Free TN P&C Exam Flashcards

Tennessee's insurance regulator, headed by the Commissioner of Commerce & Insurance. It licenses producers, enforces Title 56, examines insurers for solvency and market conduct, and approves rates and forms filed through SERFF. On the exam, any question that names a dollar amount, deadline, penalty, or the Commissioner is almost certainly TDCI/Tennessee-law territory, not national-concept territory.

The volume of the Tennessee Code that codifies state insurance law, including producer licensing (56-6), continuing education, unfair trade practices, cancellation and non-renewal timelines, and auto financial responsibility. Distinguishing Title 56 (state law) from national P&C fundamentals is the single most useful test-day split, because Tennessee questions look for state-specific numbers while national questions look for concepts.

Tennessee is unusual: it imposes zero mandatory pre-licensing course hours to sit for the Property or Casualty producer exam. You may register with Pearson VUE and test immediately. The trap is treating this as 'no preparation needed' — successful self-study candidates still log roughly 40-60 hours, and the 18 Tennessee-law items per line exam come straight from Title 56.

Tennessee does NOT use a single combined P&C exam. It tests Property and Casualty as separate line exams, each with 77 total questions (68 scored plus 9 pretest), 105 minutes, and a passing score of 70. You can reserve both as a combined reservation, but each line is scored independently — passing one does not satisfy the other, and you must hold both line authorities for full P&C authority.

After passing a Tennessee line exam, you must wait 48 hours before filing your license application through NIPR. The wait exists so your score posts to TDCI first. Filing before the 48-hour window is a common administrative mistake that gets the application rejected, and you must also pass a fingerprint-based background check via IdentoGO and pay the $50 filing fee.

Tennessee producer licenses renew on a two-year cycle and require 24 hours of continuing education from TDCI-approved providers, including at least 3 hours of ethics. The ethics minimum is independent — meeting 24 total hours without the 3-hour ethics block can block compliant renewal, so the ethics course should be completed first, not last.

A peril is the actual cause of loss (fire, wind, theft). A hazard is a condition that increases the frequency or severity of a peril — physical (frayed wiring), moral (dishonest insured), or morale (careless attitude because insurance exists). Risk is the uncertainty of loss itself. Confusing peril (the cause) with hazard (what makes the cause more likely) is a foundational error that breaks every later coverage question.

P&C insurance restores the insured to their pre-loss financial position — no more, no profit, no enrichment. It is why ACV subtracts depreciation, why replacement-cost coverage requires actually rebuilding, and why insurable interest is required: a person who would profit from a loss has no insurable interest and cannot be indemnified. Valued policies (agreed value on fine arts) are the deliberate exception.

The insured must face financial loss if the insured event occurs. In property, insurable interest must exist at policy inception AND at the time of loss. In liability, the insured must have potential financial consequence from becoming legally liable. Without insurable interest, the contract is unenforceable gambling — and a producer who issues a policy without verifying insurable interest creates an E&O exposure.

After paying a loss, the insurer steps into the insured's shoes to recover from the at-fault third party. Subrogation preserves indemnity by preventing the insured from collecting twice (from the insurer and from the tortfeasor) and keeps the at-fault party bearing the cost. The insured cannot waive subrogation before a loss without the insurer's consent, and must not impair the insurer's recovery right after a loss.

P&C policies are drafted by the insurer and presented take-it-or-leave-it to the insured. Because the insured has no negotiating power over terms, the legal doctrine construes ambiguous language against the insurer (contra proferentem). This is why precise policy wording and the entire-contract clause matter: a producer's oral promise cannot add coverage that the policy's written terms do not grant.

Both are open-perils on the dwelling and other structures (Coverages A and B). The split is contents (Coverage C): HO-3 insures personal property on a named-perils basis (broad form perils), while HO-5 extends open-perils to contents and adds higher inner limits on certain classes. HO-5 is the broader, higher-value form, and the exam loves to trap candidates who assume the difference is in dwelling coverage — it is not.

DP-1 (Basic) is named perils (fire, lightning, internal explosion, extended coverage by endorsement) and settles on ACV. DP-2 (Broad) adds broad named perils and pays replacement cost on the building. DP-3 (Special) is open perils on the dwelling and other structures only — contents (Coverage C) remain named perils — and pays replacement cost on the structure. The recurring trap is pairing 'DP-3' with 'open perils on contents,' which is wrong.

