Free NJ Property & Casualty Exam Flashcards

A dwelling form primarily insures a residential building and related property and can fit owner-occupied or non-owner-occupied risks; liability may require separate coverage. A homeowners form packages property coverage with personal liability and medical-payments coverage for eligible owner-occupants, renters, or condo owners.

HO-3 generally covers the dwelling and other structures on an open-perils basis but personal property on a named-perils basis. HO-5 generally uses open-perils coverage for both the dwelling and personal property. In both forms, exclusions still control.

A BOP is a standardized package for eligible small and midsize businesses, normally combining commercial property and general liability. A CPP is modular: the insured builds a package from selected coverage parts plus common declarations and conditions, allowing more customization.

Business income replaces covered net income and continuing operating expenses during a covered suspension. Extra expense pays necessary additional costs to avoid or minimize that suspension, such as temporary premises or expedited equipment.

It covers direct physical damage from a covered accidental mechanical breakdown, electrical failure, or pressure-system failure to covered equipment. It is not a maintenance contract and does not turn ordinary wear, corrosion, or deterioration into a covered cause of loss.

Inland marine follows movable, transportable, or specialized property that may be away from the insured premises—for example cargo, contractors' equipment, fine arts, or valuable articles. A floater is designed to follow covered property as its location changes.

Standard property forms commonly exclude flood and earth movement. Flood protection generally requires a separate flood policy, while earthquake coverage is commonly added by endorsement or separate policy. Never assume an open-perils form covers a specifically excluded catastrophe.

Risk is uncertainty about loss. A peril is the immediate cause of loss, such as fire. A hazard is a condition that increases the frequency or severity of loss: physical (faulty wiring), moral (dishonesty), or morale (carelessness because insurance exists).

A direct loss is immediate physical damage, such as fire damage to a store. An indirect loss is a consequence, such as lost income while repairs occur. Proximate cause is the dominant unbroken cause that sets the loss sequence in motion and helps determine coverage.

Replacement cost is the cost to replace damaged property with new property of like kind and quality, without deducting depreciation, subject to policy terms. ACV is commonly replacement cost minus depreciation. Both support indemnity: restoring the insured without creating a profit.

Before the deductible, payment is generally (insurance carried ÷ insurance required) × covered loss. If $100,000 was required, $80,000 was carried, and the covered loss is $20,000, the result is $16,000 before applying the deductible and policy limit.

Declarations identify the parties, property, limits, and policy period. The insuring agreement states the insurer's coverage promise. Exclusions remove specified causes, property, or situations. Conditions state duties and rules that govern how coverage operates.

Give prompt notice, protect property from further damage, cooperate with the investigation, inventory damaged property, and submit a signed proof of loss when required. These conditions preserve evidence and let the insurer investigate and adjust the claim.

Appraisal is a method for resolving disagreement about the amount of a property loss; it does not ordinarily decide whether coverage exists. Subrogation lets an insurer that paid a covered loss pursue the responsible third party to recover what it paid.

The Commissioner leads the Department of Banking and Insurance (NJDOBI), administers state insurance law, licenses and disciplines producers, examines regulated entities, conducts hearings, and can impose authorized penalties. PSI administers exams; it does not issue producer licenses.

It preserves state regulation and taxation of insurance unless federal law specifically provides otherwise. The exam contrast is jurisdiction: Congress can regulate interstate insurance, but states remain the primary insurance regulators under this framework.

An agent generally acts for an insurer under an appointment; a broker generally acts on behalf of the insurance buyer in obtaining coverage; a consultant provides insurance advice for compensation. The role and relationship—not merely the title—determine duties in a transaction.

Selling is exchanging an insurance contract for money or value. Soliciting is attempting to sell or urging a person to apply. Negotiating is directly conferring with a buyer about substantive benefits, terms, or conditions. A person performing these activities generally needs the proper producer authority.

A business entity that sells, solicits, or negotiates insurance needs its own producer authority and must act through properly licensed individuals. The entity license does not replace each individual's required line of authority; nonresidents generally rely on home-state good standing and reciprocity.

NJDOBI lists 20 approved classroom-equivalent hours for Property and 20 for Casualty. A combined Property and Casualty course is 40 hours. These are education requirements, not the time limits for the separate PSI examinations.

An approved professional designation may waive prelicensing education, but the current PSI bulletin says it no longer waives the corresponding exam. A same-line license in another state that is current and in good standing—or ended in good standing within 90 days—may qualify for both waivers.

They are separate exams. Property specifies 79 items; Casualty specifies 91. Each requires 70% correct and allows 3 hours 30 minutes. PSI may add 5–19 unscored experimental items, so the screen count can exceed the specified scored-item count.

Do not confuse the two. The current PSI bulletin says a New Jersey prelicensing course completion certificate never expires, while a passing PSI score report is valid for 1 year. Complete the license application while the score report remains valid.

PSI says a candidate cannot make a new appointment on the same day as the failed exam because scores must be processed. After that, the candidate may schedule the next available date. PSI publishes no separate escalating interval after three failures.

A qualifying candidate who passes Property, Casualty, or another listed producer exam may receive authority to transact insurance business for 60 days from the exam date while supervised by a currently licensed producer. It is temporary and does not replace the permanent license application.

NJDOBI lists a 2-year producer license term. A resident producer must complete 24 CE credits each term, including 3 ethics credits. Up to 12 excess credits can carry into the next term, but ethics credits cannot be carried over.

