Oregon property and casualty basics questions test a set of Code sections:

• Binders, application statements and insurable interest.
• The fire policy provisions in ORS 742.202-742.242.
• Comparative negligence.
• Commercial liability cancellation rules.
• The Oregon Insurance Guaranty Association.
• Residual-market mechanisms.

General principles (contracts, indemnity, hazards, negligence, ACV vs. replacement cost) are in the national basics guides.

Contract basics

Binders (ORS 742.043)

• A property or casualty binder may be oral or written. It includes the usual terms of the policy it binds.
• The insurer must issue a policy in its place within 90 days, unless the Director approves an extension.

Application statements (ORS 742.013)

• They are representations, not warranties.
• To deny recovery because of a misstatement, the insurer must show:
  • The application was attached to the policy.
  • The insurer relied on the misstatement.
  • It was fraudulent or material to the risk.

Insurable interest (ORS 742.011)

• A property policy is enforceable only for people with an insurable interest at the time of the loss.

Delivery (ORS 742.046)

• The policy is mailed or delivered within a reasonable time after it is issued.

Negligence (ORS 31.600)

• Oregon uses modified comparative negligence.
• A claimant recovers, reduced by their own share of fault, if that fault is not greater than the combined fault of the defendants.
• Example: a claimant 40% at fault with $100,000 of damages recovers $60,000.

Oregon fire policy provisions

Cancellation by the insurer (ORS 742.224)

• Nonpayment of premium: 10 days' written notice.
• Any other reason: 30 days' notice.
• When the insurer cancels, return premium is pro rata.

Cancellation by the insured

• Return premium is figured on a short-rate basis.

Fire in a commercial package

• When fire coverage is part of a package with commercial liability, cancellation follows the commercial liability statute (ORS 742.702).

Concealment (ORS 742.208)

• The whole policy is void if the insured willfully conceals a material fact, before or after a loss.

Claims and suits

• Proof of loss: the insured has 90 days after receiving the proof-of-loss form (ORS 742.053).
• Suits: must be filed within 24 months after the loss (ORS 742.240).
• Overinsurance: if property is totally destroyed and the loss is less than the amount of insurance, the insurer returns the premium paid for the excess (ORS 742.058).

Commercial liability cancellation and nonrenewal (ORS 742.700-742.710)

Scope

• These rules don't apply to a new policy in effect less than 60 days, or to commercial umbrella policies.

Cancellation

• Permitted grounds include failing to follow reasonable loss control recommendations.
• Notice: at least 10 working days.
• The insured may ask the Director for a hearing within 30 days. The insurer has the burden of proving the reason.
• A post office certificate of mailing is conclusive proof of receipt on the third calendar day after mailing.

Nonrenewal and renewal at a higher rate

• Nonrenewal: at least 45 days' notice.
• Renewal at a higher rate: 45 days' notice to the insured and the producer.
• A multiyear policy with a guaranteed premium can't be repriced or nonrenewed during the guarantee.

Fair treatment of risks

• Charging different rates for risks of essentially the same hazard is unfair discrimination (ORS 746.015).
• In cities of 300,000 or more, burglary and premises liability risks can't be treated differently solely because of geographic location (ORS 746.018).

Guaranty association and residual markets

Oregon Insurance Guaranty Association (ORS 734.510-734.570)

• Membership is a condition of authority to write covered lines.
• Claim cap: $600,000 for insolvencies on or after January 1, 2025. Earlier insolvencies: claims under $300,000.
• Workers' compensation claims are paid in full, less Workers' Benefit Fund payments.
• Excluded: surety, and first-party claims by insureds with net worth over $25 million.
• Assessments: at most 2% of prior-year net direct premiums a year.

Residual markets

• The Oregon FAIR Plan Association provides essential property insurance (ORS 735.005-735.145).
• A commercial liability joint underwriting association may be formed only after a market assistance plan has had time to work (ORS 735.215).
  • It isn't appropriate when coverage is unavailable for legitimate underwriting reasons.
  • Its rates must be actuarially sound and self-supporting.

Surplus lines (ORS 735.410-735.415)

• Placement requires a diligent search of authorized insurers, except for exempt commercial purchasers.
• Eligible insurers need capital and surplus of at least the greater of the home-state minimum or $15 million.

Common exam traps

• Binders must be replaced by a policy within 90 days.
• Insurable interest for property must exist at the time of loss.
• Fire policy notice: 10 days for nonpayment, 30 otherwise. Suit within 24 months. Proof of loss within 90 days after the form is received.
• Commercial liability: 10 working days to cancel; 45 days to nonrenew; umbrellas exempt.
• Comparative negligence: a claimant can recover as long as their fault isn't greater than the defendants' combined fault.