MN Insurance Exam Property and Casualty Updated 2024-2025. Questions & Correct Answers. A+, Exams of Insurance law

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MN Insurance Exam Property and

Casualty Updated 2024-2025. Questions

and Correct, Verified Answers. Graded

A+

a commissioner can examine who? - ANS- any company authorized to do business in MN

• any person involved in formation of insurer -a licensed producer or solicitor
• a person engaged in business of adjusting losses or financial premiums a premium paid at the time of the application constitutes what? - ANSan offer Absolute/Strict Liability - ANSliability without fault Actual Cash Value - ANSthe payment you receive is based on the replacement cost of an item minus depreciation Adhesion - ANSone party has greater power over the other when drafting the contract Adverse selection - ANSthe tendency of persons with a higher-than-average chance of loss to seek insurance at standard rates Advertising includes - ANS- printed and published material
• letters -billboards -radio and TV After 60 days of an effective policy, what can an insurance cancel homeowners insurance because? - ANS-nonpayment of premium -fraud when making a claim -omission of material facts -physical changes in property thats not restored within reasonable time Aleatory - ANSpayouts to insured are unbalanced Alien Insurer - ANSlike china doing business in the US Apparent Authority - ANSauthority thats assumed appraisal - ANSevaluation or estimation of worth

Arbitration - ANSsettling a dispute by agreeing to accept the decision of an impartial outsider Are stock companies profits taxable? - ANSYes avoid risk - ANSnever getting into a car BAILED - ANSBonds Aid Interest Loss of earnings Expenses Defense Costs Binders - ANSused before issuing a policy to provide immediate protection until the actual policy is issued Blanket Coverage - ANSPolicy which provides a single limit of insurance for all property falling within a specific class. like covering your house, car and boat? BOP Standard deductibe - ANS$ Broker - ANSrepresents the insured Builders Risk Coverage Form - ANSA form that covers buildings in the course of construction, including additions or alterations to existing buildings. burglary - ANStaking property from inside the premises (usually breaking in, making a visible forced entry) Business Income Coverage - ANSPays for losses of income that the insured sustains due to a direct physical loss from a covered peril that forces the insured to suspend operations. Business Owners Policy (BOP) - ANSA policy that combines property, liability and business interruption coverage for small- to medium-sized businesses. Business Personal Property - ANSProperty owned, leased or rented by a business that is used to conduct business (computers, desks, file cabinets, etc.) can a dwelling be under construction? - ANSyes cancellation - ANSoccurs before the policys expiration date Cause of Loss Forms - ANSBasic, Broad, Special

Coinsurance - ANSrequires the insured to carry a minimum amount of insurance. normally 80% did/should x loss Combined Single Limit - ANSauto insurance liability coverage that combines both bodily injury and property damage liability Commercial Package Policy (CPP) - ANSPolicy that covers two or more lines of business by combining ISO's commercial lines coverage parts. Comparative negligence - ANSinvolves both parties being at fault, and plaintiff cannot recover damages if they're greater than the defendants. comprehensive - ANSgod sent things like (deer crossing road, theft) Concealment - ANSThe withholding of known facts which, if material, can void a contract. conditions - ANSrules for the policy consultant - ANSsomeone who offers advice contributing negligence - ANSPlaintiffs lack of action negatively affects the treatment out come, contributing towards the negligence. "spilt oil all over, then decided to climb a latter because hes stupid and falls) control risk - ANSwearing a seat belt Coverage A - ANSDwelling. it covers structures attached to the dwelling, materials and supplies for use in the construction or repair of the dwelling Coverage A Exclusions - ANSExclusions: •Intended BI or expected PD •Liquor liability •Workplace accidents to employees covered by WC •Pollution Liability •Acts of War •Ownership & Operation of aircraft, watercraft, vehicles •Injury or damage caused by Mobile Equipment in transit •Damage to property owned by insured, rented to insured, occupied by insured or in the care, custody or control •Cost of product recall Coverage A: Bodily Injury and Property Damage Liability - ANSBI & PD, caused by occurance, duty to defend the insured

