, where limit required = coinsurance percentage x value at the time of loss; the payment can never exceed the policy limit.

Coinsurance example: 80% requirement on a $200,000 building means $160,000 is required; carrying $120,000 pays (120/160) x loss, or 75% of each covered loss.

A percentage deductible (for example 2% wind/hail) applies to the Coverage A limit, not to the amount of the loss.

Flood and earthquake are excluded on standard property forms; coverage requires a separate policy or a specific endorsement.

Business income pays lost net income plus continuing normal operating expenses during the period of restoration; extra expense pays costs to resume operations sooner.

Vacancy means no occupants and no personal property inside the building; unoccupancy means no occupants but property remains. Both may suspend or restrict coverage.

Blanket insurance covers several items or locations under a single limit; specific insurance covers each item or location separately, and a loss is paid first by specific coverage.

Negligence requires four elements: a legal duty owed, a breach of that duty, proximate cause linking the breach to the harm, and actual damages.

Compensatory damages: special damages are economic (medical bills, lost wages); general damages are non-economic (pain and suffering). Punitive damages punish gross misconduct and are often uninsurable.

Contributory negligence is a complete bar to recovery; pure comparative negligence reduces the award by the plaintiff's percentage of fault; modified comparative bars recovery at 50% or 51% depending on the state.

Strict or absolute liability imposes liability without fault, as with workers compensation, blasting and other inherently dangerous activities, and defective products.

Vicarious liability holds one party responsible for the acts of another, typically an employer for an employee acting within the scope of employment.

Occurrence trigger: the date the injury or damage happens. Claims-made trigger: the date the claim is first made, provided the occurrence is after the retroactive date; an extended reporting period extends the reporting tail.

CGL structure: Coverage A bodily injury and property damage, Coverage B personal and advertising injury, Coverage C medical payments; defense costs are supplementary payments paid outside the limits.

CGL limits: each occurrence, general aggregate, products-completed operations aggregate, damage to premises rented to you, and a medical expense limit per person.

Personal injury protection (PIP) pays the insured's own medical and lost income regardless of fault; uninsured/underinsured motorist coverage responds when the at-fault driver has no or insufficient liability limits.

Personal auto policy parts: A liability, B medical payments, C uninsured/underinsured motorists, D damage to your auto, plus towing and labor and transportation expenses.

PAP Part D is split into collision and other-than-collision (comprehensive), each with its own deductible; other-than-collision includes theft, fire, vandalism, and glass.

Homeowners forms differ by perils: HO-2 broad named perils throughout, HO-3 open perils on the dwelling and other structures with named perils on personal property, HO-5 open perils throughout.

HO-4 renters and HO-6 condominium unit-owners provide no Coverage A for the building; HO-6 covers building items within the unit such as fixtures, improvements, and betterments, plus loss assessment.

Businessowners policy (BOP) eligibility is limited by business class and size (premises, floor area, annual sales); ineligible or larger risks move to a commercial package or monoline policy.

Workers compensation Part One pays statutory benefits regardless of fault; Part Two, employer's liability, responds to injury-related tort suits not covered by the statutory benefits.

Umbrella and excess policies follow form over scheduled underlying policies and may apply a self-insured retention where no underlying coverage exists.

Commercial auto covered-auto symbols: 1 = any auto, 7 = specifically described autos, 8 = hired autos, 9 = nonowned autos.

Inland marine covers property in transit, portable or mobile property, and property of others in the insured's care, custody, or control (bailee coverage).