Free PA P&C Exam Flashcards

The state agency that regulates insurers and producers in Pennsylvania, led by the Insurance Commissioner. It enforces the Insurance Code, licenses producers, and handles consumer complaints. It is the primary authority tested on PA-specific questions.

The official who heads the Pennsylvania Insurance Department. In PA the Commissioner is appointed by the Governor (not elected). The Commissioner has authority to investigate, hold hearings, and impose penalties for Insurance Code violations.

24 hours of approved CE every biennial (two-year) renewal period, including at least 3 hours of ethics. Missing the deadline causes the license to lapse — there is no automatic warning or grace extension.

A PA producer whose license lapses may reinstate it WITHOUT retaking the licensing exam if they apply within 12 months, pay applicable late fees, and complete outstanding CE. After 12 months, full re-application and re-examination are required.

The authorization by an insurer allowing a licensed producer to transact business on its behalf. A producer must hold a valid PA license AND be appointed by the carrier before soliciting that company's products.

PA requires every auto policyholder to choose between full tort and limited tort. This 'choice' framework — rather than pure no-fault or pure tort — is the single most heavily tested PA auto concept.

Preserves the insured's unrestricted right to sue an at-fault party for all damages, including pain and suffering, for any injury. It carries a higher premium than limited tort.

Lowers the premium in exchange for giving up the right to sue for pain and suffering UNLESS the insured sustains a 'serious injury.' Economic damages (medical bills, lost wages) can still be recovered.

Under PA law a serious injury is death, serious impairment of body function, or permanent serious disfigurement. Only a serious injury lets a limited-tort insured sue for pain and suffering. Being merely 'not at fault' does not qualify.

$15,000 bodily injury per person / $30,000 per accident / $5,000 property damage. Among the lowest minimums in the U.S. — do not confuse with the 25/50/25 common in many other states.

Every PA auto policy must include a minimum of $5,000 in first-party medical benefits, paying reasonable medical expenses for the insured and passengers regardless of fault. Higher limits may be purchased.

In PA, stacking of uninsured/underinsured motorist coverage applies automatically across vehicles on a policy UNLESS the insured signs a written anti-stacking waiver. Stacking multiplies the UM/UIM limit by the number of insured vehicles.

UM pays the insured's bodily injury when the at-fault driver has no insurance. UIM pays when the at-fault driver has insurance but limits are insufficient to cover the loss.

Formally the Pennsylvania Property Insurance Association — a shared-market plan providing basic property coverage (dwelling fire and extended coverage) to owners rejected by the voluntary market. All PA property insurers must participate by market share.

HO-2 (broad named perils), HO-3 (special form — open perils on dwelling, named perils on contents — most common), HO-4 (renters/tenants contents), HO-5 (comprehensive open perils), HO-6 (condo unit-owner), HO-8 (modified for older homes).

Replacement cost pays to rebuild/replace with no deduction for depreciation. Actual cash value (ACV) is replacement cost minus depreciation. ACV pays less on older property and is the default for many contents settlements.

Requires the insured to carry property coverage equal to a stated percentage (often 80%) of replacement value. If underinsured at loss time, the claim payment is reduced proportionally by the coinsurance penalty formula.

A specialized commercial property form covering buildings, structures, and materials during construction against perils such as fire, theft, vandalism, and wind. It is property coverage, not liability coverage.

Property coverage for residences not eligible for a homeowners policy (e.g., rentals, vacant or non-owner-occupied homes). DP forms exclude the liability and theft breadth of an HO policy unless endorsed.

Standard homeowners and dwelling policies exclude flood. Flood coverage is purchased separately, primarily through the National Flood Insurance Program (NFIP), with a standard 30-day waiting period before coverage takes effect.

Workers' compensation is mandatory for nearly all Pennsylvania employers, with very limited exceptions (such as certain agricultural and casual domestic workers). It is a no-fault system covering job-related injury and illness.

A Pennsylvania government entity that acts as the workers' compensation insurer of last resort, covering employers who cannot obtain coverage in the private market due to claims history or industry class.

A PA employer may post a list of at least six designated health care providers. If properly posted, an injured worker must use a panel provider for the first 90 days of treatment; after 90 days the worker may choose any provider.

