I85PREP
⌘ K
MN Property & Casualty study materials
MN Property & Casualty study resources

MN Property & Casualty practice questions

One question at a time. Build your MN Property & Casualty understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Which Minnesota agency is responsible for licensing insurance producers and enforcing state insurance laws?

  1. The Minnesota Attorney General's Office
  2. The Minnesota Department of Commerce Correct answer.
  3. The Minnesota Department of Insurance
  4. The Minnesota Secretary of State

Explanation

Minnesota insurance regulation, including producer licensing and enforcement, is administered by the Department of Commerce under the Commissioner of Commerce. The commissioner issues, renews, suspends, and revokes producer licenses.

Question 2Minnesota Insurance Laws, Regulations, and Producer Responsibilities

How often must a Minnesota insurance producer license be renewed?

  1. Every year
  2. Every two years Correct answer.
  3. Every five years
  4. Every three years

Explanation

Minnesota producer licenses run on a two-year cycle and must be renewed with the commissioner. Renewal generally requires a fee and evidence of continuing education compliance.

Question 3Minnesota Insurance Laws, Regulations, and Producer Responsibilities

What is the minimum continuing education requirement for a Minnesota insurance producer during each two-year license term?

  1. 24 credit hours Correct answer.
  2. 8 credit hours
  3. 12 credit hours
  4. 16 credit hours

Explanation

Minnesota requires 24 credit hours of continuing education every two years, including at least 3 hours of ethics. Credit must come from approved courses.

Question 4Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota producer's authority to transact insurance on behalf of a particular insurer is established by:

  1. A federal producer registration number
  2. A certificate issued by the policyholder
  3. The insurer's appointment filed with the commissioner Correct answer.
  4. Membership in a state trade association

Explanation

A producer may act for an insurer only after the insurer appoints the producer and files the appointment with the commissioner. The license alone does not authorize representing a particular insurer.

Question 5Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer offers to pay the first month's premium for a client to encourage the client to buy a policy. This practice is:

  1. Permitted if disclosed to the insurer
  2. Permitted for family members only
  3. Permitted for policies under $1,000
  4. Prohibited as rebating Correct answer.

Explanation

Rebating is offering anything of value not stated in the policy to induce a sale. It is an unfair trade practice prohibited in Minnesota.

Question 6Minnesota Insurance Laws, Regulations, and Producer Responsibilities

What are the minimum liability limits required for a private passenger auto policy in Minnesota?

  1. 30/60/10 Correct answer.
  2. 25/50/10
  3. 15/30/5
  4. 20/40/10

Explanation

Minnesota's minimum auto liability limits are $30,000 per person, $60,000 per accident, and $10,000 for property damage. These are the statutory minimums for bodily injury and property damage liability.

Question 7Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Before being licensed, an applicant for a Minnesota producer license generally must:

  1. Post a $50,000 surety bond
  2. Be sponsored by a policyholder
  3. Pass a written licensing examination Correct answer.
  4. Have five years of insurance experience

Explanation

Applicants generally must pass a written exam for each line of authority unless a statutory exemption applies. Experience, sponsorship, and bonds are not general licensing requirements.

Question 8Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer tells an applicant that a policy covers flood damage when it does not. This is:

  1. Defamation
  2. Misrepresentation Correct answer.
  3. Twisting
  4. Coercion

Explanation

Misrepresentation is making false or misleading statements about policy terms to induce a sale. It is an unfair trade practice.

Question 9Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Within how many days must a Minnesota producer notify the commissioner of a change in business address?

  1. 30 days Correct answer.
  2. 10 days
  3. 60 days
  4. 20 days

Explanation

A producer must notify the commissioner of a change of address within 30 days. This keeps licensing records current and allows official notices to reach the producer.

Question 10Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota producer is disciplined by another state's insurance regulator. The producer must notify the Minnesota commissioner within:

  1. 30 days Correct answer.
  2. 15 days
  3. 10 days
  4. 20 days

Explanation

A producer must report administrative actions taken by another insurance regulator within 30 days. This includes suspensions, revocations, and similar disciplinary actions.

Question 11Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Premiums a Minnesota producer collects from insureds are held:

  1. Funds held by the commissioner
  2. Funds belonging to the policyholder until remitted
  3. The producer's personal funds once collected
  4. Trust funds held in a fiduciary capacity Correct answer.