Coverage B - ANSOther Structures. insures buildings on the premises that are separated from the dwelling by a clear space or connected only by fence or similar connection, utility line. cannot be used for commercial, manufacturing or farming purposes. Coverage B - Personal and Advertising Injury - ANSoffenses, libel slander and advertisements Coverage B - Personal and Advertising Injury Liability exclustions - ANSmaterial thats published before effective date, trademark bad Coverage C - ANSpersonal property Coverage C- Medical Payments Exclusions - ANSemployee, or payable under workers comp Coverage C: Medical Payments - ANSprovides necessary medical, surgical, ambulance, hospital, professional nursing or funeral expenses for injuries to third parties Coverage D - ANSFair Rental Value (Up to 10% of Cov. A) -Pays Landlord for damages due to covered peril -Pays for loss in rents landlord would have collected -Monthly basis pay is 1/12 of coverage amount Tyson - available if covered property loss to the dwelling or other structure makes the building uninhabitable and the insured cannot collect the rent he would have been able to receive if the loss had not occurred. 20% available. Coverage D - Fair Rental Value - ANSabout payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable Coverage D: Loss of Use (Homeowners) - ANScovers losses incurred as a result of your home being uninhabitable Coverage E: Personal Liability - ANSpays for additional living expenses the insured incurs after a covered loss, including reasonable motel, dining, laundry and transportation expenses. Coverage L - ANSPersonal Liability - covers for damages that the insured becomes legally obligated to pay because of an occurrence. Policy limit is $100, Coverage L Exclusions - ANS-damage to property owned by an insured -damage to property rented to, occupied or used by, or in the care of an insured

• for losses that would be covered under a workers' comp or similar law -for loss assessments charged against the insured as a member of an association, corporation, or community of property owners
• assumed under most contract or agreements

• for injury to the insured or any relative or minor who resides in the same household. Coverage M - ANSMedical payments to others - the insurer will pay all necessary medical expenses incurred within three years of an accident that causes bodily harm. Max of $1,000 per person Coverage M does not apply to: - ANSBodily injury Declarations - ANSwho, what, when, where, and how much Deductible - ANSAmount you must pay before you begin receiving any benefits from your insurance company Definition of the Insured - ANSAn insurance contract must identify the persons or parties who are insured under the policy. THE NAMED INSURED Difference between dwelling policy and homeowners policy - ANS-dwelling provides more limited property coverage than homeowners -dwelling covers property only while homeowners covers property and liability coverages direct loss - ANSphysical loss to property (house burning down) Directors and Officers Liability Insurance - ANSprovides financial protection from the consequences of litigation involving wrongful acts on the part of directors and officers do dwellings have to be occupied by the owner? - ANSno Doctrine of Reasonable Expectations - ANSStates that a policy includes coverages that an average person would reasonably expect it to include, regardless of what the policy actually provides. Domestic Insurer - ANSinsurance company doing business within one state DP-1 covers - ANSnon attached buildings DP-2 (Covers) - ANSDamage by burglars, falling objects, weight of ice, snow, or sleet Duties of the Insured - ANS-pay premiums -notify the insurer of insured events within a reasonable time -cooperate with insurer's investigation dwelling broad form covers? - ANSeverything in the broad form including, damage to property caused by burglars (not theft of property tho) weight of ice snow, falling objects, freezing of plumbing

