Free Minnesota Property & Casualty Insurance Exam Flashcards

The dwelling and other structures are covered on an open-peril basis, but personal property is covered only for named perils. A client who wants open-peril coverage on contents as well needs the HO-5, not the HO-3.

The HO-8 modified coverage form. It settles losses on a functional repair or replacement basis using common modern materials, so the insurer is not forced to duplicate obsolete ornate construction.

HO-4 covers a tenant's personal property and liability with no coverage on the building itself. HO-6 covers a unit owner's property and liability plus a limited amount for building items inside the unit that the association's master policy leaves to the owner.

DP-1 is a basic named-peril form that normally settles at actual cash value. DP-3 covers the dwelling on an open-peril basis and settles at replacement cost. A DP-1 insured absorbs depreciation out of pocket.

Business income replaces net income and continuing normal expenses the business loses while operations are suspended. Extra expense pays the added costs of continuing to operate. A firm that cannot afford to close buys extra expense.

A BOP is a pre-packaged property and liability form for eligible small and mid-size risks, with several coverages built in. A CPP is assembled from separately selected coverage parts. A risk that fails BOP eligibility rules must be written as a package.

It covers a structure under construction along with materials and supplies intended to become part of it. Coverage ends when the building is accepted or occupied or the policy expires, so permanent property coverage must be in force by then.

Homeowners and dwelling forms exclude flood, so rising water damage is paid only under a National Flood Insurance Program policy or a private flood policy. A producer who does not offer it leaves the client fully exposed.

Actual cash value is replacement cost minus depreciation, so the insured funds the age and wear of the property. Replacement cost pays to replace with like kind and quality without a depreciation deduction, usually after the property is actually repaired or replaced.

The insured becomes a coinsurer. Recovery equals the limit carried divided by the limit required, times the loss, less the deductible, and never more than the policy limit. Underinsuring produces a shortfall on every partial loss.

A moral hazard is a dishonest tendency that invites loss, such as arson for profit. A morale hazard is carelessness that grows out of having insurance. Moral hazard is a declination; morale hazard is usually priced or controlled.

Direct loss is the physical damage the peril itself causes. Indirect or consequential loss is the financial harm that follows, such as lost rents or lost business income. Indirect loss needs its own coverage form to be paid.

Property forms suspend or reduce coverage for certain perils, such as vandalism and water damage, once a building has been vacant longer than the period stated in the policy. An unoccupied building keeps its coverage; a vacant one may not.

A blanket limit applies to several buildings or coverages at once, so a single large loss can draw on the whole amount. Specific insurance locks each item to its own limit, which can leave a shortfall even when other limits are untouched.

The mortgagee is paid to the extent of its interest even when the insured's own claim fails for acts such as arson or misrepresentation, and it receives its own notice of cancellation or nonrenewal. The insurer then takes the lender's rights against the borrower.

At the time of loss. Unlike life insurance, where interest must exist when the policy is issued, a property claimant with no interest at the moment of loss has no indemnifiable loss to be paid.

Concealment is the failure to disclose a material fact the applicant knew. Misrepresentation is an untrue statement of a material fact. Either can void the contract when the fact was material and the insurer relied on it.

It transfers the insured's recovery rights against the party who caused the loss to the insurer, up to the amount paid. An insured who signs a release for the at-fault party before payment can destroy the insurer's rights and lose the claim.

It resolves disagreement over the amount or value of a loss, with each side naming an appraiser and the appraisers selecting an umpire. It does not decide whether the loss is covered; coverage disputes stay outside appraisal.

The occurrence form responds when injury or damage happens during the policy period, no matter when the claim arrives. The claims-made form responds only to claims first made during the policy period for events after the retroactive date.

Coverage A is bodily injury and property damage liability. Coverage B is personal and advertising injury, such as libel or wrongful eviction. Coverage C pays medical expenses of an injured non-employee without regard to fault, which heads off small suits.

The per-occurrence limit caps what one loss can collect. The general aggregate caps the total paid for all losses in the policy period. Once the aggregate is exhausted, no coverage remains for the rest of the term even though the policy is still in force.

A combined single limit provides one amount for bodily injury and property damage together, so a severe injury can use the entire limit. Split limits cap each part separately, and a per-person figure can be exhausted while other limits go unused.

Uninsured motorist coverage responds when the at-fault driver carried no liability insurance or cannot be identified. Underinsured motorist coverage responds when that driver had insurance but not enough to pay the damages.

Liability arising from vehicles the business rents or borrows and from employees' own cars driven on company business. A business auto policy limited to owned autos leaves this exposure with the employer.

Part One pays the benefits the state statute requires, with no dollar limit. Part Two, employers liability, pays damages for work-related injury suits the statute does not cover, and it is subject to stated limits.

A surety bond is a three-party guarantee that a principal will perform an obligation, and the surety can seek reimbursement from the principal. A fidelity bond insures an employer against loss from employee dishonesty, with no reimbursement from the employee expected.

