NV Property & Casualty cheat sheet

The McCarran-Ferguson Act (1945) leaves regulation of the business of insurance to the states; Nevada enforces it through NRS Title 57 and the Nevada Division of Insurance.

The Nevada Insurance Commissioner is appointed by the Governor (not elected) and holds authority to license producers, examine insurers, hold hearings, and impose fines.

A Nevada producer license is required to solicit, negotiate, or sell insurance; licenses are issued by line of authority and renewal requires continuing education that includes an ethics component.

Producers handle premiums in a fiduciary capacity: premium funds are held in trust, commingling with personal or business funds is prohibited, and misappropriation can be prosecuted as insurance fraud.

Prohibited unfair trade practices include misrepresentation, twisting, rebating, unfair discrimination, coercion, boycotting, and unfair claim settlement practices.

Rebating is offering cash, gifts, or anything of value not stated in the policy to induce a purchase; it is illegal in Nevada and most other states.

Domestic insurer = chartered in Nevada; foreign = chartered in another state; alien = chartered outside the United States; each needs a certificate of authority to transact insurance.

The Nevada Insurance Guaranty Association pays covered claims of insolvent member insurers, subject to statutory per-claim limits and deductibles.

Twisting is a misrepresentation that induces a policyholder to lapse, surrender, or replace existing coverage.

Insurable interest: property insurance requires a financial interest at policy inception; life insurance requires it at application and is presumed for self and close family.

The principle of indemnity restores the insured to the pre-loss financial position; an insured should not profit from a loss.

Utmost good faith requires both parties to disclose material facts; concealment, fraud, or material misrepresentation can void the policy.

Insurance contracts are contracts of adhesion (insurer drafts the terms), conditional (duties must be met), unilateral (only the insurer makes an enforceable promise), and aleatory (unequal exchange of value).

Peril = the cause of loss (fire, wind, theft); hazard = a condition that increases the chance or severity of loss (physical, moral, morale).

Loss valuation: actual cash value = replacement cost minus depreciation; replacement cost pays new-for-old with no depreciation; agreed value fixes the amount in advance.

The law of large numbers lets actuaries predict losses more accurately as the number of similar exposure units increases, which stabilizes rates.

Proximate cause is the unbroken chain of events linking a covered peril to the resulting loss.

A deductible is the amount the insured retains per loss; increasing it lowers premium and eliminates small claims.

Real property is land and anything permanently attached; personal property is movable; the policy must identify which categories are covered.

Named-peril (basic/broad) forms cover only listed perils and the insured must prove the loss resulted from one; open-peril (special) forms cover all risks of direct physical loss except those excluded.

Coinsurance formula: payment = (limit carried divided by limit required) times the loss, less the deductible; carrying less than the required percentage makes the insured a coinsurer of part of each loss.

Common commercial coinsurance percentages are 80%, 90%, and 100%; an agreed value option suspends coinsurance when the insured reports accurate values.

Additional coverages usually built in: debris removal, preservation of property, fire department service charges, and pollutant cleanup with sublimits.

Loss of use pays additional living expense or fair rental value; business income pays net income plus continuing expenses during the period of restoration.

The mortgagee clause protects the lender with loss payment to the extent of its interest, notice of cancellation, and the right to pay premium to keep coverage in force.

The other insurance condition typically requires pro rata sharing by limit when two policies cover the same loss on the same basis.

Vacancy and unoccupancy conditions restrict or suspend certain perils (commonly vandalism and glass breakage) after a stated period, often 60 consecutive days.

Liability insurance pays on behalf of an insured who is legally liable for bodily injury or property damage to a third party; the injured claimant is not a party to the contract.

Negligence requires duty, breach of duty, proximate cause, and damages; comparative negligence reduces an award by the claimant's percentage of fault.

Compensatory damages include special damages (medical bills, lost wages) and general damages (pain and suffering); punitive damages punish egregious conduct and are often uninsurable.

Strict liability applies without proof of fault (hazardous activities, defective products); vicarious liability holds one party responsible for another's acts, such as an employer for an employee.

Occurrence forms respond to injury or damage that takes place during the policy period; claims-made forms respond to claims first made during the period, subject to a retroactive date.

A claims-made policy can be extended by a basic or supplemental extended reporting period (tail), which lengthens the time to report claims but does not move the coverage trigger.

Limits may be split (per person and per occurrence), a combined single limit, or subject to an aggregate; in the CGL, defense costs are paid in addition to the limit.

Medical payments coverage pays reasonable medical expenses regardless of fault, usually on a per-person basis.

Personal and advertising injury covers offenses such as libel, slander, wrongful eviction, and infringement of copyright in an advertisement.

Dwelling forms: DP-1 basic named perils, DP-2 broad named perils, DP-3 special form (open peril on the dwelling, named perils on personal property).

Coverages: A dwelling, B other structures (generally 10% of A, additional), C personal property, D fair rental value, E additional living expense.

Dwelling policies provide no personal liability coverage; liability must be added by endorsement or purchased under a separate policy.

Eligible property: one-to-four family dwellings, owner- or tenant-occupied, including dwellings rented to others; condominium unit owners use the HO-6 instead.

Personal property away from the residence premises is typically limited to 10% of the Coverage C limit.

Coverage C special limits cap categories such as money, securities, jewelry, silverware, and firearms; higher amounts require scheduling or endorsement.

A dwelling vacant beyond 60 consecutive days loses vandalism and malicious mischief coverage and may lose other perils under the vacancy condition.

Loss settlement may be actual cash value or replacement cost; replacement cost pays full RC only when the dwelling is insured to at least 80% of its full replacement cost.