Explanation

Premiums collected by a producer are trust funds held in a fiduciary capacity. They must be accounted for and remitted to the insurer as required.

Question 12Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer deposits client premiums into the same bank account used for office expenses. This is:

  1. Commingling and prohibited Correct answer.
  2. Acceptable if the account is insured
  3. Permitted for small producers
  4. Required by Minnesota law

Explanation

Mixing premium funds with personal or operating funds is commingling, which is prohibited. Premiums must be kept in a separate fiduciary account.

Question 13Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer convinces a client to lapse an existing life policy by falsely stating the current insurer is insolvent, in order to sell a new policy. This is:

  1. Coercion
  2. Subrogation
  3. Rebating
  4. Twisting Correct answer.

Explanation

Twisting is inducing a policyholder to lapse or surrender coverage through misrepresentation or incomplete comparison. It is prohibited as an unfair trade practice.

Question 14Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota life insurance policy delivered to a purchaser must generally give the owner a right to return it for a full refund within:

  1. 10 days Correct answer.
  2. 30 days
  3. 7 days
  4. 5 days

Explanation

Minnesota requires a free-look period of at least 10 days on life insurance. During that period the owner may return the policy for a refund.

Question 15Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Minnesota's no-fault law requires every auto policy to provide personal injury protection (PIP) of at least:

  1. $60,000
  2. $40,000 Correct answer.
  3. $20,000
  4. $80,000

Explanation

Minnesota requires PIP of at least $40,000 per person, typically divided into $20,000 for medical expenses and $20,000 for income loss and essential services. PIP pays without regard to fault.

Question 16Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer licensed in good standing in another state may obtain a Minnesota nonresident producer license by:

  1. Posting a surety bond with the state
  2. Maintaining an office in Minnesota
  3. Passing the Minnesota licensing examination
  4. Reciprocity plus the required fee Correct answer.

Explanation

A nonresident producer may be licensed in Minnesota based on reciprocity with the home state, without passing the Minnesota exam, if the home-state license is in good standing and the fee is paid.

Question 17Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Under Minnesota's no-fault auto law, an insurer must pay personal injury protection benefits within how many days after receiving reasonable proof of loss?

  1. 10 days
  2. 20 days
  3. 30 days Correct answer.
  4. 15 days

Explanation

Minnesota's no-fault law requires PIP benefits to be paid within 30 days after the insurer receives reasonable proof of loss. This prompt-payment rule supports the no-fault system.

Question 18Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer reports suspected insurance fraud to the Minnesota Commerce Fraud Bureau in good faith. Which statement is correct?

  1. The producer must prove the fraud before reporting
  2. The producer may be sued by the insurer for defamation
  3. The producer must obtain the client's consent
  4. The producer is immune from civil liability for the report Correct answer.

Explanation

Minnesota law provides immunity from civil liability for persons who report suspected insurance fraud in good faith to the Commerce Fraud Bureau. Consent or proof is not required before reporting.

Question 19Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Charging different premiums to applicants of the same class and risk because of race is:

  1. Rebating
  2. Unfair discrimination Correct answer.
  3. Coercion
  4. Twisting

Explanation

Unfair discrimination is charging different rates or terms to similarly situated insureds based on protected characteristics such as race. It is prohibited.

Question 20Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A producer may share a commission on a Minnesota insurance sale with:

  1. An unlicensed referral source
  2. An unlicensed office assistant
  3. The client as an inducement
  4. A licensed producer who participated in the sale Correct answer.

Explanation

A producer may share commissions only with another properly licensed producer who participated in the sale. Sharing commissions with unlicensed persons or clients is prohibited.

Question 21Minnesota Insurance Laws, Regulations, and Producer Responsibilities

The Minnesota commissioner may issue a temporary producer license to a designee after a licensed producer dies or becomes disabled. The maximum duration of that temporary license is:

  1. 365 days
  2. 180 days Correct answer.
  3. 30 days
  4. 90 days

Explanation

The commissioner may issue a temporary license for up to 180 days to a designee when a licensed producer dies or becomes disabled. It allows the business to continue during the transition.

Question 22Minnesota Insurance Laws, Regulations, and Producer Responsibilities

How long must a Minnesota insurance producer keep records of insurance transactions?

  1. 3 years
  2. 5 years Correct answer.
  3. 2 years
  4. 4 years

Explanation

Producers must keep records of insurance transactions for at least five years. Records must be available to the commissioner on request.