An HO policy requires an owner-occupant and bundles Section I property with Section II liability. When the named insured does not occupy the home — a landlord renting to tenants, a seasonal home, a substandard older dwelling — the HO does not fit and a DP form is correct. Dwelling forms contain no Section II liability in the base form; a landlord must add a Personal Liability Supplement or DL endorsement or have no liability protection at all.

A package policy for small-to-medium businesses combining commercial property (building, contents, business income) and commercial general liability on a simplified ISO form. Eligibility excludes larger or hazardous operations and certain high-risk classes; those risks move to a monoline commercial property plus CGL program. The BOP's advantage is streamlined underwriting and lower cost, with the trade-off of narrower eligibility and fewer tailoring options.

The Building and Personal Property Coverage Form is the standard commercial property form. It covers the building (Coverage A), the insured's business personal property (Coverage B), and improvements and betterments (Coverage C). It does NOT insure the land, foundations below the lowest basement floor, outdoor property excluded by endorsement, or property of others in the insured's care — those need separate floaters or bailee coverage.

Coverage A is bodily injury and property damage liability — the core of the CGL. Coverage B is personal and advertising injury (false arrest, libel, slander, copyright infringement in the insured's advertisement). Coverage C is medical payments, a small goodwill no-fault coverage that pays reasonable medical expenses for non-insureds injured on the insured's premises or operations without proof of liability, often capping at $5,000-$10,000 per person.

An occurrence policy covers injury or damage that happens during the policy period, regardless of when the claim is later reported — the standard CGL is occurrence-based. A claims-made policy covers only claims first made (reported) during the policy period, with a retroactive date limiting how far back the injury can have occurred — used for E&O, D&O, and most professional liability. Mixing them up is the most common liability-form error on the exam.

Both sit inside CGL Coverage A. Premises liability is bodily injury or property damage arising out of the insured's premises — a slip-and-fall in a store. Operations liability is injury or damage arising out of the insured's ongoing work — a contractor's tool injuring a passerby at a jobsite. A retail store has primarily premises exposure; a roofer has primarily operations exposure, and the policy covers both.

The CGL covers the insured's products and completed work, but only after the product has left the insured's possession and the work has been completed and put to its intended use. A defective product that injures a consumer years after sale is covered; a product still in the insured's warehouse is a property loss, not a products-liability loss. This coverage is why manufacturers and contractors carry CGL, and why the exclusion for impaired property (your product that just does not work) does not pay for the product itself.

The CGL excludes bodily injury or property damage to property in the insured's care, custody, or control. A repair shop holding a customer's laptop, a parking garage holding customer cars, or a warehouse storing customer goods — the CGL will not pay for damage to those items. The fix is a dedicated coverage form: garagekeepers for auto shops, a bailee's customers policy for repair and storage businesses, or a installation floater for contractors handling customers' property.

Since January 1, 2023, Tennessee requires minimum auto liability limits of $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage per accident. Senate Bill 504 raised the property-damage floor from $15,000 to $25,000, so any study material still showing 25/50/15 is wrong. Drivers must carry proof of insurance and an insurer must report cancellations to the state financial-responsibility system.

Tennessee uses fault-based liability, not a no-fault system. The at-fault driver's BI/PD coverage pays the other party, and injured parties can sue the at-fault driver directly. Personal Injury Protection (PIP) is NOT required, and there is no threshold litigation rule. Contrast with no-fault states where each driver's own insurer pays first-party injury benefits regardless of fault.

Tennessee follows modified comparative negligence with a 50% bar: a plaintiff who is less than 50% at fault recovers damages reduced by their fault percentage, but a plaintiff who is 50% or more at fault recovers nothing. The 49% line is decisive — at 49% the plaintiff recovers 51% of damages, at 50% they recover zero. This is one number tighter than the 51% bar used in many other states.

Tennessee insurers must offer Uninsured Motorist and Underinsured Motorist coverage at limits equal to the insured's liability limits. The insured can decline only by written rejection — an oral waiver or a silent policy file does not count. The protection stacks behind the at-fault driver's coverage when the at-fault party has no insurance or lower limits than the damages they cause.

Tennessee financial responsibility can be satisfied without an auto liability policy by depositing $65,000 in cash with the state or posting a $65,000 surety bond. This is the alternative for owners who self-insure or who do not want to buy commercial insurance. It is not a substitute for the 25/50/25 limits on a liability policy — it is a separate path to proving financial responsibility.

