Free AZ P&C Exam Flashcards

The Arizona cabinet agency regulating insurers, producers, and adjusters under A.R.S. Title 20. Formed in 2020 by merging the former Department of Insurance (ADOI) with financial-institutions regulation.

Appointed by the Governor and serves at the Governor's pleasure with no fixed statutory term. Enforces Title 20, adopts A.A.C. rules, and has licensing, rate-review, market-conduct, and solvency authority.

Most P&C lines use file-and-use: insurers file rates with DIFI and may use them immediately. DIFI reviews afterward and may disapprove rates that are excessive, inadequate, or unfairly discriminatory.

Rates must be: (1) not excessive, (2) not inadequate, and (3) not unfairly discriminatory under A.R.S. § 20-356. An answer omitting unfair discrimination is incomplete.

DIFI license authorizing an admitted insurer to transact insurance in Arizona. Non-admitted (surplus lines) insurers lack a certificate and are not backed by the state guaranty fund.

PSI Services LLC administers Arizona producer exams through the Arizona insurance portal (test-takers.psiexams.com/anzins). Prometric/Pearson VUE references for this exam are outdated.

150 multiple-choice questions, 150 minutes (2.5 hours), 70% passing score, $59 exam fee. PSI may include 5–10 unscored experimental items that do not affect the score.

Arizona statute imposes zero mandatory pre-licensing classroom hours. Candidates may schedule the exam immediately, though self-study of national P&C plus Arizona law is essential.

Up to four attempts within a rolling 12-month period. After four failures in 12 months, the candidate must wait one year before another attempt.

Valid for four years, expiring on the last day of the licensee's birth month. This four-year cycle is a common exam trap versus the two-year renewal used in many states.

48 approved CE hours every four-year license period, including at least 6 hours of ethics. CE must be completed before filing renewal through DIFI-approved providers.

Apply through NIPR within 12 months of passing or exam results expire. Fingerprinting and background checks are required before DIFI issues the resident producer license.

Licensed producers must report address changes, legal name changes, administrative actions in other states, and criminal prosecutions or convictions to DIFI within 30 days.

Special form: open perils on the dwelling, named perils on personal property. The most common homeowners policy sold in Arizona's admitted market.

HO-4 covers a tenant's personal property and liability only. HO-6 covers unit-owner improvements (walls-in), personal property, and loss assessment—typical for Arizona condos.

Arizona law does not require homeowners insurance. Coverage is contract-driven—mortgage lenders require it as a loan condition, but an owner with no mortgage may legally carry none.

Arizona has no state FAIR Plan or residual property pool. Hard-to-place residential risk (e.g., wildfire exposure) goes to surplus lines (E&S) carriers through licensed surplus lines brokers.

Insurer must give at least 10 days' written notice before cancellation. During the first 60 days, cancellation is limited to fraud, material misrepresentation, or nonpayment of premium.

At least 45 days' written notice before the policy expiration date, with a stated reason. Non-renewal is not the same as mid-term cancellation.

Covers a non-owner-occupied dwelling (rental property) on an open-peril basis for the structure. Personal property and liability are typically added by endorsement.

Replacement cost pays to rebuild/replace without depreciation deduction (subject to policy limits). ACV subtracts depreciation—lower payout but often lower premium.

If insured property is underinsured below the policy's coinsurance percentage at loss, the claim payment is reduced proportionally. Encourages insuring to full value.

Covers lost net income and continuing operating expenses when a covered property loss suspends business operations. Requires a defined restoration period.

Package policy combining property and liability coverages for small businesses. Simplifies coverage versus buying separate commercial property and CGL policies.

Coverage placed with non-admitted insurers when admitted market declines the risk. Must be procured through a licensed surplus lines broker; not protected by APCIGF.

$25,000 BI per person, $50,000 BI per accident, $15,000 property damage. Raised from 15/30/10 effective July 1, 2020 under Senate Bill 1087.

Tort (at-fault) state—not a no-fault PIP state. The negligent driver's liability coverage pays others' bodily injury and property damage losses.

Each party's recovery is reduced by their own fault percentage, with no bar—even a claimant 99% at fault may recover 1% of damages. Arizona does not use modified comparative thresholds.

Each defendant pays only their own percentage of fault—joint and several liability is abolished in most personal-injury and property-damage actions. Plaintiffs cannot collect 100% from one deep-pocket defendant.

Insurers must offer uninsured and underinsured motorist coverage in writing. The insured may reject UM/UIM in writing; without a signed rejection, coverage is presumed at liability limits.

Arizona MVD uses an electronic insurance verification system. Lapses in required liability coverage can trigger registration suspension and reinstatement fees.

Collision covers impact with another vehicle or object. Comprehensive covers non-collision events (theft, vandalism, fire, hail, animal strike). Both are optional unless lender-required.

Pays third-party BI/PD liability from business operations or premises. Defense costs are usually outside limits with a duty to defend.

Occurrence: injury/damage during policy period triggers coverage regardless of when claimed. Claims-made: claim must be first made and reported during the policy period (or extended reporting endorsement).

The most the insurer will pay for all covered claims during the policy term, regardless of number of occurrences. Per-occurrence limits apply separately within the aggregate cap.

Punitive damages are generally uninsurable as a matter of public policy. Liability policies cover compensatory damages, not punishment awards.

Virtually all Arizona employers with one or more employees must carry workers' compensation—unlike Texas where private coverage is voluntary for most employers.

Covered employees generally cannot sue the employer for negligence for on-the-job injuries. Benefits are the statutory trade-off; third-party suits against non-employers may still be allowed.

NCCI files prospective loss costs and experience-rating plans; individual insurers apply their own loss-cost multipliers. Explains why carriers can share class codes but charge different premiums.

Protects Arizona policyholders when a member insurer becomes insolvent, up to statutory limits. Producers must not use guaranty-fund protection as a sales inducement.

Offering something of value not specified in the policy as an inducement to buy insurance—illegal in Arizona. Includes returning premium, gifts, or favors tied to the sale.

Using misrepresentation or incomplete comparison to induce a policyholder to lapse, surrender, or replace existing coverage to the producer's financial benefit.

Replacing a policy primarily to generate new commission without a legitimate benefit to the insured. Violates Arizona unfair trade practice standards and producer fiduciary duties.

Material misstatements on an application can void coverage from inception (concealment) or support rescission. Producers must not aid false statements to obtain coverage or lower premiums.

Licensed producers must act in the insured's best interest when recommending coverage, disclose conflicts, and place business with financially sound insurers—especially surplus lines when admitted market is unavailable.

The applicant must suffer a financial loss if the insured event occurs. Without insurable interest at policy inception, the contract is void—prevents wagering on others' lives or property.

Insurance restores the insured to their pre-loss financial position—no profit from a covered loss. Replacement cost and agreed-value exceptions exist where permitted by policy form.

Waiver: intentional relinquishment of a known right (e.g., accepting late premium). Estoppel: insurer's conduct leads insured to reasonably rely, barring the insurer from denying coverage.

Written amendment adding, deleting, or modifying coverage. Must be attached to the policy to be enforceable—verbal promises are not binding coverage changes.

Binder: temporary proof of coverage until the formal policy is issued—creates immediate insurance contract. Certificate: evidence of existing coverage for a third party (e.g., landlord); does not amend the policy.