Minnesota Property & Casualty Insurance License, Practice Exams

An insured has $1M/$2M CGL underlying and a $5M umbrella. A covered liability judgment is $4M for a single occurrence. After the CGL pays its $1M occurrence limit, the umbrella pays:

1. $0
2. $5,000,000
3. $4,000,000
4. $3,000,000 ✓

Why: The CGL pays its $1M occurrence limit; the umbrella pays the remaining $3M excess over the underlying.

A homeowner's water heater bursts and water damages flooring. Under HO-3, this sudden and accidental discharge of water is:

1. Generally a covered named peril (accidental discharge or overflow of water) ✓
2. Covered only under Section ii liability if a guest is injured by the accidental discharge of water
3. Subject to a $500 sublimit that applies to all plumbing-related losses
4. Excluded as flood damage, since the exclusion applies to any water that escapes onto floors

Why: Sudden and accidental discharge or overflow of water from a plumbing system is a covered broad-form peril; gradual seepage and flood are excluded.

A trucking company hauling another company's goods is liable for cargo damaged in a collision it caused. Which coverage responds to the carrier's liability?

1. Accounts receivable coverage for sums the shipper cannot collect
2. Builders risk coverage on a structure under construction
3. Motor truck cargo (carrier's) legal liability ✓
4. Hull coverage, which insures the vessel carrying the goods and the carrier's cargo liability

Why: Motor truck cargo legal liability (a transportation inland marine form) covers a carrier's legal liability for damage to cargo it transports.

A homeowner objects in writing to the commissioner 28 days after receiving a notice eliminating a coverage. The insurer wants to know its response time, the commissioner's deadline, what a decision against it means, and whether it may act while seeking judicial review.

1. The objection was out of time and the rest does not arise: the homeowner's objection period is 20 days from receipt, the 30-day figure belonging to the automobile sections, and an insured who lets it pass is left with the appeal to the commissioner under the nonrenewal provision instead.
2. It has 30 days to respond, the commissioner must decide within 30 days, a decision against it is simply a decision, and its own decision is suspended while judicial review is pending: the section puts the parties on an equal footing as to time and preserves the status quo until a court has ruled, which is the ordinary consequence of a right of review.
3. It has ten days to respond and the commissioner must decide within 23 days, matching the automobile sections; a decision against it constitutes a charge that it has violated the law or the rules; and the decision binds pending judicial review, the two regimes having been drafted together so that an insurer writing both lines faces one set of deadlines rather than two.
4. It has ten days from notification to file a written response; the commissioner must approve or disapprove within 30 days of receipt of the written objection; a decision which disapproves the insurer's action constitutes a charge that the insurer has violated the law or the rules; and the commissioner's decision is binding pending judicial review. ✓

Why: Minn. Stat. 65A.29, subd. 9 is the homeowner's objection route and it is worth learning beside its automobile counterpart, because the two are similar enough to be confused and differ in one number. A NAMED INSURED WHO BELIEVES A NONRENEWAL, REDUCTION IN THE LIMITS OF COVERAGE, ELIMINATION OF COVERAGE, OR CANCELLATION UNDER SECTION 65A.01, SUBDIVISION 3a, IS IN VIOLATION OF THE LAW OR THE RULES MAY, WITHIN 30 DAYS AFTER RECEIPT OF THE NOTICE, FILE IN WRITING AN OBJECTION TO THE ACTION WITH THE COMMISSIONER. Four actions are covered, and the period is 30 days from receipt - the same as section 65B.21, subd. 1. Then: UPON RECEIPT OF A WRITTEN OBJECTION, THE COMMISSIONER SHALL NOTIFY THE INSURER OF RECEIPT OF THE OBJECTION AND OF THE RIGHT OF THE INSURER TO FILE A WRITTEN RESPONSE WITHIN TEN DAYS OF RECEIPT OF THE NOTIFICATION. WITHIN 30 DAYS OF RECEIPT OF WRITTEN OBJECTION BY AN INSURED, THE COMMISSIONER SHALL APPROVE OR DISAPPROVE THE INSURER'S ACTION AND SHALL NOTIFY THE INSURED AND INSURER OF THE FINAL DECISION. That 30 days is the difference: the automobile section gives the commissioner 23. A DECISION WHICH DISAPPROVES THE INSURER'S ACTION CONSTITUTES A CHARGE THAT THE INSURER HAS VIOLATED THE LAW OR THE RULES - a sentence with no automobile equivalent, and one that turns an adverse decision into the foundation of an enforcement proceeding. EITHER PARTY MAY INSTITUTE PROCEEDINGS FOR JUDICIAL REVIEW OF THE COMMISSIONER'S DECISION. THE COMMISSIONER'S DECISION IS BINDING PENDING JUDICIAL REVIEW.

Two Minnesota business people wish to form a domestic insurance corporation. They have drafted a certificate giving the corporation's name, the general nature of its business and its principal place of business, and the names and residences of the incorporators. They ask what else is required of them and of the document.

1. Two incorporators suffice, the statute setting no minimum number; and the certificate is complete as drafted, the remaining matters being dealt with in the bylaws rather than in the certificate, which need contain only the identifying particulars of the corporation and of the persons forming it.
2. At least one more incorporator is needed, since three or more persons are required; but the certificate as drafted is otherwise complete, the plan of organisation and the capital stock details being supplied later in the application to the Department of Commerce rather than subscribed by the incorporators in the certificate itself.
3. At least one more incorporator is needed, since three or more persons may form a domestic insurance corporation; and the certificate must also specify the period of the corporation's duration if limited, the board in which management will be vested with the date of the initial annual meeting and the board members until the first election, and whether the corporation is on the stock plan, the mutual plan or otherwise, with the capital stock details if it is a stock company. ✓
4. At least five incorporators are needed for a domestic insurance corporation; and the certificate must also specify the period of duration, the management board and the plan of organisation, but a stock company's capital stock details are furnished separately to the commissioner and are not among the matters the incorporators must subscribe, the certificate being confined to the corporation's identity, its purposes and the persons who brought it into being rather than to the terms on which its capital is raised.

Why: Minn. Stat. 60A.07 subd. 1 opens “Three or more persons may form a domestic insurance corporation for any of the purposes specified in subdivision 2 by applying to the Department of Commerce and complying with all applicable organizational requirements and the conditions set out in clauses (1) to (6)”. Three is the minimum, so two is short and five is more than the statute asks. The incorporators “must subscribe a certificate specifying” six things, and the drafted document has only three of them. Clause (1) the name, which must distinguish the corporation from all others authorized to do business in this state and must contain the word “company”, “corporation” or “incorporated”. Clause (2) the general nature of the business and the principal place of business. Clause (3) the period of duration, if limited. Clause (4) the names and places of residence of the incorporators. Clause (5) the board in which management will be vested, the date of the initial annual meeting at which it will be elected, and the names and addresses of the board members until the first election. Clause (6) whether the corporation is organized on the stock plan, mutual plan or otherwise - and if a stock company, the amount of capital stock, how it is to be paid in, the number of shares and the par value of each, with a description and terms of issue of each class and the method of voting on each where there is more than one class. Those capital details are part of what the incorporators subscribe, not a later filing, which is where the answers treating them as a later filing go wrong. The certificate may also contain any other lawful provision defining and regulating the powers and business of the corporation, its officers, directors, trustees, members or stockholders. The subdivision closes by providing that domestic insurance corporations established in this manner “are organized under and governed by chapter 302A, except as otherwise provided in subdivision 1d and chapter 66A”.

A Minnesota insurer denies a claim, relying on a statement in the insured's written application and on a provision of the company's own bylaws. Neither the application nor the bylaws was incorporated in or attached to the policy that was issued to the insured.

1. Both may be relied on: the application is the foundation of the contract and the bylaws bind every person who deals with the company, whether or not either document is attached to the policy, since attachment goes to the convenience of the insured in reading the terms rather than to the content of the bargain the parties actually struck.
2. The application may be relied on but the bylaws may not, because an applicant warrants the truth of the answers given whether or not the application is attached to the policy delivered, while a company's internal bylaws bind only its members and cannot be imported into a contract with a policyholder who was a stranger to their adoption and had no vote upon them.
3. Neither the application statement nor the company's bylaws may be relied on unless the insurer proves that the insured had actual knowledge of the term relied on when the policy was issued, in which case that term becomes part of the contract even though it was neither incorporated in nor attached to the policy that was delivered to the insured at the inception of the risk.
4. Neither may be relied on: a statement in full of the conditions of insurance must be incorporated in or attached to every policy, and neither the application of the insured nor the bylaws of the company shall be considered as a warranty or a part of the contract except in so far as they are so incorporated or attached. ✓

Why: Minn. Stat. 60A.08 subd. 1 is one sentence and does two things. It imposes a positive duty - “a statement in full of the conditions of insurance shall be incorporated in or attached to every policy” - and it attaches a consequence to failure: “neither the application of the insured nor the bylaws of the company shall be considered as a warranty or a part of the contract, except in so far as they are so incorporated or attached”. The exception is the operative part. Incorporation or attachment is the ONLY route by which either document enters the contract, so the test is documentary rather than evidential - the actual-knowledge escape has no basis in the text, and the appeal to the nature of the bargain in the answer letting both be relied on runs directly against it. The answer allowing the application but not the bylaws is the most instructive distractor because it splits the two documents and treats the application differently, which is exactly what the subdivision refuses to do: it names the application and the bylaws together and subjects both to the same condition. The practical effect is that an insurer which wants to rely on an application statement as a warranty must attach the application to the policy it delivers.

A Minnesota examination is completed. The insurer's general counsel maps the timetable that follows and asks when the verified report must be filed with the department, how long the company has to answer it, and what the commissioner may do once that period has run.

1. The examiner in charge files the verified written report within thirty days following completion of the examination; the department transmits it to the company, which then has sixty days to make a written submission or rebuttal; and the commissioner has no fixed period in which to act upon it, the section leaving the timing of the order to the commissioner's discretion so long as it is entered within a reasonable time of receiving the written submission or rebuttal from the company and reviewing it together with the relevant portions of the examiner's work papers.
2. The examiner in charge files the report within sixty days following completion; the company has thirty days to respond; and the commissioner must then either adopt the report as filed or reject it, there being no power to call a hearing at this stage, a hearing arising only if the company appeals the adopted report to a court of competent jurisdiction within thirty days after it has been served upon the company by certified mail, the department bearing the burden at that hearing of justifying every correction it made to the report as filed.
3. The examiner in charge files a verified written report under oath no later than sixty days following completion of the examination; on receipt the department transmits it to the company with notice giving a reasonable opportunity of not more than thirty days to make a written submission or rebuttal; and within thirty days of the end of that period the commissioner must enter an order adopting the report, rejecting it with directions to reopen the examination, or calling an investigatory hearing on at least twenty days' notice. ✓
4. The examiner in charge files the verified written report no later than sixty days following completion of the examination; the company is given a reasonable opportunity of not more than thirty days to make a written submission or rebuttal; and within thirty days of the end of that period the commissioner must enter an order adopting the report as filed, with no power to modify or correct it, any modification requiring the examination to be reopened and the report refiled by the examiner in charge before an order adopting it may be entered by the commissioner and served on the company by certified mail together with the examiner's revised findings of fact.

Why: Minn. Stat. 60A.031 subd. 4(b) requires the examiner in charge, “no later than 60 days following completion of the examination”, to file with the department a verified written report of examination under oath; on receipt the department transmits it to the company together with a notice giving “a reasonable opportunity of not more than 30 days to make a written submission or rebuttal”. Paragraph (c) then gives the commissioner thirty days from the END of that period - not from the filing - to fully consider and review the report together with the submissions and the relevant portions of the examiner's work papers, and enter one of three orders: (1) adopting the report “as filed or with modification or corrections”, and where the report reveals the company is operating in violation of a law, rule or prior order the commissioner may order any action considered necessary and appropriate to cure the violation; (2) rejecting the report with directions to the examiners to reopen the examination for additional data, documentation or information and refile it; or (3) calling for an investigatory hearing “with no less than 20 days' notice to the company”. So the power to modify on adoption exists, which is where the adopt-as-filed answer fails, and the hearing sits inside this stage rather than after an appeal, which is where the adopt-or-reject answer fails. Subdivision 4(a) separately requires the report to be a full and true report carrying findings of fact and a summary of important points, conclusions and recommendations, verified by the oath of the examiner in charge, and makes it prima facie evidence in any action in the name of the state against the company.

A Minnesota insurer wishes to continue a policy that terminates by its provisions at a specified expiration date and is not otherwise renewable. It would rather not issue a fresh policy document. It asks whether a certificate will do, and what it must do about the current policy form.

