Tennessee Property & Casualty Licensing Exam

Key Definitions in Property & Casualty

• Physical Hazard: A risk originating from the property itself that can affect its safety or insurability.

• Morale Hazard: Arises when a person's behavior becomes reckless due to having insurance coverage (e.g., driving erratically).

• Moral Hazard: Occurs when someone intentionally creates a situation that will lead to a loss in order to collect insurance money.

• Aleatory: A type of contract where the outcome relies on an uncertain event, leading to unequal value transfer between parties.

• Contract of Adhesion: An agreement where one party holds more power, typically leading to standard form contracts favoring the stronger party.

Building Classes and Materials

• Class 1 - Frame: Structures where exterior support walls, roofs, and floors are primarily wood or comparable combustible materials; typically features a stucco or brick veneer exterior.

• Class 2 - Joist and Masonry: Buildings with non-combustible exterior walls and combustible roofs and floors.

• Combustible Materials: Materials such as wood that ignite easily when exposed to fire.

• Noncombustible Materials: Substances such as concrete, stone, brick, or metal that are resistant to fire.

• Class 3 - Noncombustible: All construction elements are non-combustible.

• Class 4 - Masonry Noncombustible: Features masonry exterior walls and non-combustible roofs and floors.

• Class 5 - Modified Fire Resistive: Made of masonry or fire-resistant materials with a fire rating of 2 hours or less.

• Class 6 - Fire Resistive: Composed entirely of materials rated to resist fire for 2 hours or longer.

Insurance Coverages and Symbols

• Mortgagee/Loss Payable Condition: Defines the roles and responsibilities of the mortgage lender under an insurance policy.

• Personal Property Form: Provides open perils coverage for personal belongings in a residence.

• Personal Effects Form: Coverage for personal belongings while traveling.

• Personal Articles Form: Covers nine selected classes of property, including jewelry and fine arts.

• Symbols in Auto Insurance:

  • Symbol 30: Covers customer vehicles left for service.
  • Symbol 31: Coverage for auto dealers.
  • Symbol 48: For trailers borrowed or leased by the insured.
  • Symbol 49: For trailers owned or hired by the insured.

Worker’s Compensation and Employer’s Responsibilities

• Part 1 - Workers Compensation: Commits to paying all required compensation and benefits under the workers' compensation laws.

• Part 2 - Employers Liability: Provides coverage for legal liabilities that the insured may incur.

• Part 3 - Other States Insurance: Lists the states where work will be conducted during the policy period.

• Part 4 - Your Duties if Injury Occurs: Outlines the insured's responsibilities if an injury happens.

• Part 5 - Premium: Explains how the workers' compensation policy cost is determined.

Bonds and Legal Protections

• Fidelity Bond: Guarantees that specific dishonest acts will not occur.

• Surety Bond: Ensures that certain obligations will be fulfilled.

• Bid Bond: Guarantees that if a contractor's bid is successful, they will execute the project as required.

• Public Official Bond: Ensures that public officials will manage public funds appropriately.

Legal and Procedural Requirements in Tennessee

• License Renewal Notice: Sent 45 days before the license expiration.

• Penalties for Violations: Vary up to $1,000 for unknowing violations, reaching $250,000 for knowing violations.

• License Reinstatement: Possible within 12 months without needing to retake an exam.

• Investigative Notices: Must be communicated within specified timeframes after a complaint or investigation takes place.

Insurance Policy Regulations

• Valued Policy Law: Claims are settled at the pre-determined limits of liability.

• Auto Liability Limits: Expressed as 25/50/15 (per person bodily injury, per accident bodily injury, per accident property damage).

• Minimum Combined Limit for Auto Policy: Set at $60,000.

• Financial Responsibility Proof: Demonstrates a person's capacity to cover liabilities stemming from vehicle use.

Adjustments and Non-renewals

• Notice for Rate Increases: Insurers must provide at least 60 days' notice for any premium increase of 25% or more.

• Non-renewal Notifications: Must be communicated 30 days in advance for personal insurance policies.

• Day Requirements for Cancellations: Ranging from 10 to 60 days notice depending on the type and timing of the cancellation.