Free Ohio Property & Casualty Exam Flashcards

A peril is the actual cause of loss (fire, theft, windstorm). A hazard is a condition that increases the chance or severity of a peril. Types: physical (an oily rag), moral (faking a claim), and morale (carelessness because you're insured).

A financial stake in property or a life such that you would suffer loss if it were damaged. In property insurance it must exist at the time of loss (not necessarily at policy inception, unlike life insurance, where it must exist at inception).

The principle that restores the insured to the same financial position held before the loss, no better. It prevents profiting from insurance and underlies ACV settlement, other-insurance clauses, and subrogation.

The larger the pool of similar exposure units, the more accurately the insurer can predict losses. This statistical principle lets insurers set credible premiums; it is the mathematical basis for spreading risk.

Offer and acceptance (agreement), consideration, competent parties, and legal purpose. In insurance, the application plus premium is the offer/consideration; the insurer accepts by issuing the policy.

A contract in which the dollar amounts exchanged are unequal and depend on an uncertain event. The insured may pay small premiums and collect a large claim, or pay premiums and collect nothing. Insurance is inherently aleatory.

A take-it-or-leave-it contract drafted entirely by the insurer; the insured cannot negotiate terms. Because of this, ambiguities are construed against the insurer (in favor of the insured) under the doctrine of reasonable expectations.

A representation is a statement believed true; a material misrepresentation can void coverage. A warranty is a guaranteed-true statement that is part of the contract. Concealment is the deliberate withholding of a material fact.

Waiver is the voluntary giving up of a known right (e.g., an insurer accepting a late premium). Estoppel prevents a party from later asserting a right it appeared to surrender, once the other party has relied on that conduct to their detriment.

Declarations (the who/what/how much), Insuring Agreement (the promise to pay), Definitions, Conditions (duties of the parties), Exclusions (what's not covered), and Endorsements (modifications). Memorized as the framework for reading any P&C policy.

ACV = replacement cost minus depreciation, so the insured bears the wear-and-tear cost. Replacement cost pays to repair/replace with like kind and quality with no deduction for depreciation (usually requires repairing before full payment).

Requires the insured to carry insurance equal to a stated percentage (often 80%) of property value or pay a penalty. Penalty formula: (amount carried / amount required) x loss = recovery, capped at the limit and reduced by the deductible.

Subrogation is the insurer's right to recover its payout from the at-fault third party after paying the insured. Salvage is the insurer's right to take and sell the damaged property it paid a total-loss claim on. Both uphold the indemnity principle.

Named-peril policies cover only perils specifically listed, and the insured must prove the loss came from a listed peril. Open-peril covers all causes except those excluded, shifting the burden to the insurer to prove an exclusion applies.

Two methods of sharing a loss among insurers covering the same risk. Pro rata splits the loss in proportion to each policy's limit. Contribution by equal shares has each insurer pay equally until its limit or the loss is exhausted.

Vacant means no people and no contents/business activity (often suspends certain coverages after 60 days). Unoccupied means furnished but no one is currently present. The distinction affects what perils remain covered.

DP-1 is basic named-peril (often ACV). DP-2 is broad named-peril with more perils and replacement cost on the dwelling. DP-3 is open-peril (special) on the dwelling and named-peril on contents. Dwelling policies have no liability built in (add by endorsement).

A = Dwelling, B = Other Structures, C = Personal Property, D = Fair Rental Value, E = Additional Living Expense. Unlike a homeowners form, a dwelling policy excludes theft on basic forms and has no medical payments or personal liability.

HO-2 broad named-peril on dwelling and contents; HO-3 open-peril on dwelling, named-peril on contents (the most common); HO-5 open-peril on both; HO-8 modified for older homes paying on a repair-cost (not replacement) basis.

HO-4 is the tenants (renters) form covering personal property and liability but not the building. HO-6 is the condo unit-owner form covering personal property, liability, and improvements/betterments to the unit interior (Coverage A is small).

Section I is property: Coverage A Dwelling, B Other Structures, C Personal Property, D Loss of Use. Section II is liability: Coverage E Personal Liability and Coverage F Medical Payments to Others. The two sections have separate perils and conditions.

Pays reasonable medical expenses for bodily injury to non-residents on the insured's premises (or caused by the insured) regardless of fault, with no lawsuit required. It does NOT cover injuries to the insured or regular residents of the household.

Sub-limits cap certain categories even within the open Coverage C limit, e.g., cash/coins, securities, jewelry/furs for theft, firearms, and silverware. To insure high-value items fully, schedule them on a personal property (inland marine) floater.

Pays third-party bodily injury and property damage the insured is legally liable for from an auto accident, plus legal defense (defense costs are outside the limit). Often written as a single combined single limit or as split limits (BI per person / per accident / PD).

Pays reasonable medical and funeral expenses for the insured and passengers injured in a covered auto accident, regardless of fault, within a short time period after the accident. It is first-party, no-fault-style coverage limited to the named perils of auto use.

UM pays the insured's bodily injury when an at-fault driver has no insurance (or is a hit-and-run). UIM pays when the at-fault driver's limits are too low to cover the insured's injuries. In Ohio, insurers must offer UM/UIM, but it can be rejected in writing.

