SC Property & Casualty cheat sheet

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

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

Utmost good faith requires both parties to disclose material facts; concealment or material misrepresentation can void coverage.

Aleatory contract: the dollar values exchanged by the parties are unequal and depend on an uncertain future event.

Contract of adhesion: the insurer drafts the wording, so ambiguities are construed in favor of the insured.

Subrogation lets the insurer pursue the at-fault party after paying a claim, preventing double recovery by the insured.

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

Risk-handling techniques are avoidance, reduction, transfer, retention, and sharing; hazards are physical, moral, or morale.

Law of large numbers: as the count of similar exposure units grows, actual loss results converge on the predicted loss.

ACV = replacement cost minus depreciation; replacement cost = cost to repair or replace with like kind and quality with no depreciation deduction.

Coinsurance payment = (limit carried ÷ limit required) × loss, where limit required = coinsurance percentage × value at time of loss; payment never exceeds the policy limit.

Named-peril forms cover only the perils listed; special (open-peril) forms cover all risks of direct physical loss unless specifically excluded.

Deductibles apply per occurrence and reduce the claim payment; the policy limit caps the total amount recoverable.

Other insurance conditions allocate a loss pro rata when two or more policies cover the same property on the same basis.

Standard extensions include debris removal, preservation of property, and reasonable repairs made to protect property from further damage.

Valued policy laws: on a total loss of a building, payment may be the full stated limit rather than actual cash value.

Burden of proof differs by form: under named perils the insured proves a listed peril caused the loss; under open peril the insurer must prove an exclusion applies.

HO-3 insures the dwelling and other structures on an open-peril basis and personal property for named perils; HO-5 covers both on an open-peril basis.

Standard HO limits: Coverage B other structures 10%, Coverage C personal property 50%, Coverage D loss of use 30% of the Coverage A limit.

Section I is property coverage (A through D); Section II is Coverage E personal liability and Coverage F medical payments to others.

HO-4 renters covers personal property, loss of use, and liability but provides no building coverage.

HO-6 condo covers personal property, liability, and building items the unit-owner owns or is responsible for under the association agreement.

Special dollar limits restrict money, securities, theft of jewelry and furs, theft of firearms, and theft of silverware and goldware.

Common exclusions: earth movement, flood, ordinance or law, neglect, intentional loss, and business pursuits.

Dwelling policies (DP-1 basic, DP-2 broad, DP-3 special) insure rented or owner-occupied dwellings and exclude liability unless added by endorsement.

Theft is not provided by the DP-1 basic form; it must be added by endorsement, while HO forms include it automatically.

The building and personal property coverage form insures the building, business personal property, and personal property of others in the insured's care.

Causes of loss forms: basic (named perils), broad (basic plus additional named perils), and special (open peril subject to exclusions).

Coinsurance requires a limit of at least the stated percentage (often 80%) of value; the agreed value option suspends coinsurance.

Blanket limits apply a single limit across multiple locations or coverages; specific limits apply separately to each item.

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

Reporting forms set deposits and adjust premium from reported values; a peak season endorsement raises limits for seasonal inventory.

Vacancy beyond the stated period (typically 60 days) restricts theft, glass, and water damage claims and reduces loss payments.

Equipment breakdown (boiler and machinery) is excluded by commercial property forms and is written as separate coverage.

Builders risk insures property under construction, including materials, supplies, and equipment intended to become part of the structure.

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

Compensatory damages are special (medical bills, lost wages) and general (pain and suffering); punitive damages are awarded to punish.

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

Limit structure includes each occurrence, general aggregate, products-completed operations aggregate, and per-person limits.

The duty to defend is broader than the duty to indemnify and applies even to groundless suits; under the CGL, defense costs are paid outside the limits.

Common defenses include contributory negligence, comparative negligence, assumption of risk, and expiration of the statute of limitations.

Additional insured status extends coverage to another party, usually only for liability arising from the named insured's work or premises.

Absolute exclusions admit no exception (e.g., intentional acts); qualified exclusions contain stated exceptions that restore coverage.

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

Split limits state bodily injury per person, bodily injury per accident, and property damage (e.g., 25/50/25); a combined single limit is one amount for all damages.

Collision covers impact with another vehicle or object; other-than-collision covers fire, theft, vandalism, glass breakage, and weather.

UM pays when the at-fault driver has no insurance or leaves the scene; UIM pays when the at-fault driver's limits are insufficient for the damages.