1. A policy terminating at a specified expiration date and not otherwise renewable cannot be carried forward by certificate at all; the insurer must issue a new policy on the terms then current and deliver the complete policy document at the point of issue, the certificate procedure in the chapter being confined to life and annuity business.
2. The policy may be renewed or extended at the insurer's option, at the premium rate then required, for a specific additional period or periods by a certificate and without requiring the issuance of a new policy; and the insurer must also post the current policy form on its website, or inform the policyholder annually in writing that a copy of the current policy form is available on request. ✓
3. The policy may be renewed by certificate at the option of the policyholder rather than the insurer, and at the premium rate charged for the expiring period rather than the rate then required; and the insurer must post the current policy form on its website, an annual written notice that the form is available on request being no substitute for posting it.
4. The policy may be renewed or extended at the insurer's option by certificate at the premium rate then required, but only for an indefinite continuing term rather than for a specific additional period or periods; and the duty as to the current policy form arises only when the policyholder asks for a copy, the insurer owing no duty to post the form or to give annual notice of it.

Why: Minn. Stat. 60A.08 subd. 3 supplies a renewal mechanism for a policy “terminating by its provisions at a specified expiration date or limited as to term by any statute and not otherwise renewable”. Such a policy “may be renewed or extended AT THE OPTION OF THE INSURER, at the premium rate then required therefor, for a specific additional period or periods by a certificate, and without requiring the issuance of a new policy”. Four elements are fixed and each distractor moves one: the option is the insurer's, not the policyholder's; the rate is the rate then required, not the expiring rate; the extension is for a SPECIFIC additional period or periods, not indefinite; and a certificate suffices in place of a new policy, so the mechanism exists at all, which the answer requiring a new policy denies. The subdivision then adds a disclosure duty in the alternative: “The insurer must also post the current policy form on its website, OR must inform the policyholder annually in writing that a copy of the current policy form is available on request.” Either satisfies it - the policyholder's-option answer makes posting compulsory, and the indefinite-term answer makes both optional and reduces the duty to answering a request. The point of the pairing is that a policyholder renewed by certificate never receives a fresh policy document, so the statute makes the current wording reachable some other way.

A claimant's damages are $500,000. The at-fault car was owned by a hire company and driven with permission by a customer. The owner's liability policy pays $100,000 and the driver's own liability policy pays a further $50,000. The claimant's underinsured motorist limit is $400,000.

1. Only the owner's payment is credited, so $400,000 is payable: the underinsured motor vehicle is identified by its owner's cover, and a payment made by the driver's separate insurer is a collateral recovery the claimant is entitled to keep, the calculation being capped at her limit.
2. Only the driver's liability payment is credited against the damages, so $400,000 of underinsured motorist cover is payable: it is the driver whose negligence caused the loss and whose policy therefore stands in the claimant's way, an owner's policy on a hired vehicle being a separate protection for the hire company rather than a recovery from the at-fault vehicle, and the figure is in any event capped at her limit; crediting an owner's policy as well would make the claimant's recovery depend on how the hire company chose to arrange its own insurance.
3. Neither payment is credited, so $400,000 is payable: the subdivision measures the maximum liability by the damages the claimant sustained, and the credit it describes operates only where the same insurer is on both sides of the claim.
4. Both payments are credited, so $350,000 is payable: the maximum liability of the underinsured motorist insurer is the amount of damages sustained but not recovered from the insurance policy of the driver or owner of any underinsured at fault vehicle - the subdivision names the policy of the driver or owner, so both recoveries reduce the claim, and $500,000 less $150,000 is inside the $400,000 limit. ✓

Why: Minn. Stat. 65B.49, subd. 4a describes the credit by naming two possible sources: the maximum liability of an insurer is THE AMOUNT OF DAMAGES SUSTAINED BUT NOT RECOVERED FROM THE INSURANCE POLICY OF THE DRIVER OR OWNER OF ANY UNDERINSURED AT FAULT VEHICLE. DRIVER OR OWNER covers the common case of a borrowed, hired or company vehicle, where the person driving and the person owning are insured separately and both policies may answer. Money recovered from either is money the claimant has recovered from the at-fault vehicle's side of the accident, and the subdivision credits it. $500,000 less the $100,000 from the owner's policy and the $50,000 from the driver's is $350,000. The third sentence then caps the result - IN NO EVENT SHALL THE UNDERINSURED MOTORIST CARRIER HAVE TO PAY MORE THAN THE AMOUNT OF ITS UNDERINSURED MOTORIST LIMITS - and $350,000 is inside the $400,000 limit, so the ceiling does not operate. Note what the credit is measured against: sums recovered FROM THE INSURANCE POLICY of the driver or owner. The subdivision is describing the liability insurance on the at-fault side, which is the same thing subd. 4a's first words are about when they speak of an UNDERINSURED AT FAULT VEHICLE.

An insured says he never received the nonrenewal notice and that the cover therefore continues. The insurer produces its mailing record showing the notice, with its reasons, sent to the address shown in the policy. The insured had moved and had told his agent verbally.

1. The insurer must show actual receipt: a notice provision that can be satisfied without the insured ever learning of the decision would defeat the purpose of requiring notice at all, and the burden of proving that a communication reached its intended recipient falls on the party that chose to communicate by post rather than by a method that produces acknowledgement.
2. The insurer must show that it used the most recent address it knew of: proof of mailing of the nonrenewal notice is sufficient only where the insurer has no reason to believe the address is stale, and an insurer whose agent has been told of a move has that reason, the agent's knowledge being the insurer's knowledge for this purpose; the address shown in the policy is the default rather than a safe harbour, and an insurer that has been told otherwise cannot rely on a record it knows to be out of date.
3. The mailing record is enough only for the cancellation cases: the section names cancellation and reduction in the limits of liability, and a nonrenewal is governed by its own notice provision, which requires the notice to be mailed or delivered and therefore contemplates proof that one or the other actually happened at the insured's end.
4. The mailing record is enough: proof of mailing of notice of cancellation, reduction in the limits of liability of coverage, or nonrenewal of a policy and, if required herein, the reason or reasons therefor to the named insured at the address shown in the policy, shall be sufficient proof that notice required herein has been given. ✓

Why: Minn. Stat. 65B.18 is one sentence and it settles a question that would otherwise be fought over in every disputed termination: PROOF OF MAILING OF NOTICE OF CANCELLATION, REDUCTION IN THE LIMITS OF LIABILITY OF COVERAGE, OR NONRENEWAL OF A POLICY AND, IF REQUIRED HEREIN, THE REASON OR REASONS THEREFOR TO THE NAMED INSURED AT THE ADDRESS SHOWN IN THE POLICY, SHALL BE SUFFICIENT PROOF THAT NOTICE REQUIRED HEREIN HAS BEEN GIVEN. Three things to take from it. It covers all three actions - cancellation, reduction in limits, and nonrenewal - so there is no separate regime for nonrenewals. What must be proved mailed is the notice AND, where the Act requires them, the REASONS, so an insurer that can prove it posted a bare notice has not discharged the section where a reason was owed. And the address is THE ADDRESS SHOWN IN THE POLICY, which is the same address sections 65B.17 and 65A.29 direct the notice to; an insured who moves protects himself by having the policy changed, not by telling someone. The section proves that notice was GIVEN. It does not deem the notice received, and it does not cure a notice that was short, unreasoned or sent on a ground the Act does not allow.

The 'your product' exclusion in the CGL means the policy will not pay for:

1. Bodily injury caused by the product to a third party
2. Property damage to the insured's own product itself ✓
3. Medical payments
4. Defense costs

Why: Damage to the insured's own product is excluded; injury the product causes to others remains covered.

Under the BACF, coverage for an auto "you don't own" while being used in your business is provided by which symbol when paired with the appropriate coverage?

1. Symbol 5
2. Symbol 3
3. Symbol 9 ✓
4. Symbol 7

Why: Symbol 9 designates non-owned autos used in the business, including employees' vehicles.

An HR administrator forgets to enroll a new hire in the group health plan, and the employee incurs large medical bills. Which coverage responds?

1. D&O
2. Employee Benefits Liability ✓
3. Workers Compensation
4. CGL Coverage C

Why: A clerical error administering benefits is an EBL claim, not a CGL or WC matter.

A homeowners and auto insurer wants to end its contract with an independent agency it has appointed for four years. It cites the agency's loss ratio for last year and the fact that most of the agency's business comes from one county. It proposes 30 days' notice, giving no reasons.

1. The termination fails on every point: after three years the company must give at least 60 days' written notice, the notice must include the reasons, and the contract may not be terminated on the basis of adverse loss experience for a single year or of the geographic location of the agent's auto and homeowners business. ✓
2. The termination fails on the notice alone: 60 days' written notice is required after three years and reasons must be given, but the grounds are a matter for the company - the section restricts the manner of terminating rather than the reasons for it, an insurer being entitled to decide which risks, which homeowners business and which territories it will write.
3. The termination fails on the notice period and the reasons, and on the geographic ground, but not on the loss experience: what the section forbids is termination on adverse loss experience over the whole term of the relationship, a single bad year being exactly the kind of current underwriting information a company may act on.
4. The termination is effective: the three-year threshold runs from the date the agent was first licensed rather than from the inception of the agency contract, and on these facts the protections have not yet attached, so the company may terminate on whatever notice its contract provides.

Why: Minn. Stat. 60A.171 subd. 1(a) provides that “after an agency contractual relationship has been in effect for a period of three years, an insurance company writing fire or casualty loss insurance in this state may not terminate the agency contractual relationship with any appointed agent unless the company has provided written notice of termination to the agent at least 60 days in advance of the effective date of the termination”. The three years run from the agency contractual relationship, not from the agent's licensure, which is the substitution in the answer counting from licensure. Paragraph (b): “The notice of termination must include the reasons for termination.” Paragraph (c) then bars termination based on any of three things: “(1) an adverse loss experience for a single year; (2) the geographic location of the agent's auto and homeowners insurance business; or (3) the performance of obligations required of an insurer under Minnesota Statutes.” The section therefore restricts the grounds as well as the manner, which the notice-alone answer denies, and clause (1) is directed at a SINGLE year - the reverse of the whole-term reading. Paragraph (d) defines “fire or casualty loss insurance” as any line an agent with a personal lines, property or casualty licence under sections 60K.30 to 60K.56 may write in this state.

Most Professional Liability/E&O and D&O policies are written on what kind of trigger?

1. Claims-made ✓
2. Named perils
3. Open peril
4. Occurrence

Why: Professional and management liability lines are typically claims-made, with a retroactive date and ERP options.

An insurer tells an insured to drive 90 miles to a drive-in centre for a repair estimate on a car that is still roadworthy, and to return there for the insurer to inspect the finished work. The policy carries loss of use coverage. The insurer acknowledges the claim without mentioning it, and says nothing until the insured asks a fortnight later.

1. Both are unfair settlement practices: requiring unreasonable travel of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate, to allow the insurer to inspect a repair estimate or repairs made, or to have the automobile repaired, is prohibited regardless of whether the loss was total or partial; and where loss of use coverage exists the insurer must notify the insured of the fact of the coverage at the time of its acknowledgment of claim, or sooner if inquiry is made, including the policy terms and conditions affecting it and how the insured can apply. ✓
2. Only the travel is an unfair settlement practice: the loss of use provision requires the insurer to notify the insured of the coverage on request, and this insured did not ask until a fortnight had gone by, at which point she was told what the policy carried; the acknowledgment of claim is a procedural step by which the file is opened and the claim number issued rather than an occasion for advising on coverage, and an insurer that volunteered a list of coverages at that stage would be advising on a claim it has not yet investigated; the 90-mile trip is objectionable because the clause forbids unreasonable travel to obtain a repair estimate or to allow the insurer to inspect the repairs it has paid for.
3. Only the loss of use failure is an unfair settlement practice: the travel clause applies to a total loss, where the insured must be taken to see a replacement vehicle, and a roadworthy car the insured can drive to a centre of the insurer's choosing raises no question of unreasonable travel.
4. Both are unfair settlement practices, and the loss of use duty is stricter than the answer states: the notice must reach the insured before the claim is acknowledged, since the acknowledgment closes the window within which a hire car can usefully be arranged, and the words about an inquiry describe a second occasion on which the insurer must repeat the notice rather than an earlier trigger for the first; and the travel clause reaches only journeys the insured must make in person, so an insurer may require the vehicle itself to be delivered to a centre 90 miles away provided it pays the cost of moving it in each direction.

Why: Minn. Stat. 72A.201 subd. 6(4), "regardless of whether the loss was total or partial", prohibits "requiring UNREASONABLE TRAVEL of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate, to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made pursuant to policy requirements, or to have the automobile repaired." The opening words dispose of the loss-of-use-only answer: the clause is not confined to total losses, and four of its five limbs concern repairs rather than replacement vehicles. Subd. 6(5), also regardless of whether the loss was total or partial, prohibits "if loss of use coverage exists under the insurance policy, failing to notify an insured AT THE TIME OF THE INSURER'S ACKNOWLEDGMENT OF CLAIM, OR SOONER IF INQUIRY IS MADE, of the fact of the coverage, including the policy terms and conditions affecting the coverage and the manner in which the insured can apply for this coverage." The acknowledgment is the deadline and an earlier inquiry brings it forward - the duty does not wait for a request, which is the error in the travel-only answer, and "or sooner if inquiry is made" is an earlier trigger rather than a second occasion, contrary to the before-acknowledgment answer.

