Minnesota Property & Casualty Insurance License, Practice Exams

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.

Auto liability limits of 100/300/50 are an example of:

1. Split limits ✓
2. A coinsurance requirement
3. An aggregate limit
4. A combined single limit

Why: Split limits separate coverage into per-person bodily injury, per-accident bodily injury, and property damage amounts.

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.

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.

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.

If two PAP policies issued by the same insurer apply to the same loss, Part F provides that:

1. Both policies pay their full limits, so the insured may collect twice for the same element of damages
2. Both policies are void for concealment, because the duplicate coverage was never disclosed to the insurer
3. The insurer's maximum liability shall not exceed the highest applicable limit under any one policy ✓
4. The policy issued more recently is canceled flat and the full premium paid for it is refunded to the insured

Why: The "Two or More Auto Policies" provision limits recovery so the insurer pays no more than the highest limit under any one of its policies.

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.

Grouping similar exposures together and charging all members of the group the same base rate is known as:

1. Schedule rating
2. Judgment rating
3. Retrospective rating
4. Class (manual) rating ✓

Why: Class rating (manual rating) applies the same rate to all members of a homogeneous group of similar risks.

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.

How does a standard commercial property deductible typically apply?

1. It applies only to personal property losses, never to the building itself
2. Per item of damaged property, with no aggregate cap
3. Per occurrence, subtracted from the loss after coinsurance is applied ✓
4. Per peril, and it doubles for theft losses

Why: The deductible applies per occurrence and is subtracted from the loss amount after any coinsurance adjustment is made.

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.

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 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.

Workers' compensation wage-replacement (indemnity) benefits typically pay the worker:

1. Only the difference between the worker's wages and any unemployment compensation collected during the same weeks
2. One hundred percent of pre-injury gross wages, reported on a W-2 and fully subject to income tax
3. A flat statewide amount set by statute, the same for every worker
4. A percentage of average weekly wage, generally tax-free and subject to a maximum ✓

Why: Indemnity benefits usually replace a percentage (often around two-thirds) of the worker's average weekly wage, are generally tax-free, and are subject to statutory minimums and maximums.

A 56-year-old insured completes an approved motor vehicle accident prevention course and asks his insurer for the statutory discount. The insurer offers five percent, says the course should have been eight hours, and tells him he must retake it every year to keep the reduction.

1. The insurer is right about the percentage and wrong about the rest: the statute leaves the size of the reduction to the insurer's rating judgement and requires only that some reduction be given, the course length and the retake interval being matters for the Department of Public Safety. A fixed statutory percentage would be a rate set by the Legislature rather than by the filing process the rest of this chapter is built on, which is why the section speaks of an appropriate reduction; and the department that writes the curriculum is the one that decides how long teaching it takes.
2. The insurer is wrong on all three points: an insurer must provide an appropriate premium reduction of at least ten percent on its policies of private passenger vehicle insurance to insureds 55 years old and older who successfully complete the course; the accident prevention course must be a total of four hours; and a person 55 and older may retake the original course or take the refresher course every three years and receive a completion certificate to remain eligible. ✓
3. The insurer is wrong about the percentage and the retake interval but right about the course length: the reduction is at least ten percent and the interval is three years, but the four-hour figure in the statute is the minimum for the refresher rather than for the original course, which must be long enough to cover the curriculum the Department of Public Safety establishes by rule. A refresher is by its nature the shorter of the two, so a statute that fixed a length at all would fix it for the refresher and leave the length of the original course to the rulemaker.
4. The insurer is wrong about the percentage and the course length but right about the retake interval: the reduction is at least ten percent and the motor vehicle accident prevention course is four hours, but the certificate is evidence of completion at a point in time and an insurer is entitled to ask for current evidence every year before continuing a rating credit, the three-year figure being the period after which a person becomes eligible again rather than the interval at which eligibility is maintained.