Covered autos include the described auto, newly acquired autos, temporary substitute autos, and non-owned autos used with permission.

Common exclusions: intentional damage, racing, livery or ride-sharing use, and vehicles used for delivery or business purposes.

Medical payments pays reasonable medical expenses for the insured and passengers regardless of fault, up to the stated limit.

Physical damage losses are settled at actual cash value unless a replacement cost or loan/lease gap endorsement is added.

The business auto coverage form uses covered auto symbols 1 through 9 to define exactly which autos are insured.

Symbol 1 = any auto; symbol 7 = specifically described autos; symbol 8 = hired autos; symbol 9 = nonowned autos.

Liability, physical damage, and medical payments can each be selected separately; some states add no-fault or PIP requirements.

Hired auto covers vehicles leased, rented, or borrowed; employer's nonownership liability covers employees' autos used in the business.

The MCS-90 endorsement assures the public will be paid a negligence judgment up to federal minimum financial responsibility limits.

Garage and dealer forms cover inventory, customers' autos in the insured's care, and garagekeepers legal liability.

Trailer interchange agreements allocate responsibility for damage to trailers among the carriers involved.

Drive other car coverage extends liability protection to executives and their spouses while driving non-owned autos.

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 insuring agreement covers BI or PD caused by an occurrence that is neither expected nor intended from the standpoint of the insured.

Limits include each occurrence, general aggregate, products-completed operations aggregate, damage to premises rented, and medical expense.

Key exclusions: expected or intentional injury, contractual liability, liquor liability, pollution, auto/aircraft/watercraft, your product, your work, impaired property, and recall.

The 'your work' exclusion restores coverage for damage arising out of work performed on the insured's behalf by a subcontractor.

Personal and advertising injury includes libel, slander, wrongful eviction, and infringement of copyright, trade dress, or slogan in an advertisement.

An insured contract includes leases of premises, sidetrack agreements, easement agreements, and the tort liability assumed in a business contract.

Coverage C medical payments must be incurred and reported within one year of the accident date, subject to a per-person limit.

Exclusive remedy: statutory benefits replace the employee's right to sue the employer for a work-related injury.

Compensability requires an injury by accident arising out of and in the course of employment.

Benefit categories are medical care, temporary and permanent disability income, death benefits, and rehabilitation.

Disability income is typically two-thirds of the worker's average weekly wage, subject to a state maximum and waiting period.

Part One pays statutory benefits; Part Two employer's liability responds to suits outside the workers compensation system.

Premium = manual rate per $100 of payroll for each class code, adjusted by the experience modification factor and premium discounts.

Federal systems replacing state coverage include FELA for railroad workers, the Longshore and Harbor Workers Act, and the Jones Act for seamen.

Coverage outside the designated state is tested by the employee's state of residence, the state of injury, or the state where the contract of hire was made.

Umbrella liability pays excess over scheduled underlying policies and can drop down to cover gaps or self-insured retentions.

Inland marine covers property in transit, floater policies for movable property, bailee exposures, and motor truck cargo.

Crime coverages include employee theft, theft of money and securities, forgery or alteration, computer fraud, and extortion.

A surety bond has three parties - obligee, principal, and surety - while a fidelity bond is first-party coverage for employee dishonesty.

The businessowners policy combines property and liability for eligible small businesses and commonly includes business income.

Difference in conditions policies fill gaps such as flood and earthquake that standard property forms exclude.

Specialty liability lines include employment practices liability, directors and officers liability, cyber liability, and professional liability.

Flood coverage is written through the NFIP or private insurers, but standard property policies exclude flood and surface water.

The South Carolina Department of Insurance licenses producers and insurers; the Commissioner of Insurance is a statewide elected official.

South Carolina minimum auto liability limits are $25,000 per person and $50,000 per accident for bodily injury plus $25,000 for property damage.

Insurers must offer uninsured motorist coverage, and the named insured may reject it only in writing.

The South Carolina Wind and Hail Underwriting Association is the residual market providing wind coverage in designated coastal territory.

Employers with four or more employees must secure workers compensation coverage and are regulated by the SC Workers' Compensation Commission.

Prohibited trade practices include misrepresentation, twisting, rebating, false advertising, boycott, coercion, and intimidation.

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

Personal auto cancellation notice is generally 10 days for nonpayment of premium and 30 days for other reasons.