MN Property & Casualty flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Minnesota Department of Commerce

State agency that regulates insurers, producers, and rates in Minnesota; it licenses producers and examines insurer solvency and market conduct.

Minnesota CE requirement

Producers must complete 24 continuing education hours every two years, including at least 3 hours of ethics, to renew a Minnesota producer license.

Twisting

Misrepresenting an existing policy to persuade a policyholder to lapse, surrender, or replace it; a prohibited unfair trade practice in Minnesota.

Rebating

Offering an inducement not stated in the policy, such as cash or gifts, to sell insurance; prohibited as an unfair trade practice.

Minnesota minimum auto limits

30/60/10 coverage: $30,000 per person and $60,000 per accident for bodily injury liability, plus $10,000 for property damage liability.

Minnesota no-fault PIP

Minnesota requires at least $40,000 of personal injury protection: $20,000 for medical expense and $20,000 for wage loss and essential services.

Minnesota Guaranty Association

Pays covered claims of insolvent property and casualty insurers doing business in Minnesota, generally up to $300,000 per claim and $100,000 for unearned premium.

Insurable interest

A financial stake in the insured property such that a loss causes genuine economic harm; for property insurance it must exist at the time of loss.

Aleatory contract

An insurance contract in which the exchange of value is unequal and depends on chance, since the insurer may pay far more than the premium collected.

Contract of adhesion

A policy drafted by the insurer and offered on a take-it-or-leave-it basis; ambiguities in the wording are interpreted in favor of the insured.

Utmost good faith

Principle requiring both parties to disclose material facts honestly; breach through concealment or material misrepresentation can void the policy.

Waiver and estoppel

Waiver is the voluntary surrender of a known right; estoppel prevents asserting that right after the other party reasonably relied on the waiver.

Subrogation

After paying a covered loss, the insurer acquires the insured's right to recover damages from the negligent party who caused the loss.

HO-3 special form

Homeowners form that insures the dwelling and other structures against open perils and covers personal property against named perils only.

Coverage B other structures

Protects detached structures such as garages, fences, and sheds, usually limited to 10 percent of the Coverage A dwelling limit.

Coverage D loss of use

Pays additional living expenses and fair rental value when a covered loss makes the residence uninhabitable, typically 30 percent of Coverage A.

Replacement cost

Pays to repair or replace damaged property with new property of similar kind and quality without deducting depreciation, subject to policy limits and coinsurance.

Actual cash value

Replacement cost minus depreciation; the standard valuation method for most personal property under homeowners forms unless an endorsement provides otherwise.

Property coinsurance formula

Settlement equals (limit carried divided by limit required) times the loss, then minus the deductible; underinsurance reduces the payment proportionally.

Flood exclusion

Homeowners policies exclude flood, surface water, and related water damage; separate flood coverage through the NFIP or a private insurer is needed.

Personal auto policy parts

Part A liability, Part B medical payments, Part C uninsured and underinsured motorists, and Part D coverage for damage to your auto.

Newly acquired auto

Under the personal auto policy, a newly acquired vehicle is covered for 14 days if the insurer is not notified, and automatically if it replaces an owned auto.

Occurrence

An accident, including continuous or repeated exposure to substantially the same harmful conditions, that results in bodily injury or property damage during the policy period.

Claims-made CGL

General liability coverage that responds to claims first made during the policy period; the retroactive date excludes acts occurring before coverage began.

Employer's liability

Workers compensation Part Two coverage that responds to the employer's tort liability for employee injury not covered by statutory workers compensation benefits.

Umbrella policy

Provides excess limits above underlying policies and may cover some exposures excluded by primary policies, after a self-insured retention is satisfied.

Proof of loss

A sworn statement from the insured detailing the amount and circumstances of a claim, usually due within 60 days of the insurer's request.

Mortgagee clause

Protects a lender's interest in insured property; the lender is entitled to loss payments and to notice of cancellation or nonrenewal.

Pro rata cancellation

Refund of unearned premium calculated in exact proportion to the unused policy term; used when the insurer cancels the policy.

Short rate cancellation

Refund of less than the unearned premium when the insured cancels mid-term, because the insurer retains a cancellation penalty.

Liberalization clause

If an insurer broadens its policy forms without raising premium, the broader coverage automatically applies to policies already in force.

Vacancy provision

If a dwelling remains vacant beyond 60 consecutive days, vandalism and certain theft and glass perils are excluded from coverage.