A rideshare driver carrying a passenger is injured in a crash. He asks what liability limit protects those he injured, whether the company must insure his own injuries, and who pays for that cover.

1. $1,500,000 for third parties, no, and the driver himself: the company's obligation is to protect those the driver injures, the driver being an independent contractor who must arrange cover for his own injuries, which is why the section requires the company to disclose to him in writing that his personal policy may not provide liability, collision, comprehensive, uninsured or underinsured coverage while he is logged on to the digital network; a warning in those terms would be pointless if the company were already bound to insure him, and a blanket personal injury cover is something a company may buy for its drivers as a commercial matter rather than something the section obliges it to carry at its own expense.
2. $1,000,000 for third parties and $1,500,000 for the driver, paid by the company: the larger figure attaches to the driver's own coverage because the company directs the work, and the smaller to third-party liability, which is backed in any event by the compulsory residual limits of $30,000 / $60,000 / $10,000 in section 65B.49, subdivision 3; the driver's own cover carries the higher limit because the heads of loss it must reimburse are the no-fault heads - medical expense, disability and income loss, funeral and burial, replacement services and the survivors' benefits - which on a catastrophic injury run well past what the injured public would recover from the same collision in a single afternoon.
3. $1,500,000 for third parties, yes, but the company may recover the cost from the fare: the third-party limit and the driver's own $1,000,000 cover are as described, and the section permits the company to purchase that coverage using a portion of the fare or fee paid by the rider, which is a charge borne by the driver in substance because the fare is the fund from which the driver's own compensation is drawn, the prohibition on charging the driver being directed at a separate deduction from earnings already calculated; the permission to fund the cover out of the fare would otherwise sit oddly beside a flat prohibition on the driver's bearing any part whatever of the cost of that coverage in the end.
4. $1,500,000 for third parties, yes, and the company at no cost to him: during P2 and P3 the requirements include primary coverage of not less than $1,500,000 for death, injury, or destruction of property of others; and during P2 and P3 A TNC must maintain insurance on behalf of, and at no cost to, the driver reimbursing all loss suffered through personal injury arising from the driver's work for the TNC not otherwise covered, of not less than $1,000,000 per incident, including medical expense, disability and income loss, funeral and burial, replacement services, and the survivors' benefits - A driver shall not be charged by the TNC or have their compensation lowered because of the insurance. ✓

Why: Minn. Stat. 65B.472, subd. 2, paragraph (c) sets the P2 and P3 third-party requirements: primary coverage insuring against loss resulting from liability imposed by law for injury and property damage, including the requirements of section 65B.49, IN THE AMOUNT OF NOT LESS THAN $1,500,000 FOR DEATH, INJURY, OR DESTRUCTION OF PROPERTY OF OTHERS - a single combined figure, not a split limit like the P1 requirement in paragraph (b). Paragraph (d) is the driver's own protection and it is unusual enough to be worth knowing in terms: during P2 and P3 a TNC MUST MAINTAIN INSURANCE ON BEHALF OF, AND AT NO COST TO, THE DRIVER that provides reimbursement for ALL LOSS SUFFERED THROUGH PERSONAL INJURY ARISING FROM THE DRIVER'S WORK FOR THE TNC that is not otherwise covered by the insurance required under paragraphs (b) and (c). The company MAY purchase that coverage using a portion of the fare or fee paid by the riders, but A DRIVER SHALL NOT BE CHARGED BY THE TNC OR HAVE THEIR COMPENSATION LOWERED BECAUSE OF THE INSURANCE. The amount is NOT LESS THAN $1,000,000 PER INCIDENT due to personal injury, and the coverage must include medical expense benefits, disability and income loss benefits, funeral and burial expenses, replacement services loss benefits, survivors economic loss benefits and survivors replacement services loss benefits - the no-fault heads of loss, imported by the definitions in subd. 1, several of them subject to a maximum period of 130 weeks. It extends to personal injury sustained WHILE AT THE DROP-OFF LOCATION IMMEDIATELY FOLLOWING THE CONCLUSION OF A PREARRANGED RIDE. Paragraph (g) gives an insurer facing a claim a right of contribution where more than one TNC's blanket cover applies, and paragraph (h) reduces amounts payable under the uninsured and underinsured coverages by the total paid or payable under this blanket insurance.

An insured injured by an uninsured driver has damages of $90,000, of which $28,000 is medical expense and income loss that her own no-fault benefits have already paid. A further $2,000 of medical expense fell inside her policy's deductible and was never paid to her. Her uninsured motorist limit is $100,000.

1. She recovers $90,000: uninsured motorist coverage is a separate first-party promise for which she paid a separate premium, and clause (4) stops her no-fault obligor from paying the same medical expense twice rather than cutting down what the uninsured motorist coverage owes her; any duplication is corrected by the subrogation right the obligor has against the uninsured driver, exercised after the claim has been paid in full.
2. She recovers $62,000: no recovery shall be permitted under the uninsured and underinsured motorist coverages of this section for basic economic loss benefits paid or payable, or which would be payable but for any applicable deductible - so both the $28,000 actually paid and the $2,000 lost to the deductible come out of the uninsured motorist claim. ✓
3. She recovers $64,000: the bar reaches basic economic loss benefits paid or payable, so the $28,000 already paid comes out of the claim, but a sum the insured bore herself under a deductible she chose and was rated for was by definition never payable as a benefit to anyone, and it is left where it fell, on the uninsured motorist claim, that being the only coverage still able to reach it.
4. She recovers $88,000: the bar is confined to benefits actually paid, because a claimant cannot be made to give credit for money she has never received, and the words about benefits payable but for a deductible describe the obligor's right to recover from her in the rare case where the deductible is afterwards waived rather than a further reduction of what she may claim from the uninsured motorist coverage in the first place.

Why: Minn. Stat. 65B.49, subd. 3a, clause (4) is one sentence: NO RECOVERY SHALL BE PERMITTED UNDER THE UNINSURED AND UNDERINSURED MOTORIST COVERAGES OF THIS SECTION FOR BASIC ECONOMIC LOSS BENEFITS PAID OR PAYABLE, OR WHICH WOULD BE PAYABLE BUT FOR ANY APPLICABLE DEDUCTIBLE. It has three limbs and the third is the one candidates miss. PAID covers the $28,000 she has had. PAYABLE covers benefits she is entitled to but has not yet been sent, so an insured cannot improve her position by delaying the no-fault claim. And WHICH WOULD BE PAYABLE BUT FOR ANY APPLICABLE DEDUCTIBLE covers the $2,000 she bore herself: the deductible is treated as though the benefit had been paid, so the person who chose the deductible bears it rather than shifting it onto the uninsured motorist coverage. $90,000 less $28,000 less $2,000 is $62,000, comfortably inside the $100,000 limit. The clause is the uninsured and underinsured counterpart of the deduction the court makes from a tort recovery, and the phrase PAYABLE BUT FOR ANY APPLICABLE DEDUCTIBLE is the same phrase used there; the point in both places is that these coverages answer for the loss the no-fault system has NOT absorbed.

Under the PAP, a "temporary substitute auto" used while the covered auto is being repaired is treated as:

1. A non-owned auto, which the pap leaves entirely uninsured
2. Excluded outright once the covered auto goes into the shop
3. A covered auto, picking up the coverages that applied to the disabled vehicle ✓
4. Covered for Part A liability only, never for damage to the substitute itself

Why: A temporary substitute for a covered auto out of service (for repair, breakdown, etc.) is covered with the same coverages as the vehicle it replaces.

Multiple Peril Crop Insurance (MPCI) typically covers:

1. Liability for injuries to farm visitors and to seasonal workers hired for the harvest
2. Hail damage only, measured per acre
3. A broad range of natural causes of crop loss such as drought, flood, and disease ✓
4. Fire damage to barns and outbuildings only

Why: MPCI is a comprehensive policy covering yield losses from many natural perils including drought, excess moisture, freeze, and disease.

Identity theft / identity fraud expense coverage on a Homeowners policy generally provides:

1. Liability protection for the insured against the debts the thief ran up in their name
2. Reimbursement only for physical property such as a wallet, cards and documents taken in the theft
3. Expenses to restore the insured's identity and credit after fraud ✓
4. Earthquake protection for the dwelling

Why: The identity theft endorsement reimburses expenses (such as legal fees, lost wages, and notary costs) incurred to restore the insured's identity and credit standing.

For property and casualty insurance, insurable interest must exist:

1. At the inception of the policy and at the time of the loss ✓
2. Only at the time the policy is purchased, not afterwards
3. Only at the time of the loss, not when the policy is bought
4. At the time of application and at no later point

Why: For P&C insurance, insurable interest must be present both when the policy is issued and at the time of loss.

An SR-22 is best described as:

1. A title document the state issues when a vehicle changes owners
2. A certificate filed with the state by the insurer verifying that an at-risk driver carries required liability coverage ✓
3. A no-fault accident report the driver must file with the motor vehicle department within 10 days of any crash causing injury
4. A high-risk auto liability policy sold through the state's assigned risk plan

Why: An SR-22 is a financial responsibility certificate the insurer files to confirm a high-risk driver maintains the state's required liability insurance.

A surety bond fundamentally differs from insurance because:

1. It is written without underwriting, because the surety relies on the premium charged to fund expected defaults
2. It transfers the risk of loss from the principal to the surety, which absorbs each default the way an insurer absorbs a claim and spreads that cost across all bonded principals through its rates
3. It pays first-party property losses to the principal when the project is damaged before completion
4. It is a three-party guarantee in which the surety guarantees the principal's obligation to the obligee, and the principal must reimburse the surety for losses ✓

Why: Surety is a three-party credit guarantee; the surety expects no net loss because the principal indemnifies it, unlike insurance which transfers risk.

What is an interline endorsement in a CPP?

1. A separate stand-alone policy
2. An endorsement that applies to a single coverage part only
3. A type of declarations page
4. An endorsement affecting more than one coverage part ✓

Why: Interline endorsements modify provisions that apply to more than one coverage part, such as common policy changes affecting both property and liability.

Which of the following is an additional coverage commonly found in Homeowners forms?

1. War, insurrection, and related military action, up to the Coverage A limit
2. Earthquake, landslide, and other earth movement, subject to a 10% deductible
3. Flood, surface water, and tidal overflow
4. Credit cards, fund transfer cards, forgery, and counterfeit money ✓

Why: Coverage for credit card, electronic fund transfer card, forgery, and counterfeit money loss (commonly up to $500) is a standard additional coverage in Homeowners forms.

The principle that allows insurers to predict losses more accurately as the number of similar exposure units increases is the:

1. Principle of indemnity
2. Law of agency
3. Law of large numbers ✓
4. Doctrine of reasonable expectations

Why: The law of large numbers states that the larger the number of similar exposures, the more predictable actual loss experience becomes.

The Homeowners additional coverage for trees, shrubs, and plants typically limits aggregate coverage to what percentage of Coverage A?

1. 20%
2. Unlimited
3. 50%
4. 5% ✓

Why: Trees, shrubs, plants, and lawns are covered up to 5% of Coverage A for named perils (not wind), with a per-item dollar cap.

An agent takes a homeowner's application and says nothing about the insurer's right to cancel early. The insurer's website carries the required notice. The agent makes no note of any conversation and keeps no recording, and the applicant never asks for anything in writing.

1. The requirement is satisfied by the website alone: paragraph (b) makes publication on the insurer's website an alternative to the paper notice, and once the bold-print warning about the first 59 days is posted where any applicant may read it the insurer has done what the subdivision asks. The oral advice and the contemporaneous notation are addressed to the insurer's evidence rather than to the applicant's rights, and an applicant who submits an application without asking for anything in writing has passed over the paper route he was free to take. Nothing in the subdivision turns the agent's silence into a defect in the notice, and the remedy for an applicant who wanted the warning on paper was to ask for it when the application was submitted.
2. The requirement is not satisfied: a written notice must be provided to all applicants at the time the application is submitted, in bold print, stating that the insurer may elect to cancel coverage at any time during the first 59 days following issuance of the coverage for any reason which is not specifically prohibited by statute; the website alternative requires the insurer or agent to advise the applicant orally or in writing of its availability and to advise of the availability of a written notice on request, and an oral notice is presumed delivered only if a contemporaneous notation is made in the applicant's record or an audio recording is retained. ✓
3. The requirement is not satisfied, and the defect strips the insurer of the power the notice describes, so no cancellation within the first 59 days following issuance can take effect: the warning exists to tell the applicant that the insurer may end the coverage for any reason not specifically prohibited by statute, and an insurer that has never given the warning cannot exercise the very power it was obliged to disclose. The position is the same as an unearned premium that has not reached the insured by the effective date, where the statute makes compliance a condition of the insurer's act rather than a matter for the commissioner, so the agent's failure to note the conversation or to keep a recording turns a procedural omission into a substantive bar.
4. The requirement is satisfied because the applicant asked for nothing: paragraph (b) treats the website as the primary means of publication and makes the written notice available on request, the oral advice and the record-keeping being evidential conveniences for an insurer that wishes to prove what it did rather than conditions of compliance, so an applicant who requests nothing has received everything the subdivision entitles him to. The alternative route was added so that an insurer could publish the 59-day warning once instead of reprinting it with every application, and reading it as imposing a fresh set of conversational and record-keeping duties on the agent would destroy the saving it was meant to produce and leave the paper notice as the only safe course.