Question 23Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Before placing coverage with a nonadmitted insurer, a Minnesota surplus lines broker must:

  1. Conduct a diligent search and disclose nonadmitted status Correct answer.
  2. Obtain the commissioner's written approval for every policy
  3. Place coverage only with Minnesota-licensed insurers
  4. Match the premium charged by an admitted insurer

Explanation

Surplus lines brokers must make a diligent effort to place coverage with admitted insurers before using a nonadmitted insurer. They must also disclose the insurer's nonadmitted status to the client.

Question 24Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Before the Minnesota commissioner revokes a producer license, the producer is entitled to:

  1. Notice and an opportunity for a hearing Correct answer.
  2. A refund of all licensing fees
  3. A jury trial in district court
  4. An automatic stay of all proceedings

Explanation

Before revoking or suspending a license, the commissioner must provide notice and an opportunity for a hearing. This satisfies due process and administrative procedure requirements.

Question 25Minnesota Insurance Laws, Regulations, and Producer Responsibilities

If a nonresident producer's home-state license is suspended, Minnesota will generally:

  1. Suspend or terminate the Minnesota nonresident license Correct answer.
  2. Convert the license to a resident license
  3. Allow the producer to continue selling Minnesota policies
  4. Issue a temporary Minnesota license

Explanation

Minnesota generally follows the home-state action for nonresident producers. If the home-state license is suspended, the Minnesota nonresident license is suspended or terminated.

Question 26Minnesota Insurance Laws, Regulations, and Producer Responsibilities

How many continuing education credit hours must a Minnesota resident insurance producer complete during each two-year license term?

  1. 24 hours, including 3 ethics hours Correct answer.
  2. 16 hours, including 2 hours of ethics
  3. 30 hours, including 5 hours of ethics
  4. 12 hours, including 1 hour of ethics

Explanation

Minnesota requires resident producers to complete 24 continuing education hours each two-year license term, including at least 3 hours of ethics. The other figures do not match the biennial requirement.

Question 27Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota producer offers a $100 gift card to each applicant who buys an auto policy through the producer. This practice is:

  1. Permitted if the gift card is disclosed on the application
  2. Permitted only on renewal policies
  3. Prohibited rebating Correct answer.
  4. Permitted because the value is under $500

Explanation

Minnesota prohibits rebating, which is offering anything of value not specified in the policy as an inducement to buy insurance. A gift card tied to a purchase is a classic prohibited inducement.

Question 28Minnesota Insurance Laws, Regulations, and Producer Responsibilities

For a private passenger auto policy in Minnesota, an insurer that cancels coverage for a reason other than nonpayment of premium must give the insured at least how much advance written notice?

  1. 30 days Correct answer.
  2. 60 days
  3. 5 days
  4. 10 days

Explanation

Minnesota requires 30 days' advance written notice for cancellation of a private passenger auto policy for reasons other than nonpayment of premium. Nonpayment cancellations require 10 days' notice.

Question 29Minnesota Insurance Laws, Regulations, and Producer Responsibilities

After an insurer appoints a Minnesota producer, the insurer must notify the commissioner of the appointment within how many days?

  1. 15 days
  2. 30 days Correct answer.
  3. 45 days
  4. 10 days

Explanation

An insurer must file notice of a producer appointment with the Minnesota commissioner within 30 days after the appointment. This lets the state track which producers are authorized to represent the insurer.

Question 30Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota producer license may be denied if the applicant intends to use the license mainly to sell insurance to:

  1. Own family or business Correct answer.
  2. Small commercial accounts and farms
  3. Customers referred by an unrelated bank
  4. Members of the general public statewide

Explanation

A license may be denied or revoked if it is used mainly for controlled business, meaning insurance written on the licensee, family, or business interests. The rule prevents licensing solely to capture commissions on one's own risks.

Question 31Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Before placing a Minnesota policy with a nonadmitted insurer, a surplus lines broker must disclose to the insured that the insurer:

  1. Is backed by the Minnesota Insurance Guaranty Association
  2. Has been approved by the commissioner
  3. Is not covered by the state guaranty association Correct answer.
  4. Must use Minnesota policy forms

Explanation

Surplus lines insurers are nonadmitted, meaning they are not protected by the Minnesota Insurance Guaranty Association. The broker must disclose that lack of guaranty-fund protection to the insured.