Why: Minn. Stat. 65B.28, subd. 1 is a rating mandate rather than a permission: AN INSURER MUST PROVIDE AN APPROPRIATE PREMIUM REDUCTION OF AT LEAST TEN PERCENT ON ITS POLICIES OF PRIVATE PASSENGER VEHICLE INSURANCE, AS DEFINED IN SECTION 65B.001, SUBDIVISION 2, ISSUED, DELIVERED, OR RENEWED IN THIS STATE, TO INSUREDS 55 YEARS OLD AND OLDER WHO SUCCESSFULLY COMPLETE AN ACCIDENT PREVENTION COURSE OR REFRESHER COURSE ESTABLISHED UNDER SUBDIVISIONS 2 AND 3. AT LEAST TEN PERCENT is a floor, and the age is 55 rather than the 60 or 65 a candidate might expect. Subd. 2 puts the course in the hands of another department: THE COMMISSIONER OF PUBLIC SAFETY MUST ADOPT RULES ESTABLISHING AND REGULATING A MOTOR VEHICLE ACCIDENT PREVENTION COURSE FOR PERSONS 55 YEARS OLD AND OLDER, covering at a minimum CURRICULUM REQUIREMENTS and the ISSUANCE OF A COURSE COMPLETION CERTIFICATION AND REQUIRING ITS SUBMISSION TO AN INSURED AS EVIDENCE OF COMPLETION - and then fixes the length itself: THE ACCIDENT PREVENTION COURSE MUST BE A TOTAL OF FOUR HOURS. Subd. 3 permits a REFRESHER COURSE, which SHALL BE NO MORE THAN FOUR HOURS and based on the same curriculum, with the Department of Public Safety approving the agencies authorised to conduct it. Subd. 4 settles the interval and adds a reinstatement rule: A PERSON 55 YEARS OLD AND OLDER MAY RETAKE THE ORIGINAL COURSE OR TAKE THE REFRESHER COURSE EVERY THREE YEARS AND RECEIVE A COURSE COMPLETION CERTIFICATE TO REMAIN ELIGIBLE FOR THE PREMIUM REDUCTION. A PERSON 58 YEARS OLD AND OLDER WHO SUCCESSFULLY COMPLETES A RETAKING OF THE ORIGINAL COURSE OR A REFRESHER COURSE MORE THAN THREE YEARS FROM THE DATE THE PERSON LAST WAS ELIGIBLE FOR THE PREMIUM REDUCTION IS ENTITLED TO REINSTATEMENT OF THIS ELIGIBILITY - so a lapse is recoverable, and the age in that sentence is 58 rather than 55, which is a detail worth noticing.

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.

Mid-term, an insurer wants to cancel three automobile policies: one where the insured understated his mileage in the written application in a way that affected the rating; one where the insured refused to cooperate in defending a lawsuit after being asked; and one where the insurer has simply decided the territory is unprofitable.

1. All three cancellations are available: an insurer may cancel mid-term on any ground stated in the policy, the statutory list describing the reasons that must be honoured as valid rather than confining the insurer to them, so an unprofitable territory will serve where the policy says so.
2. The first two are available and the third is not: no cancellation or reduction in the limits of liability of coverage during the policy period shall be effective unless notice is given and unless based on one or more reasons stated in the policy which shall be limited to the statutory list - which includes the named insured's failure to disclose in the written application any requested information necessary for the acceptance or proper rating of the risk, and the named insured's refusal, when requested, to cooperate in the investigation of a claim or defense of a lawsuit. ✓
3. Only the second is available: a mid-term cancellation must rest on conduct by the insured after the policy was issued, so an understatement of mileage in the application supports rescission for misrepresentation or a nonrenewal at the end of the term, but not a cancellation during it.
4. The first and third are available and the second is not: a misstatement affecting the rating is squarely within ground (5) of the list, and an insurer's withdrawal from an unprofitable territory is a business decision the section does not reach; but a refusal to cooperate is a policy condition to be raised as a defence to the particular claim rather than a ground for ending the contract, since cancelling would leave the insurer defending the same lawsuit with no contract to enforce and would release the insured from the very obligation he had refused to perform.

