Insurance Regulation
8%of exam
Insurance Basics
13%of exam
Adjusting Losses
22%of exam
Dwelling Policy
10%of exam
Homeowners Policy
13%of exam
Commercial Package Policy
10%of exam
Businessowners Policy
14%of exam
Other Coverages
10%of exam
Quick Facts
- Exam
- PSI Series 17-62
- Credential
- NY Public Adjuster
- Time
- 1 hour
- Items
- 60 Q + 5-10 unscored
- Pass
- 70%
- Fee
- $40 per attempt
- Bond
- $1,000 to NY State
- CE
- 15 hrs / 2 yrs
- Apply By
- 2 years after passing
Regulation 10 Numbers
12.5% fee | 3-day cancel | 6pm-8am curfew
12.5%: fee cap3 days: cancel right6pm-8am: no solicit20%: supplemental fee
Public Adjuster vs Independent Adjuster
Public Adjuster
- Represents the insured
- Best-interest duty required
- Files a $1,000 bond
Independent Adjuster
- Represents the insurer
- No best-interest duty required
- No bond required
Whose side, bond required
Claim Deadline Picker
- Proof of loss complete→Decide within 15 business days(Reg 64 216.6(c))
- Insurer suspects arson→Decide within 30 business days(Ins. Law §2601)
- Settlement agreement signed→Pay within 5 business days(216.6(f))
- One claim element undisputed→Pay that element now(216.6(e))
- Compensation agreement just signed→Insured may cancel 3 days(§25.8)
- Loss just occurred (SFP)→File proof within 60 days(§3404)
- Ready to sue on SFP→File within 24 months(§3404)
Licensing & Bond
- Surety Bond
- $1,000 to New York State
- Bond Recovery
- Fraud, dishonesty, or arson-law conviction
- Character Certificates
- 5 citizens, 5-year acquaintance, unrelated
- Fingerprints
- DCJS and FBI background check
- Exam Prerequisite
- 40 training hours or 1-year experience
- Continuing Education
- 15 hours per 2-year cycle
- CE Carryover
- Excess hours do not carry forward
- License Term
- Expires Dec 31, even years
- Best-Interest Duty
- PA must favor the insured
- Application Window
- File within 2 years of passing
Regulation 10 Rules
- Fee Cap
- 12.5% of the recovery
- Supplemental Fee
- Up to 20% on supplemental claim
- Aggregate Cap
- Total fee still ≤12.5% of claim
- Cancel Right
- 3 business days after signing
- Cancellation Clock
- Starts once adjuster complies
- Notice Type Size
- At least 12-point type
- Solicitation Curfew
- No solicit 6pm-8am
- Curfew Scope
- Applies even through a contractor
- Direction of Payment
- Insured directs the claim payee
- Compensation Agreement
- Contract required before adjusting
Discipline & Federal Rules
- Cease and Desist
- §2405 stops ongoing violations
- License Discipline
- §2110 suspends or revokes license
- Penalties
- §2127 fines for violations
- Unfair Claim Practices
- §2601 bars bad-faith handling
- Regulation 64
- 216 settlement standards and deadlines
- 1033 Waiver
- Consents to felon insurance work
- TRIA
- Federal terrorism risk backstop
- Reg 169
- Consumer privacy notice rules
ACV Formula
ACV = Replacement Cost - Depreciation
RC: full rebuild costDepreciation: wear + ageACV: RC minus depreciation
Pro Rata vs Contribution by Equal Shares
Pro Rata
- Splits loss by limit share
- Proportional to each policy
Contribution by Equal Shares
- Each insurer pays equally
- Until one limit is exhausted
Proportional split vs equal split
Contract Basics
- Contract of Adhesion
- Insurer drafts; ambiguity favors insured
- Aleatory Contract
- Unequal values exchanged
- Unilateral Contract
- Only insurer makes a promise
- Conditional Contract
- Payment depends on conditions met
- Utmost Good Faith
- Highest honesty duty required
- Representation
- Statement must be substantially true
- Warranty
- Statement must be literally true
- Concealment
- Hiding a material fact
- Waiver
- Voluntarily gives up a right
- Estoppel
- Barred from denying prior conduct
Coinsurance Formula
Paid = (Carried / Required) x Loss
Carried: insurance you boughtRequired: coinsurance % x valueUnderinsured: reduces your payout
Peril vs Hazard
Peril
- Actual cause of loss
- Example: fire, windstorm
Hazard
- Condition increasing loss chance
- Example: frayed wiring
Cause vs condition
Insurance Principles
- Insurable Interest
- Financial stake at loss time
- Physical Hazard
- Frayed wiring, faulty conditions
- Moral Hazard
- Dishonest intent to profit
- Morale Hazard
- Carelessness because loss is insured
- Named Perils
- Only listed causes covered
- Open Perils
- All causes not excluded
- Actual Cash Value
- Replacement cost minus depreciation
- Broad Evidence Rule
- Any relevant proof sets ACV
- Replacement Cost
- No depreciation deducted