Question 32Minnesota Insurance Laws, Regulations, and Producer Responsibilities

In Minnesota, an injured auto accident victim generally must meet a threshold for non-economic damages, including medical expenses exceeding:

  1. $4,000 Correct answer.
  2. $1,000
  3. $10,000
  4. $2,000

Explanation

Minnesota's no-fault law limits tort recovery unless the injured person meets a threshold, including medical expenses exceeding $4,000. Other qualifying thresholds include 60 days of disability, permanent injury, or death.

Question 33Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota driver must generally carry which document in the vehicle as proof of insurance?

  1. A paid premium receipt from the insurer
  2. An insurance ID card Correct answer.
  3. A letter signed by the producer
  4. The complete insurance policy

Explanation

Minnesota drivers must carry an insurance identification card in the vehicle and show it when requested. The card shows the insurer and policy period.

Question 34Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota license that allows a producer to sell credit life and credit accident and health insurance is called a:

  1. General lines producer license
  2. Surplus lines broker license
  3. Temporary producer license
  4. Limited lines license Correct answer.

Explanation

Credit life and credit accident and health insurance are sold under a limited lines license. This authority is narrower than a general lines producer license.

Question 35Minnesota Insurance Laws, Regulations, and Producer Responsibilities

Before a Minnesota producer replaces an existing life insurance policy, the producer generally must:

  1. Cancel the old policy immediately
  2. Obtain the commissioner's prior approval
  3. Refund the first premium
  4. Give the applicant a replacement notice Correct answer.

Explanation

Replacement rules require the producer to give the applicant a replacement notice before an existing life policy is replaced. The existing insurer is also typically notified so it can compare the policies.

Question 36Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A nonresident Minnesota producer whose home state requires continuing education generally must:

  1. Take only the Minnesota ethics courses
  2. Meet the home-state CE requirement Correct answer.
  3. Repeat the Minnesota producer licensing exam
  4. Complete Minnesota's full continuing education requirement

Explanation

Minnesota generally accepts a nonresident producer's compliance with home-state continuing education if the home state has a CE requirement. The nonresident does not repeat Minnesota's full CE program.

Question 37Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota driver who cannot obtain auto liability coverage in the voluntary market may apply to the:

  1. Minnesota FAIR property plan
  2. Automobile Insurance Plan Correct answer.
  3. Commerce Department fraud bureau
  4. State insurance guaranty association

Explanation

The Minnesota Automobile Insurance Plan is the state's assigned risk mechanism for drivers who cannot obtain auto liability coverage voluntarily. It is not a property FAIR plan or a fraud agency.

Question 38Minnesota Insurance Laws, Regulations, and Producer Responsibilities

The Minnesota Insurance Guaranty Association exists mainly to:

  1. Pay claims of insolvent insurers Correct answer.
  2. License insurance producers statewide
  3. Investigate suspected insurance fraud
  4. Set rates for every admitted insurer

Explanation

The Minnesota Insurance Guaranty Association pays covered claims against insolvent admitted insurers, within statutory limits. It does not set rates, license producers, or investigate fraud.

Question 39Minnesota Insurance Laws, Regulations, and Producer Responsibilities

The Minnesota commissioner may examine a producer's insurance records:

  1. Only with the producer's written consent
  2. Only after a criminal conviction
  3. During normal business hours Correct answer.
  4. Only if the producer is unlicensed

Explanation

The commissioner has authority to examine a producer's books and records, and examinations may occur during normal business hours. Refusing to cooperate can lead to disciplinary action.

Question 40Minnesota Insurance Laws, Regulations, and Producer Responsibilities

A Minnesota policyholder knowingly submits an auto claim for damage that never occurred. This conduct is best described as:

  1. A permissible claim practice
  2. Insurance fraud Correct answer.
  3. Rebating
  4. A routine premium adjustment

Explanation

Knowingly presenting a false insurance claim is insurance fraud. Minnesota imposes criminal and civil consequences for fraudulent claims.

Question 41General Insurance Concepts and Contract Law

Which statement best defines insurance?

  1. A guarantee that the insured will never again suffer a loss of any kind
  2. A contract that transfers the chance of financial loss from one party to another Correct answer.
  3. An arrangement in which the insurer pays all debts owed by the insured
  4. A savings plan that returns the insured's deposits with interest at retirement

Explanation

Insurance is a contractual transfer of the financial consequences of certain losses from the insured to the insurer in exchange for a premium. The insurer assumes the risk of covered losses that may affect many insureds.