Why: Minn. Stat. 65A.29, subd. 13 is the applicant's warning about the homeowner's underwriting period. Paragraph (a): A WRITTEN NOTICE MUST BE PROVIDED TO ALL APPLICANTS FOR HOMEOWNERS' INSURANCE, AT THE TIME THE APPLICATION IS SUBMITTED, CONTAINING THE FOLLOWING LANGUAGE IN BOLD PRINT: 'THE INSURER MAY ELECT TO CANCEL COVERAGE AT ANY TIME DURING THE FIRST 59 DAYS FOLLOWING ISSUANCE OF THE COVERAGE FOR ANY REASON WHICH IS NOT SPECIFICALLY PROHIBITED BY STATUTE.' The wording is prescribed, the format is prescribed, and the timing is AT THE TIME THE APPLICATION IS SUBMITTED. Paragraph (b) offers an alternative and hedges it about: IF THE INSURER PROVIDES THE NOTICE ON THE INSURER'S WEBSITE, THE INSURER OR AGENT MAY ADVISE THE APPLICANT ORALLY OR IN WRITING OF ITS AVAILABILITY FOR REVIEW ON THE WEBSITE IN LIEU OF PROVIDING A WRITTEN NOTICE, IF THE INSURER ADVISES THE APPLICANT OF THE AVAILABILITY OF A WRITTEN NOTICE UPON THE APPLICANT'S REQUEST. Publication alone is not enough - somebody must tell the applicant that it is there, and must also tell him he can have it on paper. And because that advice may be oral, the paragraph supplies a proof rule: AN ORAL NOTICE SHALL BE PRESUMED DELIVERED IF THE AGENT OR INSURER MAKES A CONTEMPORANEOUS NOTATION IN THE APPLICANT'S RECORD OF THE NOTICE HAVING BEEN DELIVERED OR IF THE INSURER OR AGENT RETAINS AN AUDIO RECORDING. This agent said nothing and recorded nothing, so neither the primary route nor the alternative has been followed. The 59 days should be read with section 65B.16, which uses the same figure on the automobile side.

A building worth $200,000 has an 80% coinsurance clause and is insured for $120,000. A $40,000 loss occurs (no deductible). The insurer pays:

1. $40,000
2. $24,000
3. $32,000
4. $30,000 ✓

Why: Required = 80% × $200,000 = $160,000. Payment = ($120,000 ÷ $160,000) × $40,000 = $30,000.

Which best illustrates a partial loss?

1. A car stolen and never recovered by police
2. A kitchen damaged by a small fire while the rest of the home is intact ✓
3. A home burned to the ground, leaving nothing standing but the foundation slab
4. A building condemned by the city and demolished

Why: A partial loss damages only a portion of the property, leaving the rest usable, such as a single damaged room.

When an applicant submits a completed application with the initial premium, the applicant is generally making the:

1. Consideration only
2. Counteroffer by the insurer
3. Offer ✓
4. Acceptance

Why: In insurance, the applicant typically makes the offer by submitting the application and premium; the insurer accepts by issuing the policy.

An insurer asks which of these must conform to the Minnesota standard fire insurance policy: a combined policy insuring a car against fire and collision; an inland marine policy covering fine art against fire and theft; a policy on a warehouse building written by two insurers jointly; and a fire policy extended to cover radioactive contamination.

1. The warehouse policy must conform and the radiation cover needs a written endorsement; the car and the fine art need not conform: insurance on automobiles, motorcycles, other motor vehicles, or on property insured by ocean marine and inland marine policies against loss by fire, when combined in one policy with insurance against one or more of the other hazards mentioned in section 60A.06, subd. 1, clause (1), need not be in accordance with section 65A.01, but in no event shall this section be applicable to insurance on buildings or structures; and loss caused by nuclear reaction, nuclear radiation or radioactive contamination may be insured under the standard policy only by a written endorsement providing such insurance, affixed to that policy. ✓
2. All four must conform: the standard policy governs every contract of fire insurance on property in this state, and the exceptions in the chapter go to the form of the endorsements attached rather than to the policy itself.
3. None of the four need conform: a policy covering fire together with other perils for a single premium may be written without the standard language provided the insured gets the same rights with respect to fire, which is the general rule for package business and which covers all four of these contracts.
4. The combined car policy, the inland marine fine art policy and the warehouse policy need not conform, and the radiation cover needs no endorsement: a jointly issued policy is written under its own section, which displaces the standard form and requires instead that the policy show the severalty of the contract, the proportion of premiums and the proportion of liability each insurer assumes; and radioactive contamination is simply a peril insured against, insurable like any other by describing it in the policy. The nuclear provision is on that view a permission to write the cover rather than a requirement that it be written in a particular way, and a peril described in the body of a policy is insured as surely as one described in a document stapled to it; requiring an endorsement for one peril and not for others would be an odd distinction for a chapter concerned with the form of the whole contract.

Why: Three short sections sit around the standard policy and each carves something out or adds something. Minn. Stat. 65A.06: INSURANCE ON AUTOMOBILES, MOTORCYCLES, OTHER MOTOR VEHICLES, OR ON PROPERTY INSURED BY OCEAN MARINE, AND INLAND MARINE POLICIES AS DEFINED BY SECTION 70A.03, CLAUSE (3), AGAINST LOSS OR DAMAGE BY FIRE, WHEN COMBINED IN ONE POLICY WITH INSURANCE AGAINST ONE OR MORE OF THE OTHER HAZARDS MENTIONED IN SECTION 60A.06, SUBDIVISION 1, CLAUSE (1), NEED NOT BE IN ACCORDANCE WITH SECTION 65A.01, BUT IN NO EVENT SHALL THIS SECTION BE APPLICABLE TO INSURANCE ON BUILDINGS OR STRUCTURES. Two conditions on the exemption - the property must be of the named kinds, and fire must be COMBINED IN ONE POLICY with another hazard - and one absolute limit: never buildings or structures, which is why the warehouse policy stays inside the standard form. Section 65A.01, subd. 1 lists 65A.06 among its own exceptions, so the two read together. Minn. Stat. 65A.05: LOSS OR DAMAGE CAUSED BY NUCLEAR REACTION, NUCLEAR RADIATION OR RADIOACTIVE CONTAMINATION, ALL WHETHER DIRECTLY OR INDIRECTLY RESULTING FROM AN INSURED PERIL UNDER THE STANDARD POLICY ISSUED PURSUANT TO SECTIONS 65A.01, 65A.02, 65A.03, AND 65A.04, MAY BE INSURED UNDER SAID POLICY ONLY BY A WRITTEN ENDORSEMENT PROVIDING SUCH INSURANCE, WITH SUCH ENDORSEMENT AFFIXED TO SAID STANDARD POLICY. Minn. Stat. 65A.02 permits a joint policy but does not displace the standard form: WHEN TWO OR MORE AUTHORIZED COMPANIES UNITE IN THE ISSUE OF A JOINT POLICY, THE HEADING MAY SHOW THE SEVERALTY OF THE CONTRACT, AND THE POLICY SHALL SHOW THE PROPORTION OF PREMIUMS TO BE PAID TO EACH, AND THE PROPORTION OF LIABILITY WHICH EACH ASSUMES, AND SHALL CONTAIN A PROVISION TO THE EFFECT THAT SERVICE OF PROCESS, OR ANY NOTICE OR PROOF OF LOSS REQUIRED BY SUCH POLICY, UPON ANY OF THE INSURERS EXECUTING SUCH POLICY, SHALL BE DEEMED TO BE SERVICE UPON ALL SUCH INSURERS.

Under the PAP, fire damage to the covered auto while parked in a garage is covered under:

1. Other Than Collision (comprehensive) ✓
2. Collision coverage under Part D of the pap
3. Liability coverage under Part A
4. Not covered without an endorsement

Why: Fire is a peril insured under Other Than Collision (comprehensive) coverage in Part D.

Electronic equipment such as a permanently installed aftermarket sound/navigation system not factory-installed is, under the unendorsed PAP, generally:

1. Subject to exclusion or limitation unless added by endorsement ✓
2. Paid under Part B medical payments rather than Part D physical damage
3. Covered in full under Part D, just like factory-installed equipment
4. Always replaced with a new unit of like kind

Why: The PAP limits or excludes certain non-factory permanently installed electronic equipment; broader coverage requires an endorsement.

Under the BACF, if a covered auto is a total loss, the insurer generally pays:

1. The outstanding balance financed on the loan or lease as of the date of loss, less the deductible
2. The original purchase price shown on the bill of sale
3. The actual cash value or cost to repair, whichever is less, minus deductible ✓
4. The full cost of a brand-new replacement vehicle of like make and model

Why: BACF physical damage settlement is based on the lesser of ACV or repair cost, less the applicable deductible, similar to the PAP.

An insurer wants to attach four forms to a standard fire policy: a form recording that the insured has given up rights of recovery against a named contractor; a sprinkler-maintenance form under which cover lapses if the system is shut down; a loss-of-rents form; and a mortgagee loss-payable clause.

1. All four may be used as drafted once the commissioner has approved the forms: the subdivision is permissive from beginning to end, and approval is the mechanism by which any objectionable term, including a lapse provision, is caught before the form reaches an insured.
2. Only the relinquishment form and the mortgagee clause may be used: the subdivision sets out the exact words of those two forms and, by doing so, excludes every form it does not set out, so a sprinkler-maintenance form and a loss-of-rents form must be filed for approval under the general form provisions of chapter 60A rather than attached to a standard fire policy under this section at all.
3. Three may be used and the sprinkler form may not as drafted: a company may print or use on its policy printed forms covering the maintenance or supervision of security guard's service, automatic sprinkler service or the maintenance of a clear space in lumber yards, when approved by the commissioner, but no such clause shall contain any provision calling for the lapse or the suspension of the insurance coverage; the relinquishment form and the mortgagee clause are set out in the subdivision in the words to be used; and a loss-of-rents form is expressly permitted, subject to the prescribed period of indemnity provision. ✓
4. Three may be used and the loss-of-rents form may not as drafted: the sprinkler form is permitted with a lapse provision because the insured has taken a rate credit for maintaining the system, and a contract insuring loss of rents must carry the prescribed period-of-indemnity wording, which this insurer's form omits; the relinquishment form and the mortgagee clause are set out in the subdivision in the words to be used. A rate credit for a protective system is worth nothing if the system may be shut down without consequence, so the lapse provision is how the credit is earned rather than an imposition on the insured.

Why: Minn. Stat. 65A.01, subd. 4 lists eight things that MAY be printed in or attached to the standard policy, and two of them carry conditions worth knowing. Clause (2) gives the relinquishment form in the words to be used: THE INSURED HAS RELINQUISHED ALL RIGHTS TO RECOVER FOR LOSS OR DAMAGE BY FIRE FROM ..... Clause (8) gives the mortgagee form the same way: SUBJECT TO THE STIPULATIONS, PROVISIONS AND CONDITIONS CONTAINED IN THIS POLICY, THE LOSS, IF ANY, IS PAYABLE TO ....., MORTGAGEE, AS THE MORTGAGEE'S INTEREST MAY APPEAR. Clause (6) is the one this insurer falls foul of: A COMPANY MAY PRINT OR USE ON ITS POLICY, PRINTED FORMS COVERING THE MAINTENANCE OR SUPERVISION OF SECURITY GUARD'S SERVICE, AUTOMATIC SPRINKLER SERVICE OR THE MAINTENANCE OF A CLEAR SPACE IN LUMBER YARDS, WHEN APPROVED BY THE COMMISSIONER OF COMMERCE, BUT NO SUCH CLAUSE SHALL CONTAIN ANY PROVISION CALLING FOR THE LAPSE OR THE SUSPENSION OF THE INSURANCE COVERAGE. The protective-safeguard endorsement is permitted; the lapse it usually carries is not. Clause (7) permits forms for loss of rents and rental value, leasehold values, use and occupancy, and consequential loss from a change of temperature on the failure of refrigeration, and then requires that ALL CONTRACTS OF INSURANCE AGAINST LOSS OF RENTS OR RENTAL VALUES, USE AND OCCUPANCY, SHALL CONTAIN the provision that THE PERIOD OF INDEMNITY SHALL BE LIMITED TO SUCH LENGTH OF TIME (COMMENCING WITH THE DATE OF THE FIRE OR LIGHTNING AND NOT LIMITED BY THE DATE OF THE EXPIRATION OF THE POLICY) AS WOULD BE REQUIRED THROUGH THE EXERCISE OF DUE DILIGENCE AND DISPATCH TO REBUILD, REPAIR OR REPLACE the destroyed or damaged property. Clause (5) permits endorsements for additional perils which MAY CONTAIN PROVISIONS AND STIPULATIONS INCONSISTENT WITH the standard policy IF APPLICABLE ONLY TO SUCH OTHER PERILS - the fire cover itself cannot be cut down by an endorsement for something else.