Elements of a Contract (CLOAC) - ANSConsideration, legal purpose, offer, acceptance, competent parties Elements of Insurable Risk - ANS(CANHAM) Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable Employment practices liability insurance (EPLI) - ANSProtects an employer against claims by workers that their legal rights as employees of the company have been violated. endorsments - ANSchanges to the original policy endorsments - ANSused to add coverage or modify coverage Equipment breakdown insurance - ANSInsurance that covers loss due to the accidental breakdown of almost any type of equipment that operates under pressure or that controls, transmits, or uses mechanical or electrical power. Errors and Omissions - ANSA Professional Liability coverage that protects the insured against liability for committing an error or omission in performance of professional duties. Estoppel - ANSA legal principle that stops a party from denying because someone made a mistake? Examples of surplus lines - ANSCargo Ships, Oil Rigs, Casinos, Amusement parks Excess lines - ANSspecialized insurance coverages exclusions - ANSitems not covered Exposure - ANSA condition or situation that presents a possibility of loss. Express Authority - ANSthe authority of an agent, Extra Expense Coverage - ANSInsurance coverage for extra expenses incurred by the named insured to avoid or minimize the suspension of operations resulting from direct damage caused by a covered cause of loss. Fair Credit Reporting Act - ANSprotects consumers by requiring that the consumer be notified in certain situations and by establishing provisions for the removal or incorrect information FAIR plan does what? - ANSassists applicants in securing property or liability insurance Federal employers liability act (FELA) - ANScomp for rail road workers

Flood Insurance Coverage A Standard Deductibe - ANS$1, Flood Insurance Coverage B Standard Deductible - ANS$1, Foreign Insurer - ANSinsurance company doing business outside its home state forgery - ANSis signing the name of another person Forgery - ANSThe fraudulent making or altering of any writing in a way that changes the legal rights and liabilities of another. Fraternal Benefit Societies - ANSMust be nonprofit, have a lodge system, and offer insurance to its members only fraud - ANSlying on purpose. INTENTIONAL government covers what? - ANSWar Risk, Nuclear energy, flood, federal crop Gramm-Leach-Bliley Act - ANSprotects the confidentiality of personal financial information hazard - ANSincreases the chance of loss (gas next to a fire place) HO-2 - ANS(broad form): covers the dwelling, other structures, and personal property on a named perils basis HO-3 - ANSspecial form; provides open peril coverage for loss to dwelling and other structures; broad coverage for personal property HO-4 - ANScontents broad form, insures tenants (renters insurance) no dwelling coverage HO-5 - ANScomprehensive form, provides open peril coverage for both the dwelling and other structures and personal property HO-6 - ANS(unit- owners form) Condominium owners HO-8 - ANSmodified coverage form, policy is for OLDER HOMES that have a replacement cost that is much higher than its market value - basic coverage. In many areas HO-8 is no longer available. Homeowners Basic Form Perils - ANSWC SHAVVER + vandalism + Theft Homeowners Coverage B covers ____ - ANSstructures on the premises set apart from the home like a detached garage. Cannot be used for business

How do you get a nonresident license? - ANS-they currently have a license and are in good standing within their home state -must file an address change

• no license application required how long is vacancy? - ANS60 days How many apartments can a dwelling be? - ANSno more than 4 How many parties is involved when the insurer and insured can't agree on the value of loss? - ANS3 - the umpire is the 3rd how much does the dwelling policy cover for a fire department service charge? - ANS$ How often can a commissioner examine insurance companies? - ANSas often as necessary but MUST be every 5 years if the car owner doesn't have collision - ANSthe insured must request coverage within 4 days Implied Authority - ANS In mutual companies, what are insurance dividends considered as? - ANSa refund of overpaid premium, not taxable indirect loss - ANSloss as a result of a direct loss ( house burned down, now we gotta stay in a hotel) Insurable interest - ANSthe interest you have in insurance (ex. i have no interest in taking out insurance for taylors car. its not mine? Insurance - ANSa contract between two parties in which one party protects the other against certain types of loss in exchange for payments Insurance adjuster - ANSClaims examiner overseeing an industry related claim case Insuring Agreement - ANSpromise to pay and perils covered Is liability coverage provided with all HO forms? - ANSLiability coverage is included in all the homeowner's policy forms. Jones Act - ANSworkers comp for ship's crew. injuries caused by employers or ship owners negligence

law of large numbers - ANSthe more the data the more reliable the statistics will be Liability for damage to property rented is or isnt covered? - ANSit is not Limits of Insurance - ANSA - per occurance B- per person C - per person Lloyd's Association - ANSgroup of individuals who share the risk and the exposure