Fair rental value pays the rental value of the dwelling while additional living expense pays the extra cost of living elsewhere during repairs.

Forms: HO-2 broad, HO-3 special (open peril dwelling, broad named peril contents), HO-5 comprehensive (open peril both), HO-4 renters, HO-6 condo unit owners, HO-8 modified for older homes.

Section I limits are usually percentages of Coverage A: B other structures 10%, C personal property 50%, D loss of use 30%.

Section II: Coverage E personal liability and Coverage F medical payments to others, which pays regardless of fault, commonly $1,000 to $5,000 per person.

Coverage C special limits cap theft losses of money, jewelry, watches, furs, silverware, and firearms; scheduling or endorsement raises the limits.

The HO-3 requires an owner-occupied dwelling; tenant-occupied or rental dwellings belong in a dwelling policy or a landlord endorsement.

Section I exclusions include flood, earth movement, ordinance or law, neglect, intentional loss, and gradual seepage; some can be bought back by endorsement.

Loss of use pays additional living expense and fair rental value for the time reasonably needed to repair or relocate, subject to the Coverage D limit.

Section II excludes business liability, professional services, auto liability, and injury to workers covered by workers compensation.

Section I deductibles apply per occurrence; Section II liability coverage has no deductible.

PAP parts: A liability, B medical payments, C uninsured/underinsured motorists, D damage to your auto, E duties after an accident or loss, F general provisions.

Nevada financial responsibility minimums are 25/50/20: $25,000 per person and $50,000 per accident bodily injury plus $20,000 property damage.

Covered autos include listed autos, newly acquired autos (automatic coverage for a limited period), and temporary substitute autos.

Insureds under Part A include the named insured, a resident spouse, resident family members, and any person using the covered auto with permission.

Part D splits into collision and other-than-collision (fire, theft, glass, hail, flood, vandalism, animal strike), each carrying its own deductible.

Uninsured/underinsured motorist coverage pays for bodily injury caused by a driver with no insurance, insufficient limits, or a hit-and-run driver; Nevada requires insurers to offer it.

Exclusions include intentional damage, racing, use of a vehicle to carry persons or property for a fee, vehicles with fewer than four wheels, and vehicles furnished for the insured's regular use.

Collision covers impact with another object or overturn; other-than-collision includes glass breakage and theft of the auto or its parts.

A named non-owner policy covers liability for a person who does not own an auto but regularly drives borrowed or rented vehicles.

A commercial package policy combines at least two coverage parts (commercial property, general liability, auto, inland marine, crime, boiler and machinery) under common declarations and conditions.

Each coverage part keeps its own forms, exclusions, and limits; a claim is adjusted under the part that applies.

Commercial property covers the building, business personal property (including tenant's improvements and betterments), and personal property of others.

Causes of loss forms: Basic (named perils), Broad (named perils plus water damage, falling objects, and similar), and Special (open peril with exclusions).

CGL Coverage A covers bodily injury and property damage; Coverage B covers personal and advertising injury; Coverage C pays medical expenses regardless of fault.

CGL limits include general aggregate, products-completed operations aggregate, each occurrence, personal and advertising injury, damage to premises rented to you, and medical expense.

Commercial auto uses covered auto symbols: 1 any auto, 7 specifically described autos, 8 hired autos, 9 non-owned autos.

Business income covers net income and continuing expenses during the period of restoration; extra expense pays costs to avoid or shorten a shutdown.

Additional insured endorsements extend liability coverage to landlords, general contractors, or other parties, often on a primary and noncontributory basis.

The BOP packages commercial property and general liability for eligible small businesses; it does not include auto liability, workers compensation, or professional liability.

Eligibility is set by class and size: typical targets are offices, retail stores, restaurants, and apartment buildings; manufacturing risks and auto dealers generally need a commercial package policy.

Property coverage is written on a special (open peril) basis for the building and business personal property, and business income for 12 months is included.

Optional BOP coverages include employee dishonesty, money and securities, outdoor signs, mechanical breakdown, spoilage, and equipment breakdown.

Business income pays net income plus continuing expenses during the period of restoration; extra expense pays costs to continue operations.

Liability is commonly written at $1 million per occurrence with a $2 million aggregate, and includes medical expense and products-completed operations.

BOP liability excludes autos, aircraft, watercraft, employees' work injuries (which require workers compensation), and professional liability.

Coinsurance commonly applies to BOP property at 80%, but business income coverage is not subject to coinsurance.

Workers compensation provides statutory, no-fault benefits for work-related injury or occupational disease; fault of the employer or employee does not determine eligibility.

Benefits include medical care, temporary total disability (often about two-thirds of average weekly wage subject to a state maximum), permanent partial and total disability, death benefits, and rehabilitation.

Nevada requires employers with one or more employees to carry workers compensation coverage; NRS Chapters 616A through 617 govern benefits, claims, and administration.

Exclusive remedy: workers compensation is generally the employee's sole remedy against the employer for a covered injury, barring tort suits.

Part One pays statutory benefits; Part Two (employers liability) pays damages for injury claims outside the statutory system, commonly $100,000 each accident, $500,000 disease policy limit, and $100,000 each employee.

Premium = (payroll divided by 100) times the class rate times the experience modification factor; payroll is verified by audit.

The experience modification factor compares the employer's loss history with the class average; below 1.00 credits premium, above 1.00 debits it.

Sole proprietors, partners, and some corporate officers are excluded unless they elect coverage; independent contractors are not employees for workers compensation purposes.

Section 3.A lists the states where coverage applies, and 3.C extends benefits for temporary travel to other states.