Workers' compensation is the grand bargain: in exchange for guaranteed no-fault statutory benefits, the employee gives up the right to sue the employer in tort, and the employer is immune from suit for covered job injuries. The doctrine is the foundation of every WC question — it is why an injured worker files a WC claim, not a negligence lawsuit, against the employer. The exception is intentional torts, which can pierce the exclusive-remedy shield.

Most Tennessee non-construction employers must carry workers' compensation when they have five or more employees. Construction and coal-mining employers must cover even one employee — there is no small-employer exemption in those industries. Misapplying the general 5-employee threshold to a construction employer is a frequent exam error; the construction/coal-mining one-employee rule overrides the general threshold.

The NCCI policy bundles two distinct insuring agreements. Part One is the statutory workers' compensation benefit obligation — it has no dollar limit because the duty is defined by state law (medical is unlimited). Part Two is employers' liability, a true liability coverage with policy limits that responds to suits by employees outside the WC system (such as a spouse's loss-of-consortium claim or a third-party-over action). Confusing them is the single most-tested concept in this domain.

Temporary Total Disability pays approximately two-thirds of the injured worker's average weekly wage, subject to a state maximum and minimum, and is tax-free. The state cap means high earners receive less than two-thirds of their actual wage. The four disability categories — Temporary Total, Temporary Partial, Permanent Total, and Permanent Partial — each pay under different formulas, with Permanent Partial often using a scheduled-injury table.

Tennessee's 2014 reform moved dispute resolution out of the courts into an administrative Court of Workers' Compensation Claims and changed how permanent partial disability is calculated. Injured workers must give timely notice of injury within a short statutory window, the employer files the claim, and medical treatment is directed through a panel of physicians the employer offers. The Tennessee Bureau of Workers' Compensation, under the Department of Labor and Workforce Development, administers the system.

An insurer not licensed in Tennessee that writes hard-to-place risks through a licensed surplus lines broker. The producer must document declinations from admitted markets (commonly at least three) unless the risk is on the export list, disclose the non-admitted status in writing to the insured, and remit the 5% Tennessee surplus lines tax. Surplus lines policies are NOT protected by the state guaranty association — that is the consumer-protection distinction the exam tests most.

Covers mobile property and property in transit — contractor's equipment, motor truck cargo, builders risk, electronic data processing, valuable papers, accounts receivable. Forms are typically open perils and may use agreed value rather than coinsurance, which is why high-value or mobile property migrates from standard property forms to an inland marine floater. The trigger phrase on the exam is 'property in transit,' 'contractor's tools,' or 'property under construction.'

Insures a structure while it is under construction, usually on a completed-value basis where the limit adjusts upward as the project progresses. Coverage ends when the project is accepted, occupied, or put to its intended use — at that point the building rolls onto a permanent property form. The most common exam trap is treating builders risk like an ongoing property policy; it is temporary and project-bound.

A separate policy that fills gaps left by underlying property policies, most commonly adding flood and earthquake to a program that excludes them. DIC is excess and broadening, not a replacement for the primary policy — the underlying form pays first and DIC tops up where the primary excludes. It is the answer when the question describes a property program with catastrophe gaps the standard form does not fill.

A three-party instrument: the principal owes a duty to the obligee, and the surety guarantees performance. If the principal fails, the surety pays the obligee and then recovers from the principal — the right of exoneration. This is the key contrast with insurance: insurance assumes a loss the insurer absorbs, while a surety bond is a credit instrument the principal ultimately repays. A contractor's performance bond is the classic example.

Premiums a producer collects belong to the insurer, not the producer. They must be held in a fiduciary (trust) capacity, kept separate from personal or operating funds, and remitted to the insurer promptly. Commingling premiums with personal accounts is a licensing violation that can trigger suspension or revocation, and a producer who spends collected premium before remitting is committing a form of theft even if they intend to repay.

Giving anything of value to an insured as an inducement to buy insurance that is not specified in the policy itself is prohibited. The classic violations are returning part of the commission, giving gifts above nominal value, or paying the insured's application fee. Limited exceptions exist for nominal advertising items and after-sale service of nominal value, but anything that meaningfully rebates the premium is an unfair trade practice subject to license action.

Twisting is inducing a policyholder to replace existing coverage with new coverage through misrepresentation — the new policy is with a different insurer. Churning is the same replacement fraud but with the same insurer. Both are unfair trade practices under Title 56, and both depend on the producer misrepresenting either the old or new policy's benefits, values, or costs. The remedy required of the producer is comparison disclosures so the client can judge the replacement risk.