Homeowners Coverage C contains special limits of liability. The special limit on theft of jewelry, watches, and furs is commonly:

1. $2,500
2. $200
3. Unlimited
4. $1,000 to $1,500 ✓

Why: There is a special sublimit (commonly $1,500) for theft of jewelry, watches, and furs under Coverage C; higher amounts require scheduling.

An insured's flood loss is denied under all three Causes of Loss forms because:

1. Flood is excluded in Basic, Broad, and Special forms alike ✓
2. The deductible exceeded the amount of the flood damage claimed
3. The coinsurance requirement was not satisfied
4. Flood appears as a named peril only in the Basic form

Why: Flood is excluded under all standard commercial property causes of loss forms; separate flood coverage (e.g., NFIP or a difference-in-conditions form) is needed.

The commissioner wants to serve a statement of charges on an unauthorized alien insurer that has solicited applications in Minnesota by mail. A Minnesota resident collects premiums for it. The department serves that person on 1 March, posts a certified copy to the insurer's principal place of business on 14 March, and asks how soon a cease and desist order can be entered.

1. Service on the premium collector was valid and the mailing was in time, so an order may be entered as soon as the affidavit of compliance is filed: the Act's purpose provision requires it to be liberally construed, and a defendant who has actually received the papers cannot complain of the machinery by which they arrived. The ten-day period is a direction to the department rather than a condition of validity, and the delay in entering an order is measured from service rather than from any later filing, since it is service that puts the insurer on notice and starts time running against it. The whole scheme is one of substituted service, and substituted service works by putting the papers into a channel that reaches the defendant rather than by hitting a calendar date.
2. Service was invalid because an unauthorized insurer may be served only through the commissioner as its deemed attorney, and the resident collector is not a permitted recipient: the substituted service provision is exhaustive, which is why the Act troubles to specify the acts that constitute the appointment.
3. Service on the premium collector was a permitted method but fails because the mailing was out of time, and no order may be entered until the expiration of 30 days from the date of the filing of the affidavit of compliance: service is valid if made on a person who is soliciting insurance, making, issuing or delivering a contract, or collecting or receiving in this state any premium for insurance, and a copy must be sent within ten days thereafter by certified mail to the defendant at its last known principal place of business - 13 days is out; and no cease or desist order under this section shall be entered until the expiration of 30 days from the date of the filing of the affidavit of compliance. ✓
4. Service was valid and in time, the certified copy having gone to the principal place of business, and an order may be entered after 30 days from service: the ten days run from the date the affidavit of compliance is filed rather than from service on the resident, so the mailing was early rather than late; and the 30-day period likewise runs from service, the reference to the affidavit being a description of the proof required rather than of the event from which time is counted. Counting from a filing the defendant never sees would leave an insurer unable to know when its time expires, which is not how a notice provision is ordinarily read. An affidavit is a document the plaintiff controls the timing of, so measuring the defendant's protection from the date it is filed would let the department choose when the clock starts, which is the opposite of what a waiting period is for.

Why: Minn. Stat. 72A.37 has five subdivisions and four of them bear on this. Subd. 1 lists the acts that make the commissioner the insurer's attorney: ANY OF THE FOLLOWING ACTS IN THIS STATE, EFFECTED BY MAIL OR OTHERWISE, BY ANY SUCH UNAUTHORIZED FOREIGN OR ALIEN INSURER: (1) THE ISSUANCE OR DELIVERY OF CONTRACTS OF INSURANCE TO RESIDENTS OF THIS STATE; (2) THE SOLICITATION OF APPLICATIONS FOR SUCH CONTRACTS; (3) THE COLLECTION OF PREMIUMS, MEMBERSHIP FEES, ASSESSMENTS OR OTHER CONSIDERATIONS FOR SUCH CONTRACTS; OR (4) ANY OTHER TRANSACTION OF INSURANCE BUSINESS - EFFECTED BY MAIL OR OTHERWISE, so soliciting by post is enough. Subd. 2 gives the ordinary method: service on the commissioner or some person in apparent charge of the office, IN COMPLIANCE WITH SECTION 45.028. Subd. 3 gives an ADDITIONAL method, which is the one used here: service SHALL IN ADDITION TO THE MANNER PROVIDED IN SUBDIVISION 2 BE VALID IF SERVED UPON ANY PERSON WITHIN THIS STATE WHO ON BEHALF OF SUCH INSURER IS (1) SOLICITING INSURANCE, OR (2) MAKING, ISSUING OR DELIVERING ANY CONTRACT OF INSURANCE, OR (3) COLLECTING OR RECEIVING IN THIS STATE ANY PREMIUM FOR INSURANCE - and it is conditional: AND A COPY OF SUCH STATEMENT OF CHARGES, NOTICES OR PROCESS IS SENT WITHIN TEN DAYS THEREAFTER BY CERTIFIED MAIL BY OR ON BEHALF OF THE COMMISSIONER TO THE DEFENDANT AT THE LAST KNOWN PRINCIPAL PLACE OF BUSINESS OF THE DEFENDANT. Ten days from the service on the resident, so 1 March to 14 March is thirteen days and the condition fails. The subdivision then requires the receipt and an affidavit of the person mailing to be filed with the commissioner, or with the court administrator in the case of process, ON OR BEFORE THE DATE THE DEFENDANT IS REQUIRED TO APPEAR OR WITHIN SUCH FURTHER TIME AS THE COURT MAY ALLOW. Subd. 4: NO CEASE OR DESIST ORDER UNDER THIS SECTION SHALL BE ENTERED UNTIL THE EXPIRATION OF 30 DAYS FROM THE DATE OF THE FILING OF THE AFFIDAVIT OF COMPLIANCE - from the FILING, not from service, and section 72A.43, subd. 4 uses the identical formula for a default judgment under the other unauthorized insurer act. Subd. 5 preserves everything else: SERVICE OF PROCESS AND NOTICE UNDER THE PROVISIONS OF SECTIONS 72A.33 TO 72A.39 SHALL BE IN ADDITION TO ALL OTHER METHODS OF SERVICE PROVIDED BY LAW - which is why the claim that the substituted service provision is exhaustive fails on the face of the section.

Which of the following is NOT an element of an ideally insurable risk?

1. The premium must be economically feasible
2. The loss must be due to chance and accidental
3. The loss must be catastrophic to the insurer ✓
4. The loss must be definite and measurable

Why: Insurable losses should NOT be catastrophic to the insurer; insurers avoid risks that could cause simultaneous, ruinous losses across the pool.

The Fair Credit Reporting Act (FCRA) primarily regulates:

1. The collection, use, and disclosure of consumer report information ✓
2. How FEMA sets and subsidizes flood premiums inside mapped Special Flood Hazard Areas
3. Federal premium subsidies paid to crop insurers under the Federal Crop Insurance Act
4. The federal reinsurance backstop for certified acts of terrorism

Why: The FCRA governs how consumer reporting agencies collect, share, and use consumer credit and report information, and the rights of consumers regarding that information.

A driver is forced off the road by a car that does not stop and is never traced. Her insurer says a phantom vehicle is neither uninsured nor underinsured, so neither coverage responds. A second insured asks whether he can claim under either coverage for a crash in which he was wholly at fault.

1. Neither claimant recovers: both coverages protect only persons legally entitled to recover damages for bodily injury from the owner or operator of the vehicle concerned, and a claimant who cannot identify the car that forced her off the road can establish an entitlement against no owner and no operator, there being nobody to sue and no judgment she could ever enforce; that is why the untraced-vehicle case is routed to the assigned claims plan instead of to either motorist coverage, and the second claimant fails on the same words, having no entitlement against anyone but himself.
2. The first claimant recovers under uninsured motorist coverage and the second recovers under neither: uninsured motorist coverage means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles, while underinsured motorist coverage names only owners or operators of underinsured motor vehicles; and the driver at fault in his own crash is not legally entitled to recover damages from anyone. ✓
3. Both claimants recover: the coverages are first-party benefits paid by the insured's own obligor, and the reference to legal entitlement identifies the class of loss covered rather than imposing a condition of fault, so an untraced car and a single-vehicle crash each fall inside the protection the premium was paid for.
4. The first claimant recovers under underinsured motorist coverage and the second under uninsured motorist coverage: an untraced car is treated as carrying a nil limit, which is less than the amount needed to compensate the insured for actual damages, so it answers the underinsured definition rather than the uninsured one; and a driver at fault in his own crash is treated as injured by an uninsured motor vehicle, no liability policy standing behind the claim he makes, which is the gap the uninsured coverage was written to close and the reason it is the broader of the two protections an owner must carry.

Why: Minn. Stat. 65B.43, subds 18 and 19 are drafted in parallel and differ in one respect that decides the first claim. Subd. 18: UNINSURED MOTORIST COVERAGE means coverage for the protection of persons insured under that coverage WHO ARE LEGALLY ENTITLED TO RECOVER DAMAGES FOR BODILY INJURY FROM OWNERS OR OPERATORS OF UNINSURED MOTOR VEHICLES AND HIT-AND-RUN MOTOR VEHICLES. Subd. 19: UNDERINSURED MOTORIST COVERAGE means coverage for the protection of persons insured under that coverage WHO ARE LEGALLY ENTITLED TO RECOVER DAMAGES FOR BODILY INJURY FROM OWNERS OR OPERATORS OF UNDERINSURED MOTOR VEHICLES. HIT-AND-RUN MOTOR VEHICLES appear in subd. 18 and nowhere in subd. 19, and that is the answer to the insurer's argument: the untraced car is a hit-and-run motor vehicle and uninsured motorist coverage names that case expressly. The words the two share matter just as much. Each protects only persons LEGALLY ENTITLED TO RECOVER DAMAGES FOR BODILY INJURY from the owner or operator of such a vehicle, so both coverages are keyed to a tort entitlement against somebody else. A driver injured in a crash that was wholly his own fault has no such entitlement and neither coverage reaches him, whatever his own limits are. Both definitions also speak of BODILY INJURY, which is why neither coverage answers a property damage claim.

Which best describes "hired autos" in commercial auto?

1. Autos the named insured leases, hires, rents, or borrows for business use ✓
2. Employees' own personal autos driven on company errands and reimbursed by the mile
3. Autos the named insured holds title to and garages at its premises
4. Customer vehicles left at a repair shop, which the shop hires out while they wait

Why: Hired autos are vehicles the insured leases, hires, rents, or borrows, addressed by Symbol 8 for liability.

An injured interstate railroad worker wishes to recover for an on-the-job injury. Which law governs the claim, and on what basis?

1. FELA, requiring proof of employer negligence (fault-based) ✓
2. The Jones Act, which extends no-fault maintenance and cure to any employee working aboard a moving vehicle
3. FECA, on a no-fault basis for transportation workers
4. The LHWCA, on a no-fault basis for rail yard crews

Why: The Federal Employers' Liability Act (FELA) covers interstate railroad workers and is fault-based, requiring the worker to prove employer negligence rather than providing automatic no-fault benefits.

A workers' compensation insurer is accused of breaching the claims practices standards. A liability claimant writes asking what cover the defendant carries and gets no answer for two months. A judgment for an amount within the policy limit is entered against an insured, and with costs, disbursements and prejudgment interest added the total exceeds the limit.

1. The section applies to workers' compensation insurance like any other line, the exclusion being of workers' compensation self-insurers rather than of the line itself; the disclosure period is 30 days as the answer describes; the insurer's responsibility for costs, disbursements and prejudgment interest on a judgment entered against the insured stops at the policy limit, an insurer having contracted to pay no more than the sum it was paid to cover; and the disclosure period runs from service of the proceedings rather than from the written request, a claimant who has not sued having no such right.
2. The section does not apply to workers' compensation insurance; but the disclosure obligation is owed to an insured rather than to a claimant, a third party having no right to be told what cover an opponent carries before proceedings are issued; and the insurer is answerable for costs, disbursements and prejudgment interest on a judgment within the policy limits even where the total exceeds them.
3. The section does not apply to workers' compensation insurance; the insurer must disclose the coverage and limits of a policy within 30 days after the information is requested in writing by a claimant; and where a judgment is entered against an insured the principal amount of which is within the applicable policy limits, the insurer is responsible for the insured's share of the costs, disbursements and prejudgment interest determined under Minn. Stat. 549.09 even if the total amount of the judgment is in excess of the applicable policy limits. ✓
4. The section does not apply to workers' compensation insurance; the 30-day disclosure duty and the responsibility for costs, disbursements and prejudgment interest are as the answer describes them; and the section overrides any inconsistent policy term as well, so a clause allowing the insurer 60 days to answer a claimant's written request for the limits is void to the extent of the inconsistency and the statutory period governs instead.

