OK Property & Casualty cheat sheet

The Oklahoma Insurance Commissioner is an elected statewide official serving a four-year term and heads the Oklahoma Insurance Department.

A producer must hold a current Oklahoma license and be appointed by the insurer before soliciting, negotiating, or selling insurance in the state.

Oklahoma producer licenses renew biennially; 24 hours of continuing education, including at least 3 hours of ethics, are required each two-year term.

Producers must notify the Department of a change of address and of any administrative action or criminal prosecution taken against them, generally within 30 days.

Rebating, twisting, misrepresentation, false advertising, and commingling of premium funds are unfair trade practices punishable by fines, suspension, or revocation.

Commissions may be paid only to properly licensed persons; sharing commissions with an unlicensed individual is prohibited.

Insurers must give written notice of cancellation or nonrenewal of property and casualty policies, with a shorter notice period permitted for nonpayment of premium.

The Oklahoma Insurance Guaranty Association pays covered claims against insolvent property and casualty insurers up to a statutory cap, funded by assessments on member insurers.

Risk is transferred to an insurer for a premium; the insurer pools many similar exposure units so actual losses approach predicted losses under the law of large numbers.

Insurable interest requires a financial relationship such that a loss causes monetary harm; it must exist at policy inception for life insurance and at the time of loss for property insurance.

The indemnity principle limits recovery to the value of the loss; actual cash value = replacement cost minus depreciation.

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

Insurance contracts are aleatory, unilateral, conditional, and contracts of adhesion; ambiguities are construed against the insurer.

Utmost good faith requires disclosure of material facts; a material misrepresentation or concealment on the application can permit rescission.

Subrogation allows the insurer, after paying a loss, to pursue the at-fault party in the insured's name, preventing double recovery.

Hazards are conditions that increase loss frequency or severity: physical (icy steps), moral (intentional acts), and morale (carelessness).

A property policy consists of the declarations, insuring agreement, conditions, and exclusions.

Coinsurance payment = (insurance carried ÷ insurance required) × loss, minus the deductible, never exceeding the policy limit.

Actual cash value settles at replacement cost minus depreciation; replacement cost pays new-for-old up to the limit with no depreciation deduction.

Deductibles may be a flat dollar amount, a percentage of the limit, or a waiting period; percentage deductibles apply to the limit, not to the loss amount.

The mortgagee clause entitles the lender to loss payment up to its interest, notice of cancellation or nonrenewal, and the right to pay premiums to keep coverage in force.

Duties after loss include prompt notice, protecting property from further damage, preparing an inventory, cooperating with the insurer, and submitting a sworn proof of loss.

Other insurance conditions use pro rata contribution by limits for property and excess treatment for specified liability situations.

Vacancy beyond a stated period (commonly 60 days) suspends or excludes coverage in many commercial property forms because fire and vandalism losses rise in empty buildings.

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

Typical HO-3 relationships: Coverage B other structures 10% of Coverage A; Coverage C personal property 50% of Coverage A; Coverage D loss of use 30% of Coverage A.

Section II provides Coverage E personal liability (commonly $100,000) and Coverage F medical payments to others (commonly $1,000), paid without regard to fault and with no deductible.

Common Section I exclusions: earth movement, flood, ordinance or law, neglect, intentional loss, power failure, and government action.

Special limits cap certain property, for example theft of jewelry and furs at $1,500, theft of firearms at $2,500, money at $200, and securities at $1,500.

Replacement cost loss settlement on the dwelling applies only when the limit carried is at least 80% of the dwelling's full replacement cost; otherwise payment is reduced.

Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) insure the structure and contents but contain no liability coverage unless endorsed, and theft is excluded unless endorsed.

When a covered loss exceeds the policy limit, payment is shared pro rata between the insured and the mortgagee according to their interests.

Commercial property insures the building, business personal property, and personal property of others, with limits set separately for each item.

Coinsurance formula: (limit carried ÷ limit required) × loss, minus the deductible; the required limit equals the coinsurance percentage multiplied by the value at the time of loss.

Agreed value suspends the coinsurance requirement; a reporting form sets premium on reported values with a deposit premium plus a year-end audit.

