VT Property & Casualty cheat sheet

The Vermont Department of Financial Regulation (DFR) licenses insurers, producers, and adjusters; the Commissioner is appointed by the Governor.

Producer licenses run on a two-year term, and a producer must hold an appointment from an insurer before soliciting, selling, or negotiating that insurer's products.

Vermont producers must complete 24 hours of approved continuing education each two-year term, including at least 3 hours of ethics.

Sharing commissions with an unlicensed person is prohibited; premiums collected belong to the insurer and are held in a fiduciary capacity.

At least 10 days' written notice is required before a personal lines policy may be canceled for nonpayment of premium.

The Vermont Property and Casualty Insurance Guaranty Association responds to covered claims against insolvent member insurers, subject to statutory per-claim caps.

Unfair claim settlement practices include failing to acknowledge or act promptly on claim communications and offering substantially less than the amount ultimately recovered.

A producer must notify the DFR of a change of name or business address within 30 days.

Knowingly making a false statement in an insurance application to obtain coverage is insurance fraud and carries criminal and civil penalties.

Insurable interest must exist at the time of loss for property insurance, but only at policy issuance for life insurance.

The indemnity principle limits recovery to the actual amount of the loss so the insured cannot profit from insurance.

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

A policy is a contract of adhesion drafted by the insurer, so ambiguities are construed against the insurer.

Insurance is aleatory: the values exchanged may be unequal and performance depends on an uncertain event.

The law of large numbers holds that predicted loss experience becomes more accurate as the number of similar exposure units increases.

Pure risk involves only chance of loss or no loss and is insurable; speculative risk involves chance of profit and is generally uninsurable.

Physical, moral, and morale hazards each increase the probability or severity of loss; moral hazard involves dishonesty.

Reinsurance transfers part of an insurer's risk to another insurer; the amount an insurer keeps is its retention.

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

Coinsurance payment = (insurance carried / insurance required) x loss, and never exceeds the policy limit.

Actual cash value equals replacement cost minus depreciation; replacement cost pays for new property of like kind and quality with no depreciation deduction.

Deductibles apply per occurrence and are subtracted before payment.

A mortgagee clause gives the lender rights to loss payment and to notice of cancellation or nonrenewal.

Other insurance is handled by pro rata contribution by limits or by an excess provision that makes the policy pay only after other coverage.

A pair or set clause allows payment of the difference in value of the set or repair/replacement of the set when one item is lost.

A vacancy condition typically suspends coverage after 60 consecutive days of vacancy; unoccupancy conditions may restrict certain perils.

Appraisal resolves disputes about the amount of loss; arbitration resolves disputes about whether coverage applies.

Liability insurance pays sums the insured is legally obligated to pay as damages to third parties, plus defense costs.

Negligence requires a legal duty, breach of that duty, proximate cause, and actual damages.

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

Absolute liability applies without proof of negligence to inherently dangerous activities such as storing explosives or keeping wild animals.

Vicarious liability makes one party responsible for the acts of another, such as an employer for an employee acting in the scope of employment.

Supplementary payments (defense costs, bail bonds, loss of earnings) are paid in addition to the limit of liability.

An occurrence policy covers injury or damage that takes place during the policy period; a claims-made policy covers claims first made during the period.

Bodily injury limits are commonly expressed per person and per occurrence, with a separate aggregate.

Dwelling policies (DP-1, DP-2, DP-3) cover the dwelling and personal property but contain no liability coverage.

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

HO-2 is the broad form, HO-4 is renters, HO-6 is condominium unit-owners, and HO-8 is modified coverage for older homes.

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

Special limits restrict theft of money, jewelry, silverware, guns, and securities.

Loss of use pays additional living expense and fair rental value while the residence premises is uninhabitable.

Section II medical payments to others pays without regard to fault for injuries to non-residents on the premises.

The HO-3 dwelling loss settlement requires insurance equal to at least 80 percent of full replacement cost to avoid a penalty.

Dwelling policy endorsements add perils such as vandalism and malicious mischief, theft, and extended coverage.

Part A is liability, Part B is medical payments, Part C is uninsured/underinsured motorists, and Part D is damage to your auto.

Split limits such as 25/50/10 mean $25,000 per person, $50,000 per accident bodily injury, and $10,000 property damage; a CSL is a single combined limit.

Vermont's financial responsibility minimum for private passenger autos is 25/50/10.

Covered persons include the named insured, a resident spouse, family members, and anyone using a covered auto with permission.

A newly acquired auto has coverage for 14 days if the policy already carries collision, or 4 days if it does not.

Temporary substitute autos and non-owned autos are covered; vehicles furnished for regular use are excluded.

Part D pays actual cash value unless an endorsement adds replacement cost; the deductible applies to each collision or other than collision loss.

Exclusions include intentional damage, racing, livery use, and carrying persons or property for a fee.

Towing and labor, rental reimbursement, and loan/lease gap coverage are added by endorsement.

Building and business personal property coverage may be written separately or on a blanket basis over multiple locations with one limit.