Why: Minn. Stat. 65B.15, subd. 1 is a closed list and the opening words say so: NO CANCELLATION OR REDUCTION IN THE LIMITS OF LIABILITY OF COVERAGE DURING THE POLICY PERIOD OF ANY POLICY SHALL BE EFFECTIVE UNLESS NOTICE THEREOF IS GIVEN AND UNLESS BASED ON ONE OR MORE REASONS STATED IN THE POLICY WHICH SHALL BE LIMITED TO THE FOLLOWING. Two conditions - notice, and a listed reason that is also stated in the policy - and an unprofitable territory is not on the list, so the third cancellation fails at the first hurdle. The first six grounds are: (1) NONPAYMENT OF PREMIUM; (2) the policy was OBTAINED THROUGH A MATERIAL MISREPRESENTATION; (3) any insured MADE A FALSE OR FRAUDULENT CLAIM or knowingly aided or abetted another in presenting one; (4) the named insured FAILED TO DISCLOSE FULLY MOTOR VEHICLE ACCIDENTS AND MOVING TRAFFIC VIOLATIONS FOR THE PRECEDING 36 MONTHS IF CALLED FOR IN THE WRITTEN APPLICATION; (5) the named insured FAILED TO DISCLOSE IN THE WRITTEN APPLICATION ANY REQUESTED INFORMATION NECESSARY FOR THE ACCEPTANCE OR PROPER RATING OF THE RISK; and (6) the named insured KNOWINGLY FAILED TO GIVE ANY REQUIRED WRITTEN NOTICE OF LOSS OR NOTICE OF LAWSUIT, or, WHEN REQUESTED, REFUSED TO COOPERATE IN THE INVESTIGATION OF A CLAIM OR DEFENSE OF A LAWSUIT. Ground (5) catches the understated mileage and ground (6) the refusal to cooperate; note that ground (6) is conditioned on a request having been made.

A Farm Coverage Form generally combines:

1. Coverage for the dwelling, farm personal property, and farm structures ✓
2. Workers compensation benefits for the farm's hired laborers together with statutory employers liability limits
3. Only the liability arising out of the farming operation, with no property coverage on the dwelling or the barns
4. Ocean marine cargo on crops moving to market and personal auto coverage on the farm's pickup trucks

Why: The Farm Coverage Form can combine coverage for the farm dwelling, household personal property, farm personal property (including livestock and machinery), and farm buildings/structures.

"Specified Causes of Loss" physical damage coverage under the BACF differs from Comprehensive in that it:

1. Includes collision damage as well, so a separate collision coverage need not be purchased for the auto
2. Covers only named perils such as fire, theft, windstorm, vandalism, and certain others ✓
3. Covers a broader range of perils than comprehensive does, and therefore carries a higher premium
4. Applies with no deductible at all, while comprehensive coverage must always be written with one

Why: Specified Causes of Loss is a named-peril coverage (fire, lightning, theft, windstorm, hail, flood, mischief, etc.), narrower and cheaper than comprehensive.

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.

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 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.

A licensed agent authorised by a surplus lines broker collects the premium from an insured and then fails to remit it. The broker, who is separately in arrears to the eligible surplus lines insurer, has not paid that insurer either. A loss occurs. The broker also charged the insured a fee on top of the premium and kept records of the transaction for three years.

1. The broker is treated as having received the premium, the insurer is treated as having received it and is liable for the loss and for any unearned premium on cancellation regardless of whether the broker is indebted to the insurer, the fee is permissible if not excessive or discriminatory and documented, and the three-year retention is short of the five years required. ✓
2. The broker is not treated as having received the premium because the agent absconded with it, and the insurer is liable only to the extent it has been paid: a statute that made an insurer answer for money it never saw would be a guarantee fund by another name, and the surplus lines market exists precisely because it is not backed by one, which is what every insured is warned of before placement.
3. The broker is treated as having received the premium but the insurer is not, so the loss falls on the broker; the fee is prohibited because a surplus lines broker is compensated by the insurer; and records must be kept for five years: the chain of deemed receipt stops at the broker because that is as far as the section's language reaches, and permitting a separate fee would let a broker charge twice for one placement, once through the commission the insurer pays and once through the insured's pocket, which is the practice the requirement of complete documentation is designed to expose rather than to authorise.
4. The insurer is liable for the loss but not for unearned premium, the fee is permissible without documentation, and the retention period is three years: the deemed-receipt rule is about claims rather than about accounting between the parties, so it does not reach a refund on cancellation; and a requirement to document a fee would be surplusage next to the general obligation to keep an account of each transaction, which is where the retention period is set and which the broker has met.

