Property & Casualty cheat sheet

Indemnity restores the insured to the pre-loss financial position; property insurance cannot produce a profit.

Insurable interest must exist at the time of loss for property insurance; for life insurance it must exist at policy inception.

A material misrepresentation or concealment on an application can allow the insurer to rescind coverage.

An aleatory contract exchanges unequal amounts contingent on chance; a contract of adhesion is drafted by the insurer, so ambiguities are construed against the drafter.

Subrogation lets the insurer step into the insured's shoes after payment and pursue recovery from a responsible third party.

Waiver is the voluntary relinquishment of a known right; estoppel prevents an insurer from asserting a right or fact after the insured reasonably relied on its conduct.

A valid insurance contract requires offer, acceptance, consideration, legal purpose, and competent parties.

Utmost good faith requires disclosure of material facts; concealment of a material fact can be grounds for rescission.

Declarations identify the named insured, covered property, policy period, limits, deductibles, and premium.

The insuring agreement grants coverage; exclusions narrow it; conditions establish duties and procedures.

Actual cash value equals replacement cost minus depreciation; replacement cost pays new without depreciation.

Coinsurance payment = (carried limit ÷ required limit) × loss, capped at the limit; required limit = coinsurance percentage × property value.

Duties after loss commonly include prompt notice, proof of loss, cooperation, protecting property, and submitting an inventory.

Other insurance clauses use pro rata sharing, primary/excess status, or noncontributory treatment to prevent double recovery.

Assignment requires insurer consent; cancellation notice follows state law; mortgagee rights are protected under property policies.

Appraisal resolves amount disputes; insureds may not abandon property to the insurer without consent.

Named-peril forms cover only listed causes; special/open-perils forms cover direct physical loss unless excluded.

Basic causes of loss include fire, lightning, explosion, windstorm, hail, riot, vandalism, and sprinkler leakage; broad forms add water damage and weight of ice or snow.

Coinsurance penalizes underinsurance; agreed value suspends coinsurance when values are accepted by the insurer.

Blanket coverage applies one limit to multiple locations or items; specific coverage applies separate limits to described property.

Debris removal, preservation of property, and fire department service charges are common additional coverages.

Vacancy conditions can suspend or reduce coverage; unoccupancy conditions vary by form.

Collapse, water damage, and mold are often limited or excluded; flood and earth movement are typically excluded.

Business income pays lost net income plus continuing expenses during the period of restoration.

HO-3 covers the dwelling on an open-perils basis and personal property on broad named perils; HO-5 uses open perils for both.

HO-4 renters covers personal property and liability, not the building; HO-6 condo covers unit interiors and certain assessments.

Coverage A is the dwelling, B other structures, C personal property, D loss of use, E personal liability, and F medical payments to others.

Section II liability and medical payments generally have no deductible; Section I property coverage is subject to the policy deductible.

Special limits apply to money, jewelry, firearms, silverware, and business property, both on and off premises.

Dwelling coverage is commonly replacement cost; personal property is often actual cash value unless a replacement-cost endorsement applies.

Common exclusions include earth movement, flood, ordinance or law, intentional loss, neglect, business use, and limited mold.

Loss of use pays additional living expense or fair rental value during the reasonable time needed to repair or replace.

The building and personal property form covers buildings, business personal property, and personal property of others at described premises.

Causes of loss forms include basic, broad, and special; special is open perils subject to exclusions.

Coinsurance requires a limit of at least a stated percentage of value; reporting forms use a deposit premium and later audits.

Business income and extra expense cover lost income and extra costs during the period of restoration.

Additional coverages include debris removal, preservation of property, pollutant cleanup, and fire department charges.

The agreed value option waives coinsurance when the insured reports acceptable values and updates them at expiration.

Equipment breakdown, flood, earthquake, and ordinance or law coverage generally require separate coverage or endorsements.

A commercial package policy combines property and liability coverage under common declarations and conditions using modular forms.