Commercial coinsurance applies to the value of the property at the time of loss, commonly at 80, 90, or 100 percent.

Business income pays net income loss plus continuing normal operating expenses during the period of restoration, and extra expense pays costs to resume operations.

An agreed value option suspends the coinsurance condition when the insured and insurer agree to a value in the declarations.

Inland marine covers property in transit, mobile property, and property of others; forms are often written on an open perils basis.

The Nationwide Marine Definition lists the types of property and risks eligible for inland marine coverage.

Bailee coverage protects customers' property in the insured's care, custody, or control.

Builders risk and equipment breakdown are separate forms, not part of the standard commercial property policy.

Coverage A is bodily injury and property damage, Coverage B is personal and advertising injury, and Coverage C is medical payments.

The occurrence form covers injury or damage that occurs during the policy period regardless of when the claim is reported; the claims-made form requires reporting during the policy period or extended reporting period.

A retroactive date on a claims-made policy bars coverage for injury or damage occurring before that date.

The coverage territory is the United States, its territories and possessions, Puerto Rico, and Canada.

The 'your work' exclusion bars damage to the insured's own completed work, subject to the subcontractor exception.

The limits section includes general aggregate, products-completed operations aggregate, personal and advertising injury limit, each occurrence limit, and damage to premises rented to you.

Products-completed operations covers injury or damage occurring away from the premises and arising from the insured's product or completed work.

Aircraft, auto, watercraft, liquor liability, and pollution exposures are generally excluded and require separate coverage.

Additional insured status and waiver of subrogation are provided only by endorsement.

Business auto covered auto designations use symbols 1 through 9; symbol 1 means any auto and symbol 7 means specifically described autos.

Hired auto and non-owned auto liability are not automatic under every business auto form and are often added by endorsement.

Commercial auto medical payments covers occupants of the covered auto and does not apply to pedestrians.

Garagekeepers coverage insures customers' autos in the insured's care; garage liability covers the business's liability exposures.

The businessowners policy packages commercial property, general liability, and business income for eligible small businesses.

BOP eligibility depends on occupancy, building size, and property value rules stated in the form.

The BOP is written for a 12-month policy period, provides business income for up to 12 months, and has built-in limits such as a $10,000 money limit.

Optional BOP coverages include employee dishonesty, equipment breakdown, spoilage, outdoor signs, and money and securities.

Workers compensation pays statutory benefits for work-related injury or disease: medical, disability income, death, and rehabilitation, without regard to fault.

The exclusive remedy doctrine makes workers compensation benefits the employee's sole remedy against the employer, except for intentional acts.

Disability income categories are temporary total, temporary partial, permanent partial, and permanent total, commonly paid at two-thirds of average weekly wage subject to a state maximum.

Part One, workers compensation, has no dollar limit; Part Two, employers liability, carries limits such as $100,000 each accident, $500,000 disease policy limit, and $100,000 disease each employee.

Premium equals the rate per $100 of payroll multiplied by payroll divided by 100, adjusted by the experience modification factor.

Employees are classified by the nature of their work, and a premium audit at policy expiration adjusts premium to actual payroll.

Item 3 of the information page lists the states covered; other states are covered for temporary travel or by endorsement.

Common exclusions include intentional self-inflicted injury, injury due to intoxication, and injury outside the course of employment.

Federal statutes such as FELA, the Longshore and Harbor Workers' Act, and the Jones Act cover specified worker groups instead of state workers compensation.

An umbrella provides excess limits over scheduled underlying policies and can drop down to cover losses not covered by any underlying policy.

Excess liability follows the terms of the underlying policy and generally does not broaden coverage.

When no underlying policy applies, the umbrella pays after a self-insured retention is satisfied by the insured.

A commercial umbrella typically requires underlying general liability, auto liability, and employers liability limits stated in the schedule.

A personal umbrella typically requires underlying homeowners and auto liability limits before it responds.

Defense costs may be inside or outside the umbrella limit depending on the form used.

Drop-down occurs when the underlying limit is exhausted or reduced by other claims, so the umbrella responds sooner.

A surety bond has three parties: the obligee who requires performance, the principal who must perform, and the surety that guarantees the obligation.

Contract bonds include bid, performance, payment, and maintenance bonds; license and permit and court bonds are other categories.

Surety underwriting evaluates the principal's character, capital, and capacity, and the surety expects no loss.

Fidelity bonds cover employee dishonesty and are insurance rather than surety, written with a stated limit per loss.

Commercial crime coverage includes employee theft, forgery or alteration, computer fraud, and funds transfer fraud.

Cyber liability covers data breach response costs, network security liability, and privacy liability.

Professional liability (errors and omissions) covers negligent acts in rendering professional services; medical malpractice is a form of professional liability.

Directors and officers liability covers wrongful acts of directors and officers, while employment practices liability covers harassment, discrimination, and wrongful termination.

Difference in conditions coverage fills gaps left by named perils property forms, often adding flood and earthquake.