Why: Minn. Stat. 72A.201 subd. 10 is two sentences: "This section does not apply to WORKERS' COMPENSATION INSURANCE. NOTHING IN THIS SECTION ABROGATES ANY POLICY PROVISIONS." The line is excluded, not merely its self-insurers, which is the rewriting in the self-insurers answer; and the second sentence runs the opposite way from the answer voiding an inconsistent policy term, preserving policy provisions rather than overriding them. Subd. 11: "An insurer must disclose the coverage and limits of an insurance policy WITHIN 30 DAYS after the information is requested IN WRITING BY A CLAIMANT." The duty is owed to a claimant - the third party asserting a claim against the insured, as subd. 3(5) defines that word - which is the error in the answer confining disclosure to an insured. Subd. 12: "If a judgment is entered against an insured, THE PRINCIPAL AMOUNT OF WHICH IS WITHIN the applicable policy limits, the insurer is responsible for their insured's share of the COSTS, DISBURSEMENTS, AND PREJUDGMENT INTEREST, as determined under section 549.09, included in the judgment EVEN IF THE TOTAL AMOUNT OF THE JUDGMENT IS IN EXCESS OF THE APPLICABLE POLICY LIMITS." The test is applied to the principal amount alone, and the additions may carry the insurer past the limit - the point the self-insurers answer denies.

An insured wants to cover a $40,000 diamond ring with no deductible and broad worldwide protection. The best approach is:

1. Add a scheduled personal property floater (endorsement) listing the ring ✓
2. Apply to the state FAIR Plan, which writes basic property coverage on risks the voluntary market has declined
3. Buy an NFIP dwelling policy, since federal flood coverage follows scheduled jewelry anywhere in the world
4. Rely on the homeowners Coverage C limit, which pays the full $40,000 once the policy deductible is satisfied

Why: High-value items exceeding homeowners sublimits are best covered by scheduling them on a personal property floater, which offers broad, often worldwide, coverage with no deductible.

An injured worker recovers WC benefits, then sues and recovers from a negligent third party who caused the injury. The WC insurer typically has what right regarding that recovery?

1. The right to rescind the employer's policy back to inception and bill the employer for benefits paid
2. A right of subrogation/lien to recover benefits it paid ✓
3. A duty to double the benefits already paid
4. No interest in the recovery, because the exclusive remedy rule bars the insurer from sharing in a tort settlement

Why: The WC insurer generally has subrogation (lien) rights against a third-party recovery, allowing it to be reimbursed for benefits paid out of the worker's recovery.

Under 'contribution by equal shares,' insurers covering the same loss pay:

1. Only the insurer whose policy was written first, with the others reimbursing it afterward
2. Nothing until the insured has paid a share equal to the deductible
3. Equal amounts until the lowest limit is exhausted, then the rest continue ✓
4. Amounts proportional to each policy's limit of insurance

Why: Each insurer contributes equal amounts until the smallest applicable limit is used up; remaining insurers continue contributing equally.

The commissioner has reason to believe an unauthorized alien insurer, whose United States principal office is in Illinois, is running radio advertisements in Minnesota that misrepresent its dividends. Twenty days after the commissioner writes to it, the advertisements are still running and the insurer is collecting premiums from Minnesota residents.

1. The commissioner's duty was to give notice by certified mail to the insurer and to the insurance supervisory official of its domiciliary state - here Illinois, because for an alien insurer the domiciliary state ... Shall be deemed to be the state of entry or the state of the principal office in the United States - and action may not follow until if after 30 days following the giving of the notice the insurer has failed to cease; at 20 days the commissioner must wait. ✓
2. The notice goes to the insurer alone and the commissioner may act at once: a regulator who has reason to believe advertising is false is not required to consult another state's official before protecting its own residents, and the collection of premiums is itself a ground for immediate action.
3. The notice must go to the insurer and to the supervisory official of the country in which the alien insurer is organised, and the commissioner may act after 30 days: an alien insurer's domicile is where it is incorporated, which is what the word alien means in this chapter, and the deeming provision about a United States principal office is directed at service of process rather than at the identity of the supervisory official who must be told.
4. The notice requirement is as described but no waiting period applies once the insurer is collecting premiums: the section conditions action on the insurer's failure to cease after notice, and an insurer that is taking money while it advertises has moved beyond advertising into the transaction of business, which the commissioner may restrain immediately under the ordinary enforcement powers rather than through this Act. Reading a 30-day grace period into a case where residents are paying premiums every day would make the notice provision a shield for the conduct it was written to stop, so the better view is that the period governs advertising alone.

Why: Minn. Stat. 72A.35 states the prohibition and the notice duty in one long sentence. The prohibition: NO UNAUTHORIZED FOREIGN OR ALIEN INSURER OF THE KIND DESCRIBED IN SECTION 72A.33 SHALL MAKE, ISSUE, CIRCULATE OR CAUSE TO BE MADE, ISSUED OR CIRCULATED, TO RESIDENTS OF THIS STATE ANY ESTIMATE, ILLUSTRATION, CIRCULAR, PAMPHLET, OR LETTER, OR CAUSE TO BE MADE IN ANY NEWSPAPER, MAGAZINE OR OTHER PUBLICATION OR OVER ANY RADIO OR TELEVISION STATION, ANY ANNOUNCEMENT OR STATEMENT TO SUCH RESIDENTS MISREPRESENTING ITS FINANCIAL CONDITION OR THE TERMS OF ANY CONTRACTS ISSUED OR TO BE ISSUED OR THE BENEFITS OR ADVANTAGES PROMISED THEREBY, OR THE DIVIDENDS OR SHARE OF THE SURPLUS TO BE RECEIVED THEREON, IN VIOLATION OF THE UNFAIR TRADE PRACTICE ACT. Four subjects of misrepresentation are named and dividends is the fourth. The duty: WHENEVER THE COMMISSIONER SHALL HAVE REASON TO BELIEVE THAT ANY SUCH INSURER IS ENGAGING IN SUCH UNLAWFUL ADVERTISING, IT SHALL BE THE COMMISSIONER'S DUTY TO GIVE NOTICE OF SUCH FACT BY CERTIFIED MAIL TO SUCH INSURER AND TO THE INSURANCE SUPERVISORY OFFICIAL OF THE DOMICILIARY STATE OF SUCH INSURER. SHALL BE THE COMMISSIONER'S DUTY, so the notice is not discretionary, and it goes to two recipients. The last sentence answers the country-of-incorporation answer: FOR THE PURPOSE OF THIS SECTION, THE DOMICILIARY STATE OF AN ALIEN INSURER SHALL BE DEEMED TO BE THE STATE OF ENTRY OR THE STATE OF THE PRINCIPAL OFFICE IN THE UNITED STATES - a United States state, never the country of incorporation. Section 72A.36 supplies the waiting period and three further conditions before the commissioner acts: IF AFTER 30 DAYS FOLLOWING THE GIVING OF THE NOTICE MENTIONED IN SECTION 72A.35 SUCH INSURER HAS FAILED TO CEASE MAKING, ISSUING, OR CIRCULATING SUCH FALSE REPRESENTATIONS ... AND IF THE COMMISSIONER HAS REASON TO BELIEVE THAT A PROCEEDING IN RESPECT TO SUCH MATTERS WOULD BE TO THE INTEREST OF THE PUBLIC, AND THAT SUCH INSURER IS ISSUING OR DELIVERING CONTRACTS OF INSURANCE TO RESIDENTS OF THIS STATE OR COLLECTING PREMIUMS ON SUCH CONTRACTS OR DOING ANY OF THE ACTS ENUMERATED IN SECTION 72A.37, THE COMMISSIONER SHALL TAKE ACTION AGAINST SUCH INSURER UNDER THE UNFAIR TRADE PRACTICE ACT. Note what the collection of premiums does and does not do: it is one of the three conditions that must be satisfied BEFORE the commissioner acts, not a reason to act sooner, which is what the no-waiting-period answer inverts. The remedy itself is borrowed - the commissioner proceeds under the Unfair Trade Practice Act, sections 72A.17 to 72A.32, rather than under any penalty in this Act.

An insurer nonrenews a homeowner's policy after two paid claims and one telephone call in which the insured asked her agent whether a cracked window would be worth claiming. It has no written plan about claim frequency and has never warned the insured that further losses might cost her the policy.

1. The nonrenewal is good: two paid claims in a policy period is a loss record any insurer may act on, and the requirement of a plan is an internal governance matter that does not affect the validity of a decision taken without one.
2. The nonrenewal is bad only because of the inquiry: counting a call to the agent as a claim is prohibited, but the absence of a plan and of a prior warning are matters between the insurer and the commissioner rather than conditions of a valid nonrenewal, since neither requirement is expressed as making the nonrenewal ineffective and the insured is protected instead by the right to appeal.
3. The nonrenewal is bad on three grounds: every insurer shall establish a plan that sets out the minimum number and amount of claims during an experience period that may result in a nonrenewal; the insurer may not consider as a claim the insured's inquiry about a hypothetical claim, or the insured's inquiry to the insured's agent regarding a potential claim; and no homeowner's insurance policy may be nonrenewed based on the insured's loss experience unless the insurer has sent a written notice that any future losses may result in nonrenewal due to loss experience. ✓
4. The homeowner nonrenewal is bad because claims and losses are not an available ground at all, written plan or none: the commissioner's rules must limit nonrenewal to the cancellation grounds and to matters amounting to unfair practices, so a policy may never be ended for claiming, and the provisions about plans and warnings are directed at the insurer's rating rather than at termination; an insurer unhappy with a loss record must reflect it in the premium. A rule that allowed termination for claiming would put an insured to the choice between using the cover she has paid for and keeping it, which is a choice the loss-experience provisions are drafted to prevent her from having to make at all.

Why: Minn. Stat. 65A.29, subd. 11 imposes three separate requirements on a loss-experience nonrenewal and this insurer has met none of them. First: EVERY INSURER SHALL ESTABLISH A PLAN THAT SETS OUT THE MINIMUM NUMBER AND AMOUNT OF CLAIMS DURING AN EXPERIENCE PERIOD THAT MAY RESULT IN A NONRENEWAL. The plan must fix both a NUMBER and an AMOUNT, and it must do so in advance, so an insurer cannot decide after the event that two claims were too many. Second: FOR PURPOSES OF THE PLAN, THE INSURER MAY NOT CONSIDER AS A CLAIM THE INSURED'S INQUIRY ABOUT A HYPOTHETICAL CLAIM, OR THE INSURED'S INQUIRY TO THE INSURED'S AGENT REGARDING A POTENTIAL CLAIM. Both limbs are needed here: the call was to the AGENT and it was about a POTENTIAL claim. Third, and this is the requirement most often missed: NO HOMEOWNER'S INSURANCE POLICY MAY BE NONRENEWED BASED ON THE INSURED'S LOSS EXPERIENCE UNLESS THE INSURER HAS SENT A WRITTEN NOTICE THAT ANY FUTURE LOSSES MAY RESULT IN NONRENEWAL DUE TO LOSS EXPERIENCE. It is a warning shot the insured is entitled to before the policy is at risk. The subdivision closes by requiring that ANY NONRENEWAL OF A HOMEOWNER'S INSURANCE POLICY MUST, AT A MINIMUM, COMPLY WITH THE REQUIREMENTS OF SUBDIVISION 8 AND THE RULES ADOPTED BY THE COMMISSIONER, so the loss-experience rules sit on top of the general ones rather than replacing them. The inquiry protection is the same policy that produces the surcharge prohibition in section 65A.285.

The Miscellaneous Type Vehicle endorsement to the PAP can extend coverage to:

1. Privately owned aircraft and gliders
2. A commercial dump truck operated by the insured's contracting business
3. Motorcycles, motor homes, golf carts, or all-terrain vehicles ✓
4. Inboard motorboats longer than 40 feet used for personal recreation

Why: The Miscellaneous Type Vehicle endorsement provides PAP coverage for vehicles such as motorcycles, motor homes, dune buggies, golf carts, and ATVs.

An 'occurrence' is defined in the CGL as:

1. An accident, including continuous or repeated exposure to substantially the same general harmful conditions ✓
2. Any claim first made against the insured and reported during the policy period, whenever the conduct occurred
3. Only a sudden and abrupt event happening at one identifiable time and place, so gradual exposure never qualifies
4. An intentional act by the insured that produces unexpected harm

Why: The CGL defines occurrence as an accident, including continuous or repeated exposure to substantially the same harmful conditions.

Under TRIA, the federal government's share of insured terrorism losses applies only after the insurer pays:

1. The full amount of every certified loss, with federal reimbursement available only to reinsurers
2. Nothing, since federal sharing begins at the first dollar
3. A flat $1,000 retention for each certified event
4. An insurer deductible based on a percentage of its prior-year premiums ✓

Why: Under TRIA, each insurer retains a deductible (a percentage of its prior-year direct earned premium) before the federal government shares in the remaining certified losses.

Which of the following is NOT one of the four elements required to prove a negligent act?

1. Intent to cause harm ✓
2. A breach of that duty
3. Proximate cause
4. A legal duty owed

Why: Negligence requires duty, breach, proximate cause, and damages. Intent is not required—an intentional act is a different category (an intentional tort).

The PAP's out-of-state coverage provision does what when the insured travels to a state with higher required limits?