Question 42General Insurance Concepts and Contract Law

Under the principle of insurable interest, a person may buy property insurance on a building only when the person:

  1. holds a real estate license issued by the state where the building is located
  2. has lived in the same county as the building for at least one year
  3. plans to purchase the building within the next five years
  4. would suffer a financial loss if the building were destroyed Correct answer.

Explanation

Insurable interest requires a financial relationship such that a loss of the property would cause the insured actual monetary harm. In property insurance that interest must exist at the time of loss. Residence, licensing, or a future purchase plan does not create it.

Question 43General Insurance Concepts and Contract Law

Which principle restores an insured to roughly the same financial position held before a loss, no better and no worse?

  1. Indemnity Correct answer.
  2. Utmost good faith
  3. Coinsurance
  4. Subrogation

Explanation

Indemnity means the insured is compensated for the actual value of the loss so that no profit is made from it. It is the reason policies pay actual cash value or replacement cost rather than an arbitrary amount.

Question 44General Insurance Concepts and Contract Law

A pile of oily rags stored beside a furnace in a woodworking shop is an example of which of the following?

  1. A pure risk
  2. A speculative risk
  3. A physical hazard Correct answer.
  4. A moral hazard

Explanation

A physical hazard is a tangible condition that increases the chance or severity of a loss. Oily rags next to an ignition source is a physical condition of the property itself.

Question 45General Insurance Concepts and Contract Law

Which of the following is a required element of a legally enforceable insurance contract?

  1. A corporate seal on the policy
  2. Notarization of the application
  3. Delivery of the policy by certified mail
  4. Offer and acceptance Correct answer.

Explanation

A valid contract requires an offer, an acceptance, consideration, competent parties, and a lawful purpose. Notarization, seals, and a particular delivery method are not required elements.

Question 46General Insurance Concepts and Contract Law

An insurance policy is described as a unilateral contract because:

  1. either party may change the terms without the other's consent
  2. both parties exchange equal promises at the moment the policy is issued
  3. only the insurer makes an enforceable promise to pay covered claims Correct answer.
  4. the insured must sign the policy before any coverage begins

Explanation

In a unilateral contract only one party makes a promise that the law will enforce; the insured pays premium and makes no promise to continue doing so. The insurer's promise to pay covered claims is enforceable once premium is paid.

Question 47General Insurance Concepts and Contract Law

Because an insurance policy is a contract of adhesion:

  1. the insured may add terms to the policy at any time during the policy period
  2. the insurer writes the terms and the insured takes them or leaves them Correct answer.
  3. each clause is negotiated individually between the insurer and the insured
  4. the policy must be reviewed by a court before coverage takes effect

Explanation

A contract of adhesion is prepared by one party and offered to the other on a take-it-or-leave-it basis. Because the insurer controls the wording, ambiguous language is generally construed against the insurer.

Question 48General Insurance Concepts and Contract Law

An insurance contract is aleatory, which means that:

  1. the premium is refunded when no loss occurs during the term
  2. the parties promise to exchange things of exactly equal value at once
  3. the amounts exchanged depend on whether a loss occurs Correct answer.
  4. the insurer must pay a claim in every policy period

Explanation

Aleatory means the values exchanged are unequal and depend on chance. The insured may pay a modest premium and collect a large claim, or pay premium and collect nothing.

Question 49General Insurance Concepts and Contract Law

After paying a covered loss caused by a negligent third party, an insurer may seek reimbursement from that third party. This right is called:

  1. salvage
  2. assignment
  3. subrogation Correct answer.
  4. contribution

Explanation

Subrogation lets the insurer stand in the insured's shoes and recover from the party legally responsible for the loss. It helps keep premiums down and prevents the insured from collecting twice.

Question 50General Insurance Concepts and Contract Law

Which statement about representations made in an insurance application is correct?

  1. They may only be recorded by the insurer in its own underwriting file
  2. They are beliefs stated as true to the best of the applicant's knowledge Correct answer.
  3. They are guarantees that void the policy whenever they are false in any respect
  4. They are unenforceable unless notarized by an agent

Explanation

Representations are statements of fact or belief made by the applicant during underwriting, as opposed to warranties, which are guarantees. A false representation generally permits rescission only when it is material.