Why: Minn. Stat. 60A.205 builds a two-link chain of deemed receipt, and each link protects the party further from the money. Subd. 1: A SURPLUS LINES BROKER MAY BE COMPENSATED BY AN ELIGIBLE SURPLUS LINES INSURER AND THE BROKER MAY COMPENSATE A LICENSED AGENT IN THIS STATE FOR OBTAINING NONADMITTED INSURANCE BUSINESS. A LICENSED AGENT AUTHORIZED BY THE BROKER MAY COLLECT A PREMIUM ON BEHALF OF THE BROKER, AND AS BETWEEN THE INSURED AND THE BROKER, THE BROKER SHALL BE CONSIDERED TO HAVE RECEIVED THE PREMIUM IF THE PREMIUM PAYMENT HAS BEEN MADE TO THE AGENT. Subd. 2 is the second link and it is the one that decides the loss: IF AN ELIGIBLE SURPLUS LINES INSURER HAS ASSUMED A RISK, AND IF THE PREMIUM FOR THAT RISK HAS BEEN RECEIVED BY THE BROKER WHO PLACED THE INSURANCE, THEN AS BETWEEN THE INSURER AND THE INSURED, THE INSURER SHALL BE CONSIDERED TO HAVE RECEIVED THE PREMIUM DUE TO IT FOR THE COVERAGE AND SHALL BE LIABLE TO THE INSURED FOR ANY LOSS COVERED BY THE INSURANCE AND FOR THE UNEARNED PREMIUM UPON CANCELLATION OF THE INSURANCE, REGARDLESS OF WHETHER THE BROKER IS INDEBTED TO THE INSURER. Read the two together and the insured is protected twice over: the agent's receipt is the broker's receipt, and the broker's receipt is the insurer's receipt. Note the express words AND FOR THE UNEARNED PREMIUM UPON CANCELLATION, which is what the claims-only reading denies, and AS BETWEEN THE INSURER AND THE INSURED, which leaves the insurer's claim against the broker for the money entirely alive. Two neighbouring sections complete the item. Section 60A.204, subd. 2: A SURPLUS LINES BROKER MAY CHARGE A FEE AND COMMISSION, IN ADDITION TO THE PREMIUM, THAT IS NOT EXCESSIVE OR DISCRIMINATORY. THE BROKER SHALL MAINTAIN COMPLETE DOCUMENTATION OF ALL FEES AND COMMISSIONS CHARGED - so the fee is allowed, and it is allowed IN ADDITION TO a commission, but the documentation duty is expressed as a separate SHALL. Section 60A.203: EACH SURPLUS LINES BROKER SHALL KEEP A SEPARATE ACCOUNT OF EACH TRANSACTION ... EVIDENCE OF THESE TRANSACTIONS SHALL BE DOCUMENTED IN THE FORM AND MANNER DESIGNATED BY THE COMMISSIONER AND RETAINED BY THE BROKER FOR A MINIMUM OF FIVE YEARS. THE FORMS MUST BE READILY AVAILABLE FOR REVIEW AND AUDIT BY THE COMMISSIONER.

Liberalization is a policy condition that:

1. Reduces coverage automatically whenever the insurer files a narrower form with the state
2. Adds Section ii liability protection for the insured's business pursuits at each renewal without charge
3. Cancels the policy automatically when a broader form is approved, requiring the insured to reapply for coverage
4. Automatically extends any broadened coverage to existing policyholders without additional premium ✓

Why: The liberalization clause provides that if the insurer broadens coverage without additional premium during the policy period, the broadened coverage applies automatically to the existing policy.

Provisions that remove or restrict coverage for certain perils, property, or losses are found in the:

1. Insuring agreement
2. Declarations
3. Exclusions ✓
4. Supplementary payments

Why: Exclusions identify perils, property, hazards, or losses that the policy does not cover.

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 PAP insured is injured by an at-fault driver whose liability insurer is declared insolvent before paying the claim. Under Part C, the at-fault vehicle is:

1. Treated as insured, since a policy was in force
2. Covered only through the insured's own Part B
3. Excluded, since insolvency is a regulatory matter
4. Treated as an uninsured motor vehicle ✓

Why: Part C defines an uninsured motor vehicle to include one whose insurer denies coverage or is or becomes insolvent. A policy that existed on the accident date but cannot pay leaves the insured in the same position as having no policy at all.

