PA Property & Casualty common mistakes
PA Property & Casualty · Understand the traps and how to avoid them.
Answering Pennsylvania auto questions with a generic 'no-fault means you can't sue' model - stating that an injured driver in PA automatically loses the right to sue for pain and suffering, or that a tort threshold applies to every policy.
Most prep material is written nationally, and candidates memorize the Michigan/New York version of no-fault before ever seeing PA's rules, so the first plausible-sounding answer wins.
What to do instead
Learn PA as a choice no-fault state and rehearse it as a branch point: every private passenger auto policy must offer full tort or limited tort. Limited tort (the cheaper election) waives most non-economic claims unless an exception applies (death, serious/permanent injury, DUI-involved, insured in an out-of-state vehicle, etc.). PIP is the first-party no-fault benefit that pays regardless of fault.
Plugging another state's financial responsibility numbers (25/50/10, 20/40/10) into PA liability questions, and forgetting that PA requires both PIP and an offer of UM/UIM coverage.
Limit tables from other states and from general 'standard limits' mnemonics bleed together, and candidates treat UM/UIM and PIP as optional extras rather than as required elements of a PA auto policy.
What to do instead
Build a one-page PA numbers card and study it as a single set: split limits of $15,000 per person / $30,000 per accident bodily injury with $5,000 property damage, a minimum $5,000 of PIP, and UM/UIM that must be offered with a signed written rejection to be removed. Recite the set out loud until the numbers travel together.
Assuming the federal government regulates the business of insurance, or that the NAIC writes binding rules that insurers must follow nationwide.
Insurance is heavily discussed in federal policy news, and the NAIC publishes model laws that look like statutes, so candidates assign authority to whichever body sounds most authoritative.
What to do instead
Anchor on McCarran-Ferguson: states regulate insurance, and the federal antitrust laws apply only to the extent the business is not state-regulated. The NAIC is an association of state regulators that drafts model laws and collects data - it has no enforcement power. A model law becomes binding only if a state legislature or regulator adopts it.
Using 'admitted,' 'licensed,' 'surplus lines,' and 'certificate of authority' interchangeably, and treating a producer's license and an insurer's authority as the same credential.
All four terms live in the same chapter of most textbooks and describe 'permission to do business,' so the distinctions get flattened into one fuzzy idea.
What to do instead
Sort by who holds it and what it proves: an insurer needs a certificate of authority to be an admitted (authorized) insurer in a state; a non-admitted insurer has no such authority and can only write through surplus lines when coverage is unavailable from admitted markets and surplus lines requirements are met; a producer needs a license, not a certificate of authority. Write the four terms in a grid (who / grants it / what it permits) once, and reuse it.
Treating actual cash value, replacement cost, and stated/valued amount as synonyms - for example, saying a replacement cost policy pays the full new cost of a 12-year-old roof with no adjustment.
Everyday speech uses 'value' loosely, and the exam deliberately builds distractors that differ only by which valuation method was named.
What to do instead
Fix the definitions cold: actual cash value = replacement cost minus depreciation; replacement cost = new property of like kind and quality with no depreciation; valued/agreed amount = a figure set at inception and paid in full on a total loss without regard to the indemnity principle. Then practice classifying short fact patterns by asking only one question - 'did the question name depreciation?'
Calculating a property coinsurance payment by simply subtracting the deductible and applying the percentage, without first testing whether the limit meets the coinsurance requirement, or confusing a coinsurance clause with a deductible or a copayment.
Coinsurance appears in health-style contexts too, and the penalty formula has multiple steps, so candidates shortcut to 'multiply by 80%.'
What to do instead
Always run the same three steps in order: (1) required limit = coinsurance % x replacement cost; (2) if the limit carried is less, apply (limit carried / required limit) to the loss; (3) subtract the deductible. Do the division before touching the deductible, and remember that coinsurance is a condition of the property policy, not a cost-sharing percentage.
Assuming a homeowners policy covers flood, earth movement, or the extra cost of rebuilding to current code, and mixing up which HO forms insure the dwelling on an open-perils basis versus the contents.
Water damage and 'the city made me rebuild' feel like everyday perils, and the HO forms are numbered similarly, so the coverage trigger for each form blurs.
What to do instead
Memorize exclusions by name (flood, earth movement, ordinance or law, neglect, intentional loss, and the business/rental exclusions) and pair each with where the gap is actually filled (NFIP or a difference-in-conditions endorsement for flood, a specific endorsement for ordinance or law). For the forms, hold the line that HO-2 is named perils on both dwelling and contents, HO-3 is open perils on the dwelling with named perils on contents, and HO-5 is open perils on both.
Mixing up Coverage A, B, C, and D limits, and treating additional living expense as identical to fair rental value or as unlimited once the dwelling limit is exhausted.
These four coverages are always presented together in a table, and candidates memorize the letters without attaching a distinct meaning to each.
What to do instead
Attach a noun to each letter and use it every time: A = dwelling, B = other structures, C = personal property, D = loss of use. Inside D, separate additional living expense (the extra cost of living elsewhere while your home is repaired) from fair rental value (rent you would have collected from a rented part of the premises). Limits are typically stated as percentages of Coverage A, so practice converting percentages into dollars rather than memorizing raw figures.
Applying an occurrence trigger to a claims-made liability policy (or the reverse), ignoring the retroactive date, and confusing an extended reporting period with an extended discovery/tail for occurrences.
Both triggers are described with the same vocabulary - 'injury' and 'claim' - and the retroactive date is often buried in a single sentence in the textbook, so candidates answer from the policy's inception date.
What to do instead
Reduce each to a timeline question: occurrence form asks 'when did the injury happen and was the policy in force then?'; claims-made asks 'when was the claim made and was the policy in force then, and is the injury date at or after the retroactive date?' A retroactive date can only exclude earlier acts; it never moves forward with renewals. An extended reporting period only extends the reporting window for acts already occurring - it adds no new coverage period.
Applying a blanket negligence rule to liability questions - treating comparative negligence as pure nationwide, or assuming any negligence by the claimant completely bars recovery, and overlooking the exclusive-remedy rule for injured workers.
Tort rules differ by state and are often taught with whichever state the author lives in, while workers compensation conflicts with tort instincts because the question describes a careless employer and an injured employee.
What to do instead
Learn PA's rule as a number: modified comparative negligence with a 51% bar - a claimant at fault but less than 51% recovers reduced damages; at 51% or more, recovery is barred. This differs from pure comparative states (recovery reduced but never barred) and from contributory negligence states (any fault bars). For workplace injuries, apply exclusive remedy first: workers compensation is the employee's statutory remedy against the employer, and employer's liability coverage responds only to claims outside that remedy.