• known for insuring unusual risks (BIG money things like cargo ships) longshore harbor workers comp act - ANScomp for longshore and harbor marine workers Loss Ratio - ANSloss ratio = incurred losses/earned premiums Material Fact - ANSa fact that would cause an insurance company to decline a risk medical malpractice - ANSprofessional negligence of physicians or providers Medical Payments under casualty insurance covers... - ANSmedical and funeral expenses within 3 years Methods of Handling Risk (STARR) - ANSSharing Transfer Avoidance Retention Reduction misrep - ANSmaking false statement regarding dividends or financial condition of the insurer Misrepresentation - ANSA false statement or lie that can render the contract void. Mobile Home Insurance - ANS-endorsement to a dwelling or homeowners policy -can be separate policy -insures the home, other structures (10%), and contents -personal property- 40% of dwelling coverage -loss of use -20% -permanent foundation moral hazard - ANSthey just want money from the insurance company Morale hazard - ANSbeing careless "my insurance will pay for it, its fine"

Mortgagee Rights - ANSRights granted to a mortgagee (lender), under a property contract issued to a mortgagor, by virtue of the mortgagee's financial interest in the property. Mutual Companies are managed by who? - ANSboard of directors mutual companies are owned by? - ANSpolicy holders mysterious disappearance - ANSmeans property of the insureds property that vanished without explanation Named nonowner coverage - ANScovers someone who does not own an automobile but may drive borrowed or rented autos National Flood Insurance Program - ANSThe federal government's program to provide Flood insurance at subsidized rates. Negligence - ANScareless neglect, often resulting in injury network liability covers.. - ANScyber liability Newly Acquired Auto - ANSautomatically has the same coverage as current covered autos for 14 days. nonrenewal - ANSoccurs at the expiration date Notice of Claim - ANS- The policyowner's obligation to the insurer to provide notification of loss within 20 days after the occurrence (or as soon as is reasonably possible).

• 20 days Obligations of the Insurance Company - ANSan insurance company, in return for premium, must be fair in underwriting and must pay covered losses. occurrence - ANSan accident, including continuous or repeated exposure to substantially the same general harmful conditions. Occurrence Form - ANStriggered by damage or injury that occurs during the policy period other-insurance provisions - ANSprevent profiting from insurance and violation of the principle of indemnity Part A: Liability Coverage - ANSCovers body/property damage caused by insured
• think you being the insured and being "liable" for something/someone

Part B: Medical Insurance - ANSvoluntary program that covers physicians' fees and related medical services Part D: Coverage for Damage to Your Auto - ANSprovides coverage for damage or theft of an auto Parts of an Insurance Contract (DICEE) - ANSdeclarations, insuring agreements, conditions, exclusions, and definitions (explainations) Peril - ANScause of loss (fire) Personal Articles Floater - ANSprovides all risk coverage, including fire, theft, etc for certain types of personal property such as jewelry. White traveling? physical hazard - ANSlike a wet floor Policy Application - ANSprinted form that includes questions about a prospective insured and the desired insurance coverage and limits. Premises and Operations - ANSon and off the premises Principle of Indemnity - ANSThe insurer agrees to pay no more than the actual amount of the loss producer - ANSme Products and Completed Operations - ANSA form of insurance, which covers a company against liability arising out of its products or its completed operations. Ex Salmonella Proof of Loss - ANSA statement of facts about a loss for which the insured is making a claim. proximate cause - ANSLegal cause. It exists when the connection between an act and an injury is strong enough to justify imposing liability. pure risk - ANSchance of loss reasons one would be eligible under the FAIR plan? - ANSpoor credit history, high number of claims, property condition Rebating - ANSoffering something to help sell Reciprocal - ANSmembers of unincorporated group insure eachother and share losses. (Cover eachother, what goes around like a reciprocal)