- Agreed Value
- Set value, no depreciation dispute
- Coinsurance Formula
- Carried ÷ Required × Loss
- Pro Rata Clause
- Splits loss by policy limit share
ACV vs Replacement Cost
Actual Cash Value
- Replacement cost minus depreciation
- Broad evidence rule applies
Replacement Cost
- No depreciation deducted
- Pays full rebuild cost
Depreciated vs full cost
Common Policy Provisions
- Declarations
- Who, what, when, limits
- Insuring Agreement
- Insurer's promise to pay
- Vacancy Clause
- 60-day suspension if vacant
- Liberalization Clause
- Broader edition applies automatically
- Standard Mortgage Clause
- Protects mortgagee's separate interest
- Loss Payable Clause
- Names a lienholder for payment
- No Benefit to Bailee
- Bailee can't claim insured's coverage
- Named Insured
- Person listed on the declarations
Standard Fire Policy Clock
60d loss -> 20d/15d appraisal -> 24mo suit
60 days: proof of loss20/15 days: appraiser/umpire24 months: file suit
Reservation of Rights vs Non-Waiver
Reservation of Rights
- Unilateral insurer notice
- Doesn't need insured's signature
Non-Waiver Agreement
- Bilateral, insured also signs
- Same purpose, more formal
One signs vs both sign
Adjuster Tool Picker
- ACV or loss amount disputed→Demand appraisal in writing(20/15-day steps)
- Still investigating coverage→Send reservation of rights(Unilateral, insurer signs alone)
- Want insured's signature too→Use non-waiver agreement(Bilateral document)
- Third party caused the loss→Pursue subrogation after paying(Assign recovery right)
- Property is a total loss→Apply Reg 64 valuation method(216.7(c)(1))
- Need cash before settlement→Make an advance payment(No waiver created)
Adjusting Process
- Duty to Notify
- Insured must promptly tell insurer
- Duty to Mitigate
- Insured must limit further damage
- Proof of Loss
- Sworn statement of the loss
- Burden of Proof
- Insured proves value and loss
- Depreciation
- Wear and age reduce value
- Salvage
- Insurer keeps recovered damaged property
- Advance Payment
- Partial pay; no waiver created
- Draft Authority
- Adjuster's authorized settlement limit
- Release
- Discharge cannot exceed the settlement
Abandonment vs Salvage
Abandonment
- Insured can't hand over property
- Barred by the Standard Fire Policy
Salvage
- Insurer may take the property
- Only after paying a total loss
Insured barred, insurer allowed
Claim Settlement & Disputes
- Appraisal Demand
- Either side can demand it
- Appraiser Deadline
- Name one within 20 days
- Umpire Deadline
- Agree within 15 days
- Umpire Fallback
- Court appoints if no agreement
- Appraisal Award
- Any two of three bind
- Reservation of Rights
- Unilateral notice; insurer only signs
- Non-Waiver Agreement
- Bilateral; insured also signs
- Total Loss Valuation
- Reg 64 216.7(c)(1) method
- Subrogation
- Insurer recovers from at-fault party
- Abandonment Barred
- Insured can't hand over property
Named Perils vs Open Perils
Named Perils
- Only listed causes covered
- Used by Basic, Broad forms
Open Perils
- Covers all causes not excluded
- Used by Special forms
Listed causes vs excluded causes
Form Selection Picker
- Owner-occupied 1-4 family home→Homeowners (HO) form(Owner occupied)
- Non-owner rental dwelling→Dwelling (DP) form(Landlord risk)
- Named perils on dwelling only→DP Basic or Broad(Narrower peril list)
- Open perils on dwelling→DP Special (DP-3)(Broadest DP form)
- Named perils on contents too→HO-3 Special Form(Contents stay named)
- Open perils on contents too→HO-5(Broadest HO form)
- Condo unit owner→HO-6(Unit owners form)
- Older or modified home→HO-8(Modified coverage form)
Dwelling Policy Forms
- DP Basic Form
- Shortest named-perils list
- DP Broad Form
- Adds more named perils
- DP Special Form
- Open perils on the dwelling
- Coverage A
- Dwelling
- Coverage B
- Other structures
- Coverage C
- Personal property
- Coverage D
- Fair rental value
- Coverage E
- Additional living expense
- DP 01 31
- New York special provisions
- DP 04 11
- Automatic increase in insurance
- DP 04 83 / 04 72
- Broad theft coverage
- DP 11 43
- Dwelling under construction
HO-3 vs HO-5
HO-3 Special Form
- Dwelling on open perils
- Contents on named perils
HO-5
- Dwelling on open perils
- Contents on open perils too
Contents coverage is the difference
Homeowners Policy Forms
- HO-2 Broad Form
- Named perils, broader list
- HO-3 Special Form
- Open perils on the dwelling
- HO-5
- Open perils, dwelling and contents
- HO-6
- Condo unit owners form
