The national guides cover the P&C basics: perils, hazards, valuation, negligence and policy structure. This guide adds Tennessee's rules on fire insurance values, personal risk and commercial risk notice requirements, rate filing and loss runs. Questions on these come up on the Property, Casualty and Personal Lines exams.

Personal vs. commercial risk (Tenn. Code Ann. 56-5-102)

• Personal risk insurance covers:
  • 1- to 4-family dwellings, including mobile homes
  • household goods
  • private passenger nonfleet autos
  • pleasure watercraft used for personal, farm or family needs
  • farm property, unless it's written commercially
• Commercial risk insurance is everything within the rating law that isn't personal risk.

Rate and form filing (56-5-105, 56-5-106)

Fire insurance values (56-7-801 to 56-7-803)

• Inspection: within 90 days after a fire policy is written on a Tennessee building, the insurer or its agent must have it inspected.
• No insurer or producer may knowingly write fire insurance that, with other insurance, exceeds the fair value of the property.
• Total loss by fire: the insurer owes only the actual value at the time of loss. Excess premium is refunded with 6% annual interest from the date of issue.
• If the insurer doesn't set a reasonable value within the inspection period, the value stated in the policy or application is conclusively presumed reasonable.

Personal risk nonrenewal (56-7-1901, 56-7-1902)

• The insurer gives at least 30 days' written notice before expiration.
• The insured may ask for the reason in writing within 15 days after the nonrenewal takes effect. The insurer answers within 20 days.
• No lawsuit can be based on the reason given.
• Auto has its own rules (see the Tennessee Personal Auto guide).

Commercial risk cancellation and nonrenewal (56-7-1801 to 56-7-1806)

Scope. Commercial risk here excludes fidelity and surety bonds and surplus lines policies.

Cancellation after 60 days is allowed only for listed grounds:

• nonpayment, including a missed installment under a premium finance plan
• a conviction for a crime that increases the hazard
• fraud or material misrepresentation
• failure to follow written loss control recommendations
• a material change in the risk
• insurer solvency findings
• policy violations

Falling business revenue isn't a ground. Cancellation takes effect at least 10 days after mailing. On request, the insurer gives the facts behind the stated grounds.

Nonrenewal, or renewal with reduced limits or coverages

• At least 60 days' notice to the insured and agent.
• If the notice is late, the policy is extended 60 days from the date of notice at a pro rata premium.
• No notice is needed if the insurer offered to renew, or the insured got or agreed to replacement coverage.

Premium increase of more than 25% on equivalent exposures: at least 60 days' notice stating the percentage.

Other commercial rules

• Loss runs: an insurer provides up to 3 years of loss history within 10 business days of a written request, free for one copy (56-5-123). A late loss run violates the unfair trade practices act.
• Changing a commercial risk's classification or rates more than a year after renewal needs the insured's written consent, unless the change favors the insured (56-8-104(17)).
• Residual market application data can't be used to solicit the insured (56-8-104(16)).

Common exam traps

• Personal risk filings go in 30 days before use. Commercial filings go in 15 days after.
• Fire policies must be inspected within 90 days. A total fire loss pays actual value.
• Personal risk nonrenewal: 30 days. Commercial nonrenewal: 60 days.
• Commercial cancellation after 60 days: listed grounds only, with 10 days' notice.
• A commercial premium increase over 25% needs 60 days' notice.