An umbrella sits above the underlying limits and can also drop down to cover some claims the underlying policies exclude, subject to a self-insured retention. Straight excess coverage only follows the underlying form and never broadens it.

A legal duty owed, a breach of that duty, proximate cause linking the breach to the harm, and actual damages. If any one element fails, the liability claim fails and the liability policy owes nothing but defense.

Strict or absolute liability attaches without proof of fault, as with defective products or inherently dangerous activities. Vicarious liability attaches because of a relationship, such as an employer answering for an employee's acts on the job.

Special damages are measurable economic losses such as medical bills and lost wages. General damages are non-economic, such as pain and suffering. Punitive damages punish the wrongdoer, and liability policies generally do not pay them.

The final premium depends on payroll or sales that are unknown when the policy is written. The insurer collects an estimate, audits the actual exposure after expiration, and then bills or refunds the difference.

It is evidence that the described coverage was in force on the date issued. It does not amend the policy, add the holder as an insured, or guarantee the coverage will stay in force.

An accident, including continuous or repeated exposure to substantially the same harmful conditions, that results in injury or damage neither expected nor intended by the insured. Deliberate harm falls outside the definition.

They cover defense costs, bail bonds, reasonable expenses the insured incurs at the insurer's request, and post-judgment interest. Under the standard CGL they are paid in addition to the limit, so defense does not erode the coverage available to claimants.

Give prompt notice, forward every demand and legal paper, cooperate with the investigation and defense, and make no voluntary payment beyond first aid. Late notice that prejudices the insurer can defeat an otherwise covered claim.

It requires the insured's agreement before the insurer settles a claim, which matters most in professional liability where a settlement damages reputation. Without the clause the insurer controls settlement decisions outright.

The insurer must offer terrorism coverage and disclose the premium charged for it, and the insured may reject it in writing. Federal backstop support applies only to acts certified under the Act.

Twenty hours of Commerce-approved education per major line of authority under Minn. Stat. 60K.36, so 40 hours for combined Property & Casualty. Testing before the education is complete forfeits the fee and voids the result even if the candidate passes.

Twenty-four credit hours of courses accredited by the commissioner during each 24-month licensing period, of which at least three hours must be in ethics, under Minn. Stat. 60K.56. No more than half the hours may come from insurer-sponsored courses, and unmet CE blocks renewal.

Only with the insurer's permission. Minn. Stat. 60K.49 bars a producer from transacting an insurer's business unless the insurer has appointed the producer, or has given permission and the appointment is obtained within 15 days after the first application is submitted. The insurer files the appointment notice with the commissioner within that same 15-day window.

Three years from the date of the examination, under Minn. Stat. 60K.36, subd. 6. PSI's bulletin restates it as a 36-month window to submit the license application, so a candidate who waits longer to complete fingerprinting and apply must sit the examination again.

Payment on a covered claim is limited to $300,000, whether it arises under one policy or several, and the association's obligation to any one insured and its affiliates ends once $10,000,000 has been paid in the aggregate. Workers compensation claims are exempt from both limits under Minn. Stat. 60C.09.

Minn. Stat. 72A.201 requires acknowledgment of the claim notification within 10 business days and notice of acceptance or denial within 30 business days after receiving notification. Missing either deadline is an unfair claims practice.

Within five business days after the insurer receives the signed agreement or the claimant performs, under Minn. Stat. 72A.201. Delay past that window exposes the insurer to an unfair claims practice finding.

Rebating any part of the premium or offering an inducement not stated in the policy, defaming an insurer with false statements about its financial condition, and unfairly discriminating between people of the same class and hazard. All fall under Minn. Stat. Chapter 72A.

It is the residual property market created by Minn. Stat. 65A.31 to 65A.42, making the standard fire policy, extended coverage, homeowners, condominium and cooperative forms, builders risk and vandalism coverage available to applicants who cannot buy it in the voluntary market. Its policies are written on a non-replacement-cost basis with limits capped at the county assessor's market value, so it is a last resort, not a cheaper market.

At least 60 days advance written notice under Minn. Stat. 65A.29, and the notice must state the specific underwriting or other reason, the insurer's name and the date issued. A vague reason does not satisfy the statute.

At least $40,000 of basic economic loss benefits under Minn. Stat. 65B.44: $20,000 for medical expense loss, plus a separate $20,000 for income loss, replacement services, funeral expense and survivor's loss. The two halves are not interchangeable, so exhausting medical benefits does not reach the wage-loss pot.

Minn. Stat. 65B.49 requires residual liability of at least $30,000 per person, $60,000 per accident and $10,000 property damage, and it separately requires uninsured and underinsured motorist coverage of at least $25,000 per person and $50,000 per accident each. Unlike many states, Minnesota makes UM and UIM mandatory rather than optional.