Collision pays for impact with another vehicle or object, or overturn. Other-than-collision (comprehensive) covers fire, theft, glass, falling objects, flood, hitting an animal, and vandalism. Each has its own deductible; OTC perils are broader.

An additional vehicle gets automatic coverage if the insured reports it within the time the policy specifies (commonly 14 days). A replacement vehicle generally carries the same coverage as the car it replaced until reported.

The failure to use reasonable care. To recover, a plaintiff must prove: a legal duty owed, a breach of that duty, that the breach was the proximate cause of harm, and actual damages. All four are required for liability.

Occurrence policies cover injury that happens during the policy period no matter when the claim is filed. Claims-made policies cover only claims first made during the policy period (subject to a retroactive date); tail/ERP coverage extends reporting after expiration.

Bodily injury is physical harm to a person. Property damage is physical injury to or loss of use of tangible property. Personal injury is a defined group of offenses (libel, slander, false arrest, invasion of privacy) covered under CGL Coverage B.

Compensatory damages reimburse the injured party and split into special (measurable: medical bills, lost wages) and general (intangible: pain and suffering). Punitive damages punish gross misconduct; many policies and states limit their insurability.

Liability imposed on one party for the negligent acts of another due to their relationship, such as an employer for an employee acting within scope (respondeat superior) or a vehicle owner for a permitted driver. It extends who can be held responsible.

Absolute liability is imposed without fault for inherently dangerous activities (blasting, keeping wild animals) or under statute (workers comp). It differs from negligence, where fault must be proven; here, liability attaches regardless of care taken.

Coverage A is bodily injury and property damage liability. Coverage B is personal and advertising injury. Coverage C is medical payments (small, no-fault). Coverages A and B include legal defense; defense costs are paid in addition to the limits.

The per-occurrence limit caps any single loss. The general aggregate caps total payouts for the policy period across most coverages; a separate products-completed operations aggregate applies to product/work-related claims. Once an aggregate is exhausted, no more is paid.

Numeric symbols on the BAP declarations define which autos are covered for each coverage. Symbol 1 = any auto, 2 = all owned, 7 = specifically described, 8 = hired, 9 = non-owned. Symbol 1 gives the broadest liability protection.

Commercial property uses three forms. Basic is named-peril (fire, lightning, explosion, etc.). Broad adds perils like water damage and weight of snow. Special is open-peril (all risks except exclusions) and is the broadest commercial property coverage.

Business income (interruption) replaces lost net profit and continuing expenses while operations are suspended by a covered loss. Extra expense pays the added costs to keep operating or speed restoration. Both require a covered direct physical loss to trigger.

Ocean marine covers vessels, cargo, and liability over water (hull, cargo, freight, protection and indemnity). Inland marine grew from it to cover property in transit over land and movable/specialized property (floaters, bailee, builders risk).

A surety bond is a three-party guarantee that a principal will perform an obligation (e.g., a contractor finishing a job); the surety can recover from the principal. A fidelity bond protects an employer against loss from employee dishonesty (theft/embezzlement).

A package policy bundling commercial property and general liability for small to mid-size businesses, often with broader coverage than buying each separately. It excludes workers comp, professional liability, and auto, which must be added or written separately.

Medical (unlimited, no deductible), disability income (temporary/permanent, total/partial), death benefits to survivors, and rehabilitation. It is a no-fault, statutory system: the employee gives up the right to sue in exchange for guaranteed benefits.

Ohio is a monopolistic workers comp state: employers buy coverage from the state-run BWC, not private insurers (unless self-insured and approved). Because of this, employers-liability is not in the policy and is added via a stop-gap endorsement on a CGL.

The ODI, led by the Superintendent of Insurance, regulates the Ohio insurance market: it licenses producers and insurers, reviews rates and forms, investigates complaints, and enforces the Ohio Revised Code (Title 39, including Chapter 3905 on producer licensing).

Ohio's compulsory minimum auto liability limits are $25,000 bodily injury per person, $50,000 per accident, and $25,000 property damage. Ohio is an at-fault (tort) state, so the negligent driver's liability coverage pays third-party claims.

Ohio's Fair Access to Insurance Requirements plan is the property insurer of last resort for owners who cannot obtain coverage in the voluntary market (often due to location or risk). It provides basic property coverage, not a substitute for a full homeowners policy.

OPLIGA pays covered claims of Ohio policyholders when a member P&C insurer becomes insolvent, funded by assessments on solvent insurers. It protects consumers but applies per-claim statutory caps and does not cover every line or every dollar.

Ohio law prohibits acts like misrepresenting policy provisions, failing to act promptly on communications, denying claims without a reasonable investigation, or not attempting good-faith prompt settlement when liability is clear. The ODI enforces these as market-conduct violations.

Sit for the P&C exam after 40 hours of ODI-approved pre-license education (20 Property + 20 Casualty). After licensure, complete 24 hours of CE every two years, including 3 hours of ethics. An appointment from a carrier authorizes a producer to write its business.