Twisting uses misleading comparisons to induce a policy replacement. Rebating offers an unfiled or unauthorized inducement not stated in the contract. Misrepresentation gives false or misleading information about policy terms, benefits, dividends, or an insurer. All undermine fair competition and informed choice.

A licensee must keep licensing information current, including legal or business names, branch-office information, and address changes, using the required state process. Exam questions distinguish this regulatory reporting duty from merely notifying clients or an insurer.

Fraud involves a knowingly material false statement or concealment made to obtain an insurance benefit or affect a transaction. Producers must protect nonpublic personal information. When consumer-report information affects underwriting, Fair Credit Reporting Act notice and disclosure duties may apply.

The New Jersey Insurance Underwriting Association's FAIR Plan is a residual source of basic property coverage for applicants unable to obtain coverage from a standard insurer. It covers eligible homes and business property; its base coverage does not include personal liability or theft, though optional theft coverage is available.

Coverage A addresses covered bodily injury and property damage arising from hazards such as premises and operations, products and completed operations, independent contractors, and insured contracts. The insurer also has a duty to defend covered suits, subject to policy terms.

An occurrence form is triggered when covered injury or damage happens during the policy period, even if the claim comes later. A claims-made form generally requires the claim to be made during the policy period and the event to occur after any retroactive date; reporting and extended-reporting rules matter.

Coverage B addresses personal and advertising injury offenses such as libel, slander, or certain wrongful-entry claims. Coverage C provides limited no-fault medical payments for accidental injury on or next to the premises or from operations; it is not a substitute for Coverage A liability.

Liability protects against covered injury or damage caused to others; medical payments or state-required no-fault coverage addresses occupants' injuries; UM/UIM responds to inadequately insured at-fault drivers; and physical damage covers collision and other-than-collision loss to the covered auto.

Owned autos belong to the business. Hired autos are leased, hired, rented, or borrowed by it. Non-owned autos are used in the business but owned by others, such as employees' cars. Garagekeepers coverage addresses customers' autos in the insured's care, custody, or control.

Workers' compensation pays statutory benefits for covered job-related injury or disease without requiring the employee to prove employer negligence. Employers liability covers certain employer-liability suits arising from employee injury that fall outside the workers' compensation benefit obligation, subject to exclusions and limits.

Commercial crime addresses theft and dishonesty; a surety bond guarantees the principal's performance to an obligee; professional liability or E&O addresses errors in professional services; and umbrella or excess liability supplies limits above scheduled underlying coverage, with umbrella potentially broader by its terms.

Duty, breach, causation, and damages. The defendant must owe a duty, fail to meet the required standard, proximately cause the injury, and create actual compensable harm. Missing any one element defeats the negligence claim.

Bodily injury means physical injury, sickness, disease, or resulting death. Property damage means physical injury to tangible property or covered loss of its use. Personal injury refers to specified offenses such as false arrest, wrongful eviction, libel, or slander—not simply physical harm to a person.

Burglary involves unlawful entry or exit, usually with visible signs as the form defines. Robbery takes property by force or threat from a person. Theft is the broad unlawful taking of property. Mysterious disappearance means property is missing without evidence showing what happened.

A binder is temporary evidence of actual coverage pending policy issuance and is subject to the policy's terms. A certificate is informational evidence that coverage existed when issued; it does not create coverage, amend the policy, or grant rights beyond the underlying contract.

Provide notice as soon as practicable, immediately forward legal papers, cooperate in investigation and defense, and avoid voluntary payments or assuming obligations without consent except for permitted first aid. The exact condition language controls.

They are defense-related expenses the insurer pays in addition to covered damages, such as defense costs, certain court costs, bond premiums, and interest, as the form specifies. Do not assume every expense is outside limits; the policy's supplementary-payments provision controls.

Other-insurance provisions coordinate payment when multiple policies cover the same loss, using primary, excess, or contribution rules. Subrogation operates after payment, transferring the insured's recovery rights so the insurer can pursue a responsible third party.

Cancellation ends a policy before its expiration date and follows applicable reason and notice rules. Nonrenewal means the insurer declines to continue coverage at the end of the term and follows separate notice rules. State-specific rules can be more protective than the base form.

For policies effective in 2026, DOBI's Standard-policy chart starts at $35,000/$70,000 bodily injury and $25,000 property damage. The Basic Policy includes $5,000 property damage and $15,000 PIP; bodily injury is not included but $10,000 per accident is optional, and UM/UIM is not included.

PIP pays covered medical expenses for the insured and covered persons regardless of fault, subject to the selected limit, deductible, and coordination option. On a Standard Policy, Limited Right to Sue restricts noneconomic claims unless a listed serious-injury threshold is met; Unlimited Right to Sue does not impose that threshold.

PAIP is the residual market for personal auto risks unable to obtain voluntary coverage. CAIP serves qualifying commercial auto risks unable to obtain voluntary coverage. SAIP is limited medical coverage for eligible federal Medicaid recipients with hospitalization; it does not provide liability or physical-damage coverage.

New Jersey generally requires employers outside federal programs to secure workers' compensation or qualify to self-insure. It is a no-fault system providing medical, temporary wage-replacement, permanent-disability, and death benefits for covered work injuries; the employer or carrier normally selects the treating provider.

Surplus lines can place qualifying coverage with an eligible nonadmitted insurer when the admitted market cannot provide it and New Jersey's diligent-effort or exportable-list rules are satisfied. It is not the FAIR Plan, and nonadmitted status must not be confused with an insurer being unapproved for surplus-lines use.