1. Cuts the limits back to the home state's compulsory minimums whenever the insured crosses a state line
2. Automatically adds collision and comprehensive coverage for any trip that lasts longer than 30 days
3. Suspends all coverage until the insured registers the auto in the visited state
4. Automatically increases the policy's liability limits to meet that state's compulsory minimums ✓

Why: The out-of-state provision raises the policy limits to the minimum amounts required by the other state's compulsory or financial responsibility law if they are higher.

A commercial policyholder writes to its insurer asking how its rate was arrived at and for a review of the way the rating system was applied. The insurer, which makes its own rates, does not reply. Forty days later the policyholder wants to take the matter further.

1. The insurer owes no explanation and there is no appeal: rates are the insurer's commercial property, and a policyholder's remedy for a rate it dislikes is to buy elsewhere, which is the discipline the chapter relies upon.
2. The insurer owed the information but the policyholder is out of time: the appeal to the commissioner must be brought within 30 days of the request, so a policyholder who waits for an answer that never comes loses the right, which is why the section speaks of proceeding as if the application had been rejected - it is a warning to move rather than a licence to wait.
3. The insurer owed the information and a means of review, the failure to answer within 30 days lets the policyholder proceed as if the application had been rejected, and it may appeal to the commissioner within 30 days after written notice of the action: every rate service organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor, furnish to any insured affected by a rate made by it all pertinent information as to that rate, and shall provide within this state reasonable means whereby any person aggrieved by the application of its rating system may be heard; the commissioner holds a hearing on not less than ten days' written notice and may affirm or reverse. ✓
4. The insurer, which makes its own rates, owed information on its rating system only if it belongs to a rate service organization, and the policyholder's route is to the district court: the obligation to explain a rate is imposed on the body that made it, and an insurer making its own rates answers to the commissioner rather than to its policyholders; the appeal machinery in the section is available to an insurer aggrieved by an organisation's decision, not to an insured, whose remedy lies in the ordinary courts on the contract. The two references in the section to a rate service organization or insurer are addressed to the body whose decision is under review, and a policyholder who is dissatisfied with the price of a contract he agreed to has the remedy any contracting party has; reading the paragraph as giving an insured a statutory appeal against his own insurer's pricing would make the commissioner the arbiter of every commercial premium in the state.

Why: Minn. Stat. 70A.19 is one paragraph containing two duties and a two-stage remedy. The duties: EVERY RATE SERVICE ORGANIZATION AND EVERY INSURER WHICH MAKES ITS OWN RATES SHALL, WITHIN A REASONABLE TIME AFTER RECEIVING WRITTEN REQUEST THEREFOR, FURNISH TO ANY INSURED AFFECTED BY A RATE MADE BY IT, OR TO THE AUTHORIZED REPRESENTATIVE OF THAT INSURED, ALL PERTINENT INFORMATION AS TO THAT RATE. EVERY RATE SERVICE ORGANIZATION AND EVERY INSURER WHICH MAKES ITS OWN RATES SHALL PROVIDE WITHIN THIS STATE REASONABLE MEANS WHEREBY ANY PERSON AGGRIEVED BY THE APPLICATION OF ITS RATING SYSTEM MAY BE HEARD, IN PERSON OR BY AN AUTHORIZED REPRESENTATIVE, ON A WRITTEN REQUEST TO REVIEW THE MANNER IN WHICH THAT RATING SYSTEM HAS BEEN APPLIED IN CONNECTION WITH THE INSURANCE AFFORDED. Both duties fall on an insurer that makes its own rates as squarely as on a bureau. Then the deeming provision that protects a policyholder against silence: IF THE RATE SERVICE ORGANIZATION OR INSURER FAILS TO GRANT OR REJECT ANY SUCH REQUEST WITHIN 30 DAYS AFTER IT IS MADE, THE APPLICANT MAY PROCEED IN THE SAME MANNER AS IF THE APPLICATION HAD BEEN REJECTED. And the appeal: ANY PARTY AFFECTED BY THE ACTION OF A RATE SERVICE ORGANIZATION OR INSURER ON ANY SUCH REQUEST MAY, WITHIN 30 DAYS AFTER WRITTEN NOTICE OF SUCH ACTION, APPEAL TO THE COMMISSIONER WHO, AFTER A HEARING HELD UPON NOT LESS THAN TEN DAYS' WRITTEN NOTICE TO THE APPELLANT AND TO THE RATE SERVICE ORGANIZATION OR INSURER, MAY AFFIRM OR REVERSE ITS ACTION. The two 30-day periods run in sequence, not in parallel: the first is the insurer's time to answer, the second is the policyholder's time to appeal once there is an action - actual or deemed - to appeal from. At day 40 the request is deemed rejected and the appeal window is open.

'Completed operations' coverage applies when:

1. The product is still in the insured's inventory awaiting shipment
2. A customer slips on a wet floor inside the insured's showroom
3. Work is still in progress at the job site and the insured's crew has not yet turned the finished project over to the owner
4. The insured's work is completed or abandoned and bodily injury or property damage occurs away from the premises ✓

Why: Completed operations responds after the work is finished, typically for injury/damage occurring away from owned/rented premises.

To add liability protection to a Dwelling Policy, which is typically attached?

1. Ordinance or Law endorsement
2. Inflation guard endorsement
3. Personal Liability Supplement ✓
4. Scheduled Personal Property endorsement

Why: Because the Dwelling Policy has no built-in liability, a Personal Liability Supplement is added to provide Coverage L (liability) and Coverage M (medical payments).

An insurance policy is a unilateral contract because:

1. Only the insured makes a legally enforceable promise
2. Only the insurer makes a legally enforceable promise ✓
3. Both parties make legally enforceable promises
4. Neither party makes any promise

Why: In a unilateral contract, only one party, the insurer, makes a legally enforceable promise; the insured is not legally obligated to pay future premiums.

A dockworker loading and unloading ships, injured while working on the pier and over navigable waters, is most likely covered by:

1. The Jones Act, since anyone whose work is performed over navigable water qualifies as a seaman
2. FELA, which Congress extended to cover cargo handling at any interstate terminal
3. The Black Lung Benefits Act, for dust in ship holds
4. The Longshore and Harbor Workers' Compensation Act (LHWCA) ✓

Why: The LHWCA provides no-fault workers' compensation benefits to longshore, harbor, and maritime workers (such as those loading/unloading vessels) who are not seamen.

A deductible in a property policy is the portion of a loss that:

1. The insurer pays first, then bills the insured
2. Is recovered from salvage sale proceeds
3. The insured retains/pays before the insurer pays ✓
4. Is added to the annual premium at renewal

Why: A deductible is the amount the insured must absorb on a covered loss before insurance benefits apply.

An insurer wishing to comply with GLBA must provide its initial privacy notice to a customer:

1. Only when the policy is cancelled or nonrenewed, along with the final notice
2. Only after the customer files a first claim under the policy
3. At the time the customer relationship is established (and annually thereafter, as applicable) ✓
4. Only when the customer asks in writing to see the insurer's information-sharing practices

Why: GLBA requires delivery of a privacy notice when the customer relationship is established and, historically, an annual notice describing information-sharing practices.

The PAP towing and labor costs coverage pays for labor:

1. For accident-related medical transport
2. Only when performed at the place of disablement ✓
3. Anywhere repairs are needed regardless of location
4. For routine maintenance at the shop

Why: Towing and labor costs coverage pays towing plus labor, but only labor performed at the place where the vehicle was disabled.

Under the CGL, which limit applies to the cost of medical care for a third party regardless of fault?

1. General Aggregate
2. Personal and Advertising Injury Limit
3. Medical Expense Limit ✓
4. Each Occurrence Limit

Why: The Medical Expense Limit (Coverage C) caps no-fault medical payments per person for third parties.

Coverage E in the Dwelling Policy provides which of the following?

1. Additional living expense for the owner-occupant ✓
2. Identity theft restoration expenses, up to $25,000 per occurrence
3. Medical payments to injured guests
4. Personal liability for bodily injury

Why: Coverage E — Additional Living Expense pays the increased cost of living elsewhere while the insured's own residence is being repaired after a covered loss.

In one class of business four insurers write 80 percent of the direct written premiums. An insurer in that class earns a long-run profit the commissioner considers unreasonably high for the riskiness involved. A second insurer's rates are low but sufficient to sustain projected losses and expenses in the state.

1. Competition is presumed adequate, the first insurer's rates are not excessive, and the second insurer's rates are inadequate: rates are inadequate whenever they are materially below those of the market, which is the test a regulator can apply without waiting for an insurer to fail.
2. Competition is presumed not to exist, the first insurer's rates may be excessive, and the second insurer's rates are conclusively adequate: it is presumed that a reasonable degree of competition does not exist if less than five insurers write more than 75 percent of the direct written premiums; where competition does not exist rates are excessive if they are likely to produce a long-run profit that is unreasonably high in relation to the riskiness of the class of business, or if expenses are unreasonably high in relation to the services rendered; and rates are conclusively presumed to be adequate if they are sufficient to sustain projected losses and expenses within the state. ✓
3. Competition is presumed not to exist and both insurers are in breach: a market in which four companies hold 80 percent is by definition uncompetitive, so every rate in it must be justified to the commissioner, and a rate at either end of the range is open to challenge until that justification is given.
4. Competition is presumed not to exist where four insurers write 80 percent of the direct premiums in the class, the first insurer's rates are excessive as a matter of law, and the second insurer's rates, though sufficient to sustain it, may still be inadequate for the riskiness involved: once the market test fails, an unreasonably high long-run profit is conclusive rather than merely evidential, and adequacy is judged against the solidity of the insurer as a whole rather than against projected losses and expenses in this state, since an insurer can be driven under by business written elsewhere just as easily as by business written here. Reading the profit test as conclusive is the only way the standard can be administered without a second inquiry into every insurer's books, and measuring adequacy by the solidity of the whole company rather than by one state's projected experience is the only measure that protects the policyholders of a company writing in forty states.

Why: Minn. Stat. 70A.04 states the three classic standards and then defines each one in a way that repays close reading. Subd. 1: RATES SHALL NOT BE EXCESSIVE, INADEQUATE OR UNFAIRLY DISCRIMINATORY, NOR SHALL AN INSURER USE RATES TO ENGAGE IN UNFAIR PRICE COMPETITION - four prohibitions, not three. Subd. 2 makes excessiveness turn on the market first: RATES ARE PRESUMED NOT TO BE EXCESSIVE IF A REASONABLE DEGREE OF PRICE COMPETITION EXISTS AT THE CONSUMER LEVEL with respect to the class of business, and IN ADDITION TO ANY OTHER MANNER OF DETERMINING WHETHER A REASONABLE DEGREE OF PRICE COMPETITION EXISTS, IT IS PRESUMED THAT A REASONABLE DEGREE OF COMPETITION DOES NOT EXIST IF LESS THAN FIVE INSURERS WRITE MORE THAN 75 PERCENT OF THE DIRECT WRITTEN PREMIUMS. Four insurers holding 80 percent satisfies that test exactly. Only then does paragraph (b) apply: IF SUCH COMPETITION DOES NOT EXIST, RATES ARE EXCESSIVE IF THEY ARE LIKELY TO PRODUCE A LONG-RUN PROFIT THAT IS UNREASONABLY HIGH IN RELATION TO THE RISKINESS OF THE CLASS OF BUSINESS, OR IF EXPENSES ARE UNREASONABLY HIGH IN RELATION TO THE SERVICES RENDERED - and the commissioner must determine whether the rate PRODUCES A RATE OF RETURN THAT IS NOT IN EXCESS OF A REASONABLE RATE OF RETURN, considering riskiness, the insurer's profitability in that class and other relevant factors. Subd. 3 is the mirror image and it is narrow: RATES ARE INADEQUATE ONLY IF THEY WILL ENDANGER THE SOLIDITY OF AN INSURER THAT USES THEM OR IF THEY ARE INSUFFICIENT TO SUSTAIN PROJECTED LOSSES AND EXPENSES WITHIN THE STATE. RATES ARE CONCLUSIVELY PRESUMED TO BE ADEQUATE IF THEY ARE SUFFICIENT TO SUSTAIN PROJECTED LOSSES AND EXPENSES WITHIN THE STATE. Subd. 4 defines unfair discrimination by reference to whether a rate CLEARLY FAILS TO REFLECT EQUITABLY THE DIFFERENCES IN EXPECTED LOSSES, EXPENSES AND THE DEGREE OF RISK, and expressly protects different premiums for like loss exposures with different expense factors, or the reverse, SO LONG AS THE RATES REFLECT THE DIFFERENCES WITH REASONABLE ACCURACY. Subd. 5 defines unfair price competition as charging a rate FOR THE PURPOSE OF SECURING AN UNFAIR COMPETITIVE ADVANTAGE, or one whose use has or tends to have the effect of DESTROYING COMPETITION OR CREATING A MONOPOLY.

Two matters come before the commissioner. An insurer simply never filed a termination report it should have filed. A producer filed a report that a court has since found he made with actual malice. Each says the section provides no sanction against it.