Covers medical expenses, wage-loss (indemnity) benefits, specific-loss benefits for permanent injuries, and death benefits to dependents. Coverage is provided regardless of fault.

Protects a business against third-party claims of bodily injury and property damage from its premises, operations, products, and completed work — e.g., a customer slip-and-fall on the business premises.

Occurrence form covers injury that happens during the policy period regardless of when the claim is filed. Claims-made form covers only claims first made during the policy period (subject to a retroactive date).

A CGL coverage part for offenses such as libel, slander, false arrest, malicious prosecution, wrongful eviction, and copyright/slogan infringement in advertising — distinct from bodily injury and property damage.

Provides liability limits above underlying auto, homeowners, or CGL policies and can drop down to cover some claims excluded by underlying policies (subject to a self-insured retention).

Legal responsibility imposed on one party (e.g., an employer) for the negligent acts of another (e.g., an employee acting within the scope of employment). Commonly tested in commercial liability scenarios.

Pays covered P&C claims when an admitted insurer becomes insolvent and is liquidated, up to $300,000 per covered claim. Funded by assessments on solvent admitted insurers.

PIGA protects only policies issued by ADMITTED (licensed) insurers. Claims under surplus lines (non-admitted) carriers are NOT covered — buyers of surplus lines coverage assume the added insolvency risk.

An admitted insurer is licensed by the PID and backed by PIGA. A non-admitted (surplus lines) insurer is not PID-licensed, is used for hard-to-place risks, and is not protected by the guaranty association.

When an insurer cannot meet its obligations, the Commissioner can place it in rehabilitation or liquidation. In liquidation, PIGA assumes covered claims up to statutory limits; policyholders are not left fully unpaid on covered losses.

Pennsylvania statute prohibiting unfair or deceptive acts in the insurance business, including misrepresentation, false advertising, defamation, boycott, and unfair claims settlement. Enforced by the Insurance Department.

Making a false or misleading statement about a policy's terms, benefits, or conditions, or about a competitor. A core unfair trade practice under PA law that can lead to fines and license action.

Inducing a policyholder to lapse, cancel, or replace an existing policy through misrepresentation or an incomplete/misleading comparison. Prohibited in PA — distinct from a legitimate, fully disclosed replacement.

Offering a customer any inducement (cash, gift, or value) not specified in the policy to purchase insurance. Treating one insured differently from others in the same class is an unfair, prohibited practice.

Making, publishing, or circulating a false statement that is maliciously critical of, or derogatory to, the financial condition of an insurer. A prohibited unfair trade practice under the PA Insurance Code.

Includes misrepresenting policy provisions, failing to act promptly on communications, not attempting good-faith settlement when liability is clear, and compelling litigation by offering substantially less than amounts ultimately recovered.

Premiums a producer collects belong to the insurer or insured, not the producer. Commingling or converting premium funds for personal use is a serious violation of the producer's fiduciary responsibility.

A financial stake in property or a person such that loss would cause genuine financial harm. For property/casualty it must exist at the time of loss; without it the contract is unenforceable (prevents wagering).

Insurance restores the insured to the financial position held before the loss — no profit from a loss. It underlies ACV settlement, subrogation, and other-insurance clauses.

After paying a claim, the insurer assumes the insured's right to recover the amount from the negligent third party. Prevents double recovery and supports the indemnity principle.

Both parties must deal honestly and disclose material facts. Breaches include concealment (silence on a material fact) and misrepresentation, which can void coverage.

Adhesion: insurer writes the contract; ambiguity is construed against the insurer. Aleatory: unequal exchange of value depending on chance. Unilateral: only the insurer makes a legally enforceable promise.

A representation is a statement believed true to the best of the applicant's knowledge; a warranty is guaranteed to be literally true. A material misrepresentation can void coverage; a breached warranty more readily voids the policy.

The intentional failure to disclose a known material fact that the insurer would have considered in underwriting. If material and intentional, it can void the policy.

Pro rata (insurer-initiated cancellation): the insured receives a full proportional refund of unearned premium. Short rate (insured-initiated): the refund is reduced by an administrative penalty.

A temporary, written or oral agreement providing immediate coverage until the formal policy is issued. It contains the essential terms and is fully enforceable while in effect.

The amount the insured pays out of pocket before coverage applies. Higher deductibles lower premiums and discourage small claims; they apply per occurrence on most property policies.