Even when a producer lacks actual authority to bind a risk, the insurer can still be bound if the producer's apparent authority led the customer to reasonably believe coverage existed. This is why insurers police producer authority in writing and why producers who bind outside their granted authority create both E&O exposure to themselves and a binding obligation for the insurer. The exam's lesson: a producer's authority limits are not a defense the insurer can rely on against a good-faith customer.

Tennessee prohibits listed unfair claim-settlement behaviors: failing to acknowledge or communicate about a claim within a reasonable time, denying coverage without investigation, lowballing to coerce settlement, and forcing an insured to litigate by offering less than the amount owed. The Commissioner can fine or suspend licenses for these practices, and a producer who steers a claimant away from filing or delays passing claim paperwork to the insurer is participating in the violation.

Under Tenn. Code Ann. 56-7-1303, a Tennessee insurer must give 60 days' advance written notice of non-renewal to BOTH the named insured and the producing agent. If the 60-day notice is not given, the policy is extended until 60 days after notice is finally given. The trap answer is 30 days — that is the wrong Tennessee figure, and the agent-not-just-insured requirement is the second half of the rule.

Tennessee permits a shorter notice period (commonly 10 days) for cancellation due to non-payment of premium, while other permitted cancellations (fraud, material misrepresentation, substantial change in risk) require longer notice. Cancellation must be in writing and mailed to the named insured, and unearned premium is refunded pro rata. A new homeowners or fire policy may be canceled for any reason within its first 60 days; after that, only statutorily enumerated reasons apply.

When the insurer cancels mid-term, the unearned premium is returned pro rata — the insured gets back exactly what was not earned, day by day. When the insured cancels, the refund is short-rate — the insurer keeps earned premium plus a penalty, so the refund is less than pro rata. The rule rewards the insurer for the administrative cost of an insured-initiated cancellation and is a recurring consumer-protection numeric on the exam.

DP-2 and DP-3 (and HO with replacement-cost coverage) require the insured to carry at least 80% of the dwelling's replacement cost to recover replacement cost on a partial loss. Carrying less triggers the coinsurance penalty: the insurer pays the proportion of the loss that the carried limit bears to the required amount, less any deductible. Underinsurance on a $200,000 dwelling carrying only $120,000 (60% of required) means the insurer pays 60% of any partial loss.

The standard mortgage clause protects the lender's insurable interest separately from the named insured's. If the insured's claim is denied for misrepresentation or fraud, the lender can still recover up to its loan balance, and the insurer pays the lender directly. The lender must pay premiums to keep coverage in force if the borrower stops, and the insurer subrogates against the borrower for any payment made to the lender. Without this clause, the lender's recovery would rise and fall with the borrower's conduct.

The state guaranty association pays covered claims of insolvent admitted (licensed) insurers, funded by post-insolvency assessments on solvent member insurers — not by taxpayers and not pre-funded. Coverage is subject to per-claim and aggregate caps set by Tennessee law. Two recurring exam traps: surplus lines (non-admitted) policies are NOT covered, and producers may NOT advertise the guaranty association as a sales inducement — doing so is itself an unfair trade practice.

The Fair Access to Insurance Requirements plan is Tennessee's residual property market for owners rejected by the voluntary market. It covers basic fire and allied lines, often settles on an ACV basis, charges higher-than-standard rates, and requires documented declinations from admitted insurers. It is not a discount program and does not automatically include liability or replacement-cost contents — a producer who sells it as cheap HO coverage is committing an E&O-grade misrepresentation.

The residual-market mechanism for Tennessee employers that cannot obtain voluntary workers' compensation coverage. Premium is higher than the voluntary market and coverage is mandatory if the employer is in a covered industry. NCCI administers the plan, and classes are assigned to participating insurers in rotation. A producer who cannot place a construction client in the voluntary market due to loss history routes the risk here rather than leaving the employer uninsured and exposed to the exclusive-remedy penalties.

Tennessee imposes a 5% premium tax on surplus lines placements, collected and remitted by the producer (not the insured and not the insurer) along with the stamping-fee filing to TDCI. The export list names classes pre-approved for surplus lines placement without a documented diligent search of admitted markets — excess and umbrella liability, environmental/pollution, D&O, EPLI, certain professional liability, and aviation. The producer's five duties in order: attempt admitted markets, place with an eligible non-admitted insurer, disclose non-admitted status in writing, remit the 5% tax, and file the affidavit with TDCI.