Reinsurance - ANSinsurance for insurance companies to help spread the risk replacement cost insurance - ANSThere is no deduction for physical depreciation in determining the amount paid for a loss representation - ANSbelieved to be true Representations - ANSstatements that the applicant believes are true retain risk - ANSpaying for it yourself. like walmart has so much money they dont need to take out insurance Retroactive Date - ANSThe date on or after which bodily injury or property damage must occur (or a personal and advertising injury offense must be committed) in order to be covered. retrospective rating - ANSthe insureds premium on losses incurred during the policy period Risk - ANSchance or uncertainty of loss robbery - ANSthe taking of property from a person's possession by using force or threats Safe Burglary - ANSThe unlawful taking of property from within a locked safe or vault salvage value - ANSthe estimated value of a fixed asset at the end of its useful life schedule rating - ANSapplies a system of debits or credits to reflect characteristics of a particular insured Scheduled Personal Property Endorsement - ANSprovides coverage for specific items of property like a watch that exceeds the internal limit on the policy Section 1 of the homeowner's policy covers what? - ANSthe home and its contents Section 2 on Homeowners Policy - ANSLiability and medical payments. paid to others only Solicitor - ANScan sell insurance but not countersign Sources of Underwriting Information - ANS- application

• agent's report
• inspection report
• physical inspection
• physical examination

Specific Coverage - ANSInsures one property on one policy for one specific amount of insurance. Speculative risks - ANSrisks where there exists both the change of gain and the chance of loss Split limits - ANSseparate limits for bodily injury and property damage liability coverage Stated Amount - ANSinsured up to this amount Stock companies are managed by who? - ANSBoard of directors Stock companies are owned by who? - ANSShareholders Subrogation - ANSthe insurer has the right to sue an at fault party for damages the insurer had to pay to the insured. common when the at fault party doesnt have insurance Supplemental Payments - ANSThings specified in auto policies that the insurance company will pay for in addition to the auto policy limits of liability Surplus Lines - ANS surplus lines - ANSallows producers to place insurance risks with eligible nonadmitted surplus lines insurers Terrorism Risk Insurance Act (TRIA) - ANSRequires insurance companies to offer terrorism insurance to their commercial policyholders. The HO-2 policy provides an additional ___% amount of coverage ont he dwelling for loss of personal property but only __% of the personal property limit can be applied to property - ANS50% and 10%. meaning you would cut the number in half then minus 10% the pair or set condition - ANSStates that in the case of a loss to an item that is part of a pair or set, the insurance company is not obligated to pay the value of the entire set. theft - ANStaking of property Theft of jewlery, watches, fure, and precious stones is valued at? - ANS$1, tort - ANSA civil wrong Total repair or replace? who decides? - ANSinsurance company

Transfer risk - ANSinsurance companies Transportation expense - ANSrental cars, buses, taxis, train Twisting - ANStaking an insured from another company Types of Risk Exposures - ANSpremises and operations, product and completed operations umbrella policy - ANSInsurance that provides additional liability protection beyond that in an automobile or homeowner's policy. under the dwelling policy, mobile homes must be? - ANSpermanently located. Underinsured Motorist - ANShas no liability insurance at the time of the accident or has a lower insurance underwriting - ANSthe process of selecting, classifying, and pricing applicants for insurance Unilateral - ANSone sided meaning the insurance company is legally bound to perform its part of the agreement Unoccupancy - ANSA property that contains personal property but has no occupants. utmost good faith - ANSinsurance company and insured rely on eachother to do their job vacancy - ANSnot people or personal property Valued policy law states that - ANSthe face amount will be paid in full in the event of a total loss vandalism and malicious mischief coverage doesn't cover? - ANSdamage to glass, losses by theft, and vandalism when the building was vacant for more than 60 consecutive days Vicarious Liability - ANSliability for the actions of another Waiver - ANSAn intentional, knowing relinquishment of a legal right. WC SHAVVER - ANSWINDSTORM, CIVIL COMMOTION, SMOKE, HAIL, AIRCRAFT, VEHICLES, VOLCANO, EXPLOSION, RIOT What are some additonal coverages in the homowners policy? - ANSDebris removal, fire department service charges, and loss assessment