- HO-8
- Modified, older-home form
- Coverage D (HO)
- Loss of use, combined
- HO 01 31
- New York special provisions
- HO 04 54
- Earthquake endorsement
- HO 04 55
- Identity fraud expense
- HO 04 61
- Scheduled personal property
- HO 04 90
- Personal property replacement cost
- HO 07 01
- Home business coverage
- HO 23 85
- Water backup and sump
Business Income vs Extra Expense
Business Income
- Lost net income plus expenses
- Paid during restoration period
Extra Expense
- Added cost to keep operating
- Avoids or limits the suspension
Lost income vs added cost
Commercial Package Forms
- CPP Structure
- Common declarations plus coverage parts
- Causes of Loss: Basic
- Short named-perils list
- Causes of Loss: Special
- Open perils, own exclusions
- CP 04 05
- Ordinance or law coverage
- CP 04 40
- Spoilage coverage
- CP 10 40
- Earthquake and volcanic eruption
- CP 10 65
- Flood coverage endorsement
- CP 12 30
- Peak season limit increase
- CP 13 10
- Value reporting form
- EB 00 20
- Equipment breakdown coverage form
- Farm Coverage A-G
- Farm dwelling through structures
Commercial Inland Marine
- Nationwide Marine Definition
- NAIC 1953, revised 1976
- Qualifying Property
- Movable, in transit, or transportation-tied
- Accounts Receivable Form
- Covers uncollectible receivables loss
- Contractors Equipment Floater
- Covers mobile contractor equipment
- Jewelers Block
- Covers jewelers' stock and property
- Motor Truck Cargo
- Covers goods while trucked
- Valuable Papers Form
- Covers records and documents
BOP Default Basis
BP 00 03 = open perils by default
BP 00 03: base BOP formBP 10 09: named-perils endorsementDefault: open perils basis
Endorsement Picker
- Water backs up from a drain→Add HO 23 85(Water backup endorsement)
- Jewelry needs full scheduled value→Add HO 04 61(Scheduled personal property)
- No depreciation wanted on contents→Add HO 04 90(Replacement cost contents)
- Utility outage damages property→Add BP 04 56(Direct-damage coverage)
- Utility outage cuts income→Add BP 04 57(Time-element coverage)
- Sprinkler impaired, not reported→BP 04 30 excludes fire(Protective safeguards condition)
Businessowners Policy Forms
- BOP Purpose
- One policy, combined underwriting
- BP 00 03
- Standard open-perils BOP form
- BP 10 09
- Named-perils endorsement narrows it
- BP 04 30
- Protective safeguards condition
- BP 04 56
- Utility direct-damage coverage
- BP 04 57
- Utility time-element coverage
- Loss Conditions
- Govern how a claim proceeds
- General Conditions
- Control of property, mortgageholders
- Optional Coverages
- Added protection for extra premium
Other Coverages
- NFIP Write Your Own
- Private insurer issues, federal underwrites
- NFIP Flood Definition
- 2+ acres or properties inundated
- Hull Insurance
- Covers the vessel itself
- Cargo Insurance
- Covers goods being shipped
- Freight Insurance
- Covers lost voyage revenue
- Protection and Indemnity
- Covers owner's liability to others
- General Average
- Shared loss from voluntary sacrifice
- Difference in Conditions
- Fills flood/earthquake coverage gaps
Common Traps
Bond vs License Fee
One-time $1,000 bond ≠ Recurring $50-$100 license fee
PA Duty vs IA Duty
PA serves the insured ≠ IA serves the insurer
Regulation 64 vs SFP Deadlines
Reg 64 governs claim decisions ≠ SFP governs proof of loss
Coinsurance vs Deductible
Coinsurance penalizes underinsurance ≠ Deductible is insured's fixed share
Appraisal vs Litigation
Appraisal settles value disputes ≠ Suit needs 24-month filing
HO-3 vs HO-5 Contents
HO-3 contents: named perils only ≠ HO-5 contents: open perils too
Same-Day Retest Not Allowed
Can't retest exam-day itself ≠ Call next day to rebook
Last Minute
- 1.60 scored questions, 1 hour, 70%
- 2.5-10 unscored experimental items possible
- 3.$40 fee; no same-day retest
- 4.Adjusting Losses heaviest domain: 22%
- 5.$1,000 bond made to New York
- 6.Five character certificates, five-year acquaintance
- 7.40 hours training or 1-year experience
- 8.15 CE hours per two-year cycle
- 9.Apply within two years of passing
- 10.Fee cap: 12.5% of recovery
- 11.Supplemental claim fee up to 20%
- 12.Cancel compensation deal within 3 days
- 13.No solicitation from 6pm to 8am
- 14.Insurer decides claim within 15 days
- 15.Arson extends review to 30 days
- 16.SFP proof of loss: 60 days
- 17.SFP suit limit: 24 months
- 18.Appraiser named within 20 days
- 19.Umpire agreed within 15 days
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