1. The insurer is wrong and the producer is right: the sanction reaches a failure to report, but a report made with actual malice is met by the loss of the statutory immunity and the civil claim that then lies, the section leaving the regulator out of a dispute between private parties once malice is established by a court of competent jurisdiction.
2. The producer is wrong and the insurer is right: the sanction reaches a report found by a court to have been made with actual malice, but a mere failure to file is met through the commissioner's general power to require information, an omission being neither a false statement nor a report at all.
3. Both are wrong, but no hearing is required in either case: the section makes suspension, revocation and a fine under section 45.027 available on the commissioner's own determination, the notice and hearing requirement attaching to action against an individual producer's licence and not to a certificate of authority issued to an insurer.
4. Both are wrong: an insurer, an authorised representative of an insurer, or a producer that fails to report as required, or that is found by a court of competent jurisdiction to have reported with actual malice, may after notice and hearing have its licence or certificate of authority suspended or revoked and may be fined. ✓

Why: Minn. Stat. 60K.52 subd. 2 is one sentence covering both cases: “An insurer, the authorized representative of the insurer, or a producer that fails to report as required under this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with section 45.027.” The two triggers are alternatives joined by “or”, so neither the exclusion of malicious reporting nor the exclusion of a failure to file survives the text. The notice and hearing requirement is written into the subdivision itself and is not confined to either kind of licensee, which disposes of the answer requiring no hearing; both a licence and a certificate of authority are named.

The HO-2 form covers personal property against:

1. Liability only
2. The broad form named perils ✓
3. Open perils
4. Flood and earthquake

Why: HO-2 insures both the dwelling and personal property on the broad form named-perils basis.

In a surety bond, the party who is required to provide the bond and perform the obligation is the:

1. Obligee
2. Beneficiary
3. Principal ✓
4. Surety

Why: The principal is the party who must perform the obligation and is required to furnish the bond.

Actual cash value (ACV) is most commonly calculated as:

1. The original purchase price
2. Market value plus depreciation
3. Replacement cost minus depreciation ✓
4. Replacement cost plus appreciation

Why: ACV is typically replacement cost at the time of loss minus depreciation for age, wear, and obsolescence.

Under PAP Part D, the deductible:

1. Applies once to the entire policy term
2. Only applies to liability claims
3. Is the amount of loss the insured retains before the insurer pays ✓
4. Is the amount the insurer pays before the insured contributes

Why: The deductible is the portion of a physical damage loss the insured pays out of pocket before the insurer pays the remainder.

An insurer asks which of these must satisfy the readability chapter: a personal auto policy issued this year; the master contract for a group policy covering 40 employees; a homeowner's policy written in Somali at the customer's request; and a health maintenance contract under chapter 62D.

1. The auto policy and the health maintenance contract must; the group master contract and the Somali policy need not: the chapter applies to all policies or contracts of direct insurance, including nonprofit health service plan corporations under chapter 62C, health maintenance organizations under chapter 62D, and fraternal benefit societies under chapter 64B; it shall not apply to insurance as described in the master contract for any policy of group insurance when the group consists of ten or more persons; and it shall not apply to a new policy or contract written in language other than English. ✓
2. All four must: the chapter's purpose is that insurance contracts be readable and understandable to a person of average intelligence, experience and education, and a contract written in a language the customer reads is more understandable rather than less, while a group master contract is the document that defines what every certificate holder has bought. A certificate holder who wants to know what he has bought must read the master contract or nothing, so exempting it would exempt the only document that answers the question; and a chapter drafted around the reader cannot coherently drop its protection at the point where the reader most needs it, which is why the exclusions are better read as describing documents already regulated elsewhere.
3. Only the auto policy must: the chapter is a property and casualty measure and the health contracts are regulated for readability under their own chapters, group business is written between commercial parties, and a policy in another language is outside any English readability test by definition.
4. The auto policy, the health maintenance contract and the Somali policy must; only the group master contract need not: the chapter is drafted around the reader rather than around the language, so a policy in Somali must be readable to a person of average intelligence reading Somali, and the Flesch procedure is applied to whatever language the contract is written in; the group exclusion is as described, and the ten-person threshold marks the point at which the buyer is taken to be a sophisticated one. The Flesch procedure counts syllables and sentences, both of which exist in any language, so nothing in the computation is peculiar to English.

Why: Minn. Stat. 72C.03 states the scope in one paragraph with four exclusions. The rule: EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED, SECTIONS 72C.01 TO 72C.13 SHALL APPLY TO ALL POLICIES OR CONTRACTS OF DIRECT INSURANCE, ISSUED BY PERSONS AUTHORIZED AT ANY TIME TO TRANSACT INSURANCE IN THIS STATE AND INCLUDING NONPROFIT HEALTH SERVICE PLAN CORPORATIONS UNDER CHAPTER 62C, HEALTH MAINTENANCE ORGANIZATIONS UNDER CHAPTER 62D, AND FRATERNAL BENEFIT SOCIETIES UNDER CHAPTER 64B. DIRECT insurance, so reinsurance is out; and the three named inclusions are there because each might otherwise have argued it was not writing insurance at all. The exclusions: insurance AS DESCRIBED IN THE MASTER CONTRACT FOR ANY POLICY OF GROUP INSURANCE WHEN THE GROUP CONSISTS OF TEN OR MORE PERSONS; policies issued BEFORE JULY 1, 1980 UNDER WHICH THERE IS NO UNILATERAL RIGHT OF THE INSURER TO CANCEL, NONRENEW, AMEND OR CHANGE IN ANY WAY, unless amended by mutual agreement; a policy WHICH IS A SECURITY SUBJECT TO FEDERAL JURISDICTION; and A NEW POLICY OR CONTRACT WRITTEN IN LANGUAGE OTHER THAN ENGLISH. The last is the one the answer requiring the Somali policy to comply gets wrong, and the reason is practical: the compliance test in section 72C.09 is a Flesch score computed from syllables per word and words per sentence, which is calibrated for English and means nothing applied to another language. Section 72C.02 states the purpose - that policies BE READABLE AND UNDERSTANDABLE TO A PERSON OF AVERAGE INTELLIGENCE, EXPERIENCE, AND EDUCATION, written in SIMPLE AND COMMONLY USED LANGUAGE, LOGICALLY AND CLEARLY ARRANGED, PRINTED IN A LEGIBLE FORMAT - and adds the limit that makes the chapter safe to apply: IT IS NOT THE INTENT ... TO MANDATE, REQUIRE OR ALLOW ALTERATION OF THE LEGAL EFFECT OF ANY PROVISION OF ANY INSURANCE POLICY OR CONTRACT. Section 72C.04 defines LEGIBLE TYPE as A TYPE FACE AT LEAST AS LARGE AS TEN-POINT MODERN TYPE, ONE POINT LEADED.

One person injured in a Minnesota accident runs up $26,000 of medical expense and $9,000 of income loss. The reparation obligor says the $40,000 minimum is a single pot and pays $35,000. The insured asks whether that is right.

1. It is right: the $40,000 minimum is a single aggregate for the injury of any one person, and the two internal figures tell the obligor how to allocate payments among the heads of loss once that aggregate has been exhausted, so $35,000 is correctly paid.
2. It is not, but for a different reason: the two $20,000 figures are minimum coverages the insurer must offer rather than caps on what it must pay, the subdivision requiring a plan to provide a minimum of $40,000 and only then describing the components of that minimum, so the sole ceiling on this claim is the $40,000 aggregate for any one person; the whole $35,000 is payable, and the obligor's error is to treat a floor beneath the coverage it must sell as a limit on the benefit it must pay once the expense is shown to be reasonable and the care necessary.
3. It is not: basic economic loss benefits shall provide a minimum of $40,000 for loss arising out of the injury of any one person, consisting of (1) $20,000 for medical expense loss arising out of injury to any one person, and (2) A total of $20,000 for income loss, replacement services loss, funeral expense loss, survivor's economic loss and survivor's replacement services loss - two separate $20,000 limits, so the medical claim is capped at $20,000 and the income loss is paid in full, a total of $29,000. ✓
4. It is not: the split is as described, but the surplus in the second $20,000 limit may be applied to a medical claim that has exhausted the first, since the section describes the $40,000 as a minimum for loss arising out of the injury of any one person and only then breaks it down, so the correct payment is $35,000 after all and the insured has no complaint about the amount, only about the reasoning; the medical figure is a floor beneath what the obligor must provide rather than a ceiling on what it may pay out of the aggregate.

Why: Minn. Stat. 65B.44, subd. 1, paragraph (a) is the arithmetic every Minnesota no-fault claim starts from. Basic economic loss benefits reimburse all loss suffered through injury arising out of the maintenance or use of a motor vehicle, subject to applicable deductibles, exclusions, disqualifications and conditions, and SHALL PROVIDE A MINIMUM OF $40,000 for loss arising out of the injury of ANY ONE PERSON, CONSISTING OF: (1) $20,000 FOR MEDICAL EXPENSE LOSS arising out of injury to any one person; and (2) A TOTAL OF $20,000 for income loss, replacement services loss, funeral expense loss, survivor's economic loss and survivor's replacement services loss. The word CONSISTING is what makes them two limits rather than one: $26,000 of medical expense is met to $20,000 and no further, while $9,000 of income loss sits comfortably inside the second $20,000. The total payable is $29,000. Paragraph (b) protects the medical side further: a person entitled to basic economic loss benefits is entitled to the FULL medical expense benefits set out in subd. 2 and MAY NOT RECEIVE MEDICAL EXPENSE BENEFITS THAT ARE IN ANY WAY LESS than those provided there, or that involve ANY PREESTABLISHED LIMITATIONS on the benefits, though the expenses must be reasonable and for necessary medical care and the obligor keeps its rights under section 65B.56. Paragraph (c) forbids a reparation obligor or health plan company from entering into or renewing any contract that provides, or has the effect of providing, MANAGED CARE SERVICES to no-fault claimants. Subd. 8 excludes property damage from basic economic loss benefits altogether.

What is the primary purpose of a coinsurance clause in commercial property insurance?

1. To set the deductible as a fixed percentage of the building limit shown in the declarations
2. To encourage insureds to carry insurance close to the property's full value ✓
3. To exclude windstorm and earthquake from the causes of loss form
4. To require the insurer to share each loss with its reinsurers under a quota share treaty

Why: Coinsurance encourages insureds to insure to value; if they underinsure below the required percentage, the loss payment is reduced proportionally.

Three arrangements are put to the commissioner. Employees of an organisation engaged by insurers inspect, rate and classify risks and supervise the training of producers, none of them selling or soliciting. A producer licensed only in Illinois, where an insured maintains its principal place of business, writes one commercial property and casualty contract covering that insured's risks in Illinois and Minnesota. A car rental company's counter staff offer rental vehicle personal accident insurance. Which need a Minnesota producer licence?

1. Only the rental vehicle staff: of the three, the employees engaged in inspection, rating and producer training fall within one exception and the producer licensed where the insured has its principal place of business within the multistate property and casualty exception, but the rental vehicle exception names the company alone, so counter staff who offer rental vehicle personal accident insurance must each hold a limited lines licence of their own.
2. Only the Illinois producer: the other two are excepted, but the multistate exception requires the nonresident to be licensed in every state in which the contract insures risks, so a producer licensed only in Illinois must take a Minnesota nonresident licence before the contract can attach to the Minnesota locations; the exception was drafted to spare a producer licensed in each affected state the cost of a resident licence in each of them, and is confined to commercial risks for that reason.
3. All three: the exceptions run only to officers, directors and employees of an insurer or of a licensed insurance producer, so an organisation merely engaged by insurers, a producer licensed in another state and a rental vehicle company each fall outside them and must be licensed here.
4. None of the three: each is a specific exception - employees engaged in inspection, rating or classification of risks or in supervising producer training who do not themselves sell, solicit or negotiate; a nonresident writing multistate commercial property and casualty risks who is licensed in the state where the insured's principal place of business is and whose contract insures risks located there; and rental vehicle companies and their employees offering rental vehicle personal accident insurance. ✓

Why: Minn. Stat. 60K.34 subd. 2 lists nine exceptions and three of them answer these facts. Clause (5) excepts “employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation, or negotiation of insurance” - so an organisation engaged by insurers is within it, which is what the all-three answer denies. Clause (7) excepts a nonresident who sells, solicits or negotiates a contract for commercial property and casualty risks for an insured with risks in more than one state, “if the person is otherwise licensed as an insurance producer to sell, solicit, or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state”; licensure is required in that one state only, which is the error in the Illinois-producer answer. Clause (9) excepts “rental vehicle companies and their employees in connection with the offer of rental vehicle personal accident insurance under section 72A.125”, naming the employees alongside the company, which is the error in the rental-vehicle-staff answer.

Which of the following is typically EXCLUDED property under the BPP?

1. Office furniture
2. Tenant's improvements
3. Money and securities ✓
4. Stock for sale

Why: Money and securities are excluded from the BPP; they require a crime policy or special form. The other items are covered property.