Blanket insurance applies one limit across multiple locations or property types, while specific insurance covers a single described item.

Causes of loss forms: basic (named perils), broad (additional named perils), and special (open perils, covering all risk except what is excluded).

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

The businessowners policy combines property, business income with a 12-month extended period, and liability for eligible small businesses; larger or high-hazard risks require a commercial package policy.

Negligence requires four elements: a legal duty owed, a breach of that duty, proximate cause, and actual damages; the claimant bears the burden of proof.

Damage categories: special damages (medical bills, lost wages), general damages (pain and suffering), and punitive damages (punishment, generally not insurable).

Split limits such as 100/300/50 cap bodily injury per person, bodily injury per occurrence, and property damage separately; a combined single limit caps all damages per occurrence.

Occurrence policies cover injury that happens during the policy period; claims-made policies cover claims first made during the period, limited by a retroactive date and extended by an optional reporting endorsement.

CGL Coverage A pays bodily injury and property damage; Coverage B pays personal and advertising injury; Coverage C pays medical expenses without regard to fault.

The duty to defend is broader than the duty to indemnify, and defense costs are paid in addition to the limit on standard CGL forms.

Strict liability applies without proof of fault to ultra-hazardous activities and defective products; vicarious liability holds one party responsible for the acts of another.

Additional insured endorsements extend coverage to parties such as landlords and general contractors; a certificate of insurance is evidence of coverage, not a grant of coverage.

PAP structure: Part A liability, Part B medical payments, Part C uninsured/underinsured motorists, Part D damage to your auto (collision and other than collision).

Oklahoma minimum auto liability limits are $25,000 per person and $50,000 per accident for bodily injury plus $25,000 for property damage; higher limits may be purchased.

Part A covers the named insured, resident relatives, and permissive users of a covered auto, and also the insured's use of non-owned autos.

Part B pays reasonable medical expenses for the insured within a stated period after an accident, regardless of fault, up to the limit.

Uninsured/underinsured motorist coverage pays the insured's injuries caused by an uninsured or underinsured driver; insurers must offer it and the insured may reject it in writing.

Part D settles at actual cash value unless an endorsement provides replacement cost; betterment may reduce the payment.

Common Part A exclusions: intentional injury, racing, use of a vehicle without a reasonable belief of permission, and vehicles furnished for regular business use.

When two or more auto policies apply, liability coverage is shared pro rata, while physical damage coverage on the same vehicle is excess.

Business auto covered-auto symbols run from 1 (any auto) through 9 (non-owned autos); symbol 7 covers only autos specifically listed on the schedule.

Commercial auto liability uses split limits or a combined single limit, and physical damage may be written scheduled by vehicle or on a blanket basis.

Hired auto and non-owned auto liability must be designated by symbol; drive-other-car coverage is not automatic under every symbol.

The CGL occurrence form carries a general aggregate, a products-completed operations aggregate, and a per-occurrence limit.

Umbrella policies provide limits above underlying auto, general liability, and employers liability, and may drop down over a self-insured retention to fill coverage gaps.

Employers liability (Part Two of the workers compensation policy) responds to work injury claims outside workers compensation; stop-gap coverage applies in states with monopolistic workers compensation funds.

Employment practices liability covers wrongful termination, discrimination, and harassment; professional liability covers errors and omissions; directors and officers liability covers management acts.

Workers compensation is a no-fault statutory benefit system; the exclusive remedy doctrine bars most employee tort suits against the employer for work-related injury.

Compensability requires an injury arising out of and in the course of employment, or an occupational disease characteristic of and peculiar to the employment.

Statutory benefits include medical care, temporary total disability, permanent partial and permanent total disability, death benefits, and rehabilitation.

Oklahoma employers with five or more employees must carry workers compensation coverage; disputed claims are administered by the Workers' Compensation Commission rather than the courts.

Premium = (payroll ÷ 100) × class rate × experience modification factor, adjusted for audits, premium discounts, and expense constants.

Policy structure: Part One covers statutory benefits, Part Two provides employers liability, and Part Three extends coverage to other states listed on the policy.

Sole proprietors, partners, and LLC members are generally excluded from coverage unless they elect to be included; independent contractors are not counted as employees.