Inland marine covers mobile property, property in transit, bailee property, and instrumentalities of transportation.

The Nationwide Marine Definition includes imports and exports, domestic shipments, instrumentalities of transportation, and bridges or tunnels.

Motor truck cargo covers a carrier's liability for shippers' goods; bailee coverage covers property of others in the insured's care.

Crime coverage includes theft, burglary, robbery, forgery, computer fraud, and employee dishonesty.

Burglary requires forced entry; robbery requires threat or violence; theft is the broader unlawful taking of property.

Employee theft covers employee dishonesty; faithful performance covers dishonesty by public employees.

Equipment breakdown covers mechanical or electrical breakdown that property forms often exclude.

Builder's risk covers property under construction; installation floaters cover property during and after installation.

Negligence requires duty, breach of duty, proximate cause, and damages; all four elements must be established.

The reasonable person standard defines ordinary care; res ipsa loquitur permits an inference of negligence; negligence per se relies on a statute violation.

Strict liability applies to abnormally dangerous activities and defective products; vicarious liability holds one party responsible for another's acts.

Comparative negligence reduces recovery by the claimant's fault; contributory negligence bars recovery in some jurisdictions; assumption of risk is a defense.

Compensatory damages include special economic losses and general noneconomic losses; punitive damages punish conduct.

Commercial general liability Coverage A covers bodily injury and property damage; Coverage B covers personal and advertising injury; Coverage C covers medical payments.

An occurrence policy responds to injury during the policy period; a claims-made policy responds to claims first made during the period, subject to a retroactive date.

Additional insured endorsements extend insured status; certificates of insurance evidence coverage but do not create it.

PAP Part A is liability, B medical payments, C uninsured/underinsured motorists, D collision, and E other than collision.

Split limits state per-person and per-accident maximums; a combined single limit states one maximum per accident.

No-fault/PIP pays medical and wage-loss benefits regardless of fault; tort thresholds vary by state.

UM/UIM covers bodily injury from hit-and-run, uninsured, or underinsured drivers; it does not pay for damage to the insured auto.

Collision pays regardless of fault subject to a deductible; other-than-collision covers comprehensive perils such as theft, fire, and hail.

Insureds include the named insured, resident spouse, family members, and permissive users.

Common exclusions include intentional acts, racing, use without reasonable belief of permission, and delivery or business use.

Transportation expenses and towing may be additional coverages or endorsements.

The business auto coverage form provides liability, physical damage, uninsured motorists, and medical payments coverage.

Covered auto symbols include 1 any auto, 2 owned autos, 3 owned private passenger, 4 owned commercial, 5 hired, 6 nonowned, 7 scheduled, 8 trailers, and 9 mobile equipment.

Hired auto covers rented or leased vehicles; nonowned auto covers employee-owned vehicles used in the business.

Garage coverage includes liability, physical damage, and garagekeepers coverage for customers' vehicles.

Garagekeepers coverage may be written on a legal liability or direct primary basis and applies to vehicles in the insured's care, custody, or control.

The MCS-90 endorsement provides public liability coverage for for-hire interstate motor carriers.

Common exclusions include intentional acts, racing, mobile equipment, and use without permission; drive-other-car endorsements extend coverage to named individuals.

Workers compensation is no-fault statutory coverage for work-related injury or occupational disease.

Part One provides workers compensation benefits; Part Two provides employers liability; Part Three lists other states.

Benefits include medical care, disability income, death benefits, and rehabilitation, subject to waiting periods and maximum limits.

The exclusive remedy doctrine generally bars an employee's tort suit against the employer for covered work injuries.

Premium equals payroll per $100 of remuneration multiplied by the class rate, adjusted by experience modification and audits.

Employers liability limits include per accident, disease policy limit, and disease each employee.

Sole proprietors and partners are excluded unless they elect coverage; independent contractors are not employees.

Monopolistic state funds require coverage through the state fund; other states permit private insurers.