What can an insurance company NOT cancel because? - ANS-properties location

• age of structure -insured was canceled by another company -property was insured under the FAIR plan -insured inquired about coverage for hypothetical or potential claim what can you get with extended coverage? WCSHAVVER - ANSRiot, explosion, vehicles, smoke, hail, civil commotion, aircraft, windstorm, volcanic eruption, vandalism and malicious mischief (in conjuction) What can you NOT put in a report? - ANSbankruptcies over 10 years, suits & judgements over 7 years, arrests or crime reports, anything else that took place over 7 years what coverage is also included in dp-2 and dp-3 - ANSCoverage E - additional living expenses (like staying in a hotel) what does an insured get back when they cancel their homeowners insurance? - ANSany excess premium paid What does the dwelling basic form cover? - ANSCoverage A - Dwelling Coverage B - Other structures Coverage C - personal property Coverage D - fair rental value What does the Managing General Agency do? - ANS-hires producers -supervises a territory
• responsible for agent activities
• must be licensed as insurance producer what does the MN insurance guaranty association do? - ANSprotects insured form insurers inability to pay claims due to bankruptcy what is a full refund of unearned premium? - ANSpro-rata what is eligible under the FAIR plan? - ANShomes, businesses, apartments, condos, factories, and farms who have been denied insurance What is not allowed in advertising - ANS-deceptive words
• using words like: all, full, comprehensive, complete, unlimited, up to, or as high as -no exaggeration what is not covered after 60 days of vacany? - ANSvandalism, glass, breakage, theft, and water damage

What is not covered by coverage C? - ANSmoney, credit cards, animals, motorcycles, boats, grave markers, and water or steam What is the commissioner empowered to do? - ANS-enforce and create rules for enforcing insurance laws

• conduct investigations and hold hearings examine and approve policy forms -examine books, records, and documents of producers
• appoint staff to assist with enforcement what is the dwelling policy used for? - ANSused by owners who do not qualify for homeowners policies and include homes that are rented to tenants what is the most coverage available for a single family dwelling covered under the regular flood program? - ANSBuilding- $250,000 and Contents - $100, what is the partial refund of unearned premium? - ANSshort rate what is the transportation expense? - ANS$20 a day and a max of $600 with 48 hour waiting period for theft. 24 for all others what percentage must the insured carry for the amount of insurance to replace a building cost? - ANS80% What perils are covered under the basic form? - ANSFire, Lightning, and Internal Explosion what would get your license revoked? - ANS-providing incorrect, misleading, incomplete, or materially untrue information on license application -violating insurance laws
• attempting to obtain insurance license through fraud -improperly withholding or converting money or property received in course of doing insurance business -misrepresenting a policy -being convicted of a felony or misdemeanor -committing unfair trade practice whats included in the personal effects floater? - ANS(Traveler's baggage) Designed to insure personal belongings of individuals and families while traveling when can an insurance company cancel a homeowners policy? - ANSneeds to give a 20 days notice When can an insured cancel homeowners insurance? - ANSanytime Who appoints the commissioner of commerce? - ANSGovernor

Who is an insured? - ANS-Named insured and resident spouse -Resident family members -Any person who borrows a covered auto with the permission of any insured With bonds - A principal... - ANSmakes the promise with bonds - a surety is.. - ANSthe one who promises to pay if the promise is broken with bonds - an Obligee... - ANSis party to whom the promise is made to with BOP endorsements applies only if the business does NOT have - ANScommercial auto