SD Property & Casualty cheat sheet

Pure risk (loss or no loss) is insurable; speculative risk (chance of gain as well as loss) is not.

Insurable risk tests: many similar exposure units, accidental and definite loss, measurable loss, losses not catastrophic to the pool, and an affordable premium.

Principle of indemnity: ACV = replacement cost minus depreciation; replacement cost settlements are still capped by the policy limit.

Insurable interest is required at the time of loss for property/casualty insurance and at policy inception for life insurance.

Utmost good faith: representations are believed true, warranties are guaranteed true, and intentional concealment of a material fact can void coverage.

Subrogation arises after the insurer pays; the insurer recovers from the negligent third party and the insured may not collect twice for one loss.

Insurance is a contract of adhesion and an aleatory contract; ambiguity in wording is construed against the insurer (contra proferentem).

Hazard types: physical (icy steps), moral (dishonesty), morale (carelessness); a peril is the cause of loss, a hazard increases the chance or severity.

Adverse selection is the tendency of poorer-than-average risks to buy coverage; underwriting, exclusions, and deductibles control it.

Coinsurance payment = (limit carried / limit required) x loss, where limit required = coinsurance percentage x insurable value; the payment never exceeds the limit.

Replacement cost is new-for-old with no depreciation; actual cash value is replacement cost minus depreciation.

HO-3 covers the dwelling on an open perils basis and personal property on a named perils basis; HO-5 is open perils on both; HO-2 is named perils on both; HO-8 modifies coverage for older homes.

Homeowners coverages: A dwelling, B other structures, C personal property, D loss of use, E personal liability, F medical payments to others.

Homeowners special limits reduce recovery for money, securities, theft of jewelry and furs, theft of firearms, and theft of silverware; these are sublimits, not exclusions.

Coverage C off-premises protection is typically 10% of the Coverage C limit, or $1,000 if greater, for property usually located at the residence.

Standard property exclusions: earth movement, flood and surface water, ordinance or law, neglect, intentional loss, war, nuclear hazard, and freezing while a building is vacant.

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

Commercial property options: agreed value suspends coinsurance, reporting forms adjust premium at audit for fluctuating values, and blanket limits apply across locations.

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

Occurrence trigger = injury or damage during the policy period; claims-made trigger = claim first made during the policy period, plus any extended reporting period.

CGL Coverage A = bodily injury and property damage; Coverage B = personal and advertising injury; Coverage C = medical payments, paid without regard to fault and without a deductible.

Personal and advertising injury offenses include libel, slander, invasion of privacy, wrongful eviction, and infringement of copyright in an advertisement.

Split limits (25/50/25) set separate bodily injury per person, bodily injury per accident, and property damage maximums; a combined single limit caps total BI and PD per accident.

Personal auto policy parts: A liability, B medical payments, C uninsured/underinsured motorists, D physical damage (collision and other than collision).

Workers compensation Part One pays statutory benefits regardless of fault; Part Two employer's liability responds to employee injury claims that fall outside the statute.

Commercial auto symbols 1 through 9 designate covered autos: symbol 1 = any auto, symbol 7 = specifically described autos, symbol 8 = hired autos, symbol 9 = non-owned autos.

Negligence requires duty, breach of that duty, proximate cause, and damages; an umbrella pays excess over underlying limits and drops down subject to a self-insured retention.

The Insurance Commissioner is appointed by the Governor, heads the Division of Insurance, and administers Title 58 of the South Dakota Codified Laws.

A producer must hold a valid license before soliciting insurance and must be appointed by the insurer; producer licenses are renewed on a biennial cycle.

Continuing education: 24 credit hours every two years, including 3 hours of ethics, required for license renewal.

Minimum auto liability limits in South Dakota: $25,000 per person and $50,000 per accident for bodily injury, plus $25,000 for property damage.

Insurers must offer uninsured and underinsured motorist coverage; the named insured must reject it in writing to have it removed.

Rates must not be excessive, inadequate, or unfairly discriminatory, and policy forms and rates are filed with the Division of Insurance.

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

Producers hold premium funds in a fiduciary capacity; commingling premium funds with personal or general business funds is prohibited.

The South Dakota Insurance Guaranty Association pays covered claims of insolvent member insurers, subject to statutory limits and deductibles.