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.

An insurer terminates an agent's appointment. Part of its reason is an unremitted premium it has been chasing; it also knows of an allegation, which it has not investigated, that the agent altered an application. It plans to write to the commissioner in a month's time saying only that the appointment has ended by mutual agreement.

1. That will not do as to the content, but a month is inside the deadline: the rule allows 30 days from the date of the termination for the written statement, and the ten working days it names is the time within which the insurer must hand the agent a copy of everything it sends the commissioner. The content fails because a bare assertion of mutual agreement supplies none of what the statement must contain - the reason for the termination, the names, addresses and available telephone numbers of every person with knowledge of the matter, the applications, checks and other documents relating to the allegation that are in the insurer's possession or control, copies of every statement or affidavit taken, and a current statement of the agent's account.
2. That will not do: an insurer or agency terminating an agent's appointment, contract or association based entirely or in part on a complaint or alleged violation of law, or with knowledge of an alleged violation, including failure to remit premiums, must within ten working days forward the commissioner a written statement of the reason, including the names, addresses and any telephone numbers of all persons having knowledge of the matter, copies of applications, checks or other documents relating to the matter in its possession or control, copies of all statements or affidavits taken, and a current statement of the agent's account. ✓
3. That will do: the rule bites only where the termination is based entirely on a complaint or an alleged violation of law, and this one rests only in part on the unremitted premium, the balance being an ordinary commercial decision the insurer may describe to the commissioner as it wishes.
4. That will not do, and the rule asks more of the insurer than the answer allows: alongside the reason and the documents, it must forward the findings of any investigation into the allegation, so an insurer that knows of an allegation it has never looked into must complete an inquiry into the claimed alteration of the application before the ten-working-day statement can properly be filed at all. That duty is why the rule speaks of documents in the insurer's possession or control: control extends to material the insurer could obtain by asking its own staff and the applicant, and an insurer that reports without those findings is in breach whatever else its statement sets out about the unremitted premium.

Why: Minn. R. 2795.1600 requires an insurer or agency “which terminates an agent's appointment, or its contract or association with an agent based entirely or in part on a complaint or alleged violation of law, or with knowledge of an alleged violation of law, including, but not limited to, the failure to remit premiums”, to forward the commissioner a written statement of the reason for the termination “within ten working days of the termination”. “Entirely or in part” is in the trigger, so a mixed reason engages it - the error in the answer saying that will do - and so does mere knowledge of an alleged violation. The period is ten working days and is the period for the statement itself, not for a copy to the agent, which is the invention of the answer allowing 30 days. The statement “must include the names, addresses, and, if available, telephone numbers of all persons having knowledge of the matter; copies of any applications, checks, or other documents relating to the complaint or alleged violation which are in the insurer's or agency's possession or control; copies of all statements or affidavits taken from any person in connection with the complaint or allegations; and a current statement of the agent's account with the insurer or agency”. Documents in the insurer's possession or control are what must be forwarded; nothing requires an investigation to be carried out first, so demanding the findings of an investigation is an addition.

A peril is best described as:

1. A condition that increases the chance of loss
2. The reduction in value of property
3. The legal obligation to pay for a loss
4. The cause of a possible loss, such as fire or theft ✓

Why: A peril is the direct cause of a loss, such as fire, windstorm, or theft. A hazard increases the likelihood of a peril causing loss.

Before workers' compensation laws, employers defending common-law negligence suits could use several defenses. Which of the following was one of those defenses that WC laws effectively removed?

1. The collateral source rule
2. The fellow-servant rule ✓
3. The statutory employer rule
4. The exclusive remedy rule

Why: The common-law defenses WC removed were contributory negligence, assumption of risk, and the fellow-servant rule (injury caused by a coworker). WC made these defenses irrelevant to benefit eligibility.

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.

A landlord owns a rental house and wants to insure the building and recover lost rents but does not need contents coverage. Which policy line fits best?

1. Homeowners HO-6 unit-owners form
2. Dwelling Policy with Coverage A and D ✓
3. A Personal Articles Floater scheduling the rental home's contents
4. Homeowners HO-4 contents broad form

Why: The Dwelling Policy is well suited to landlord/rental risks, providing Coverage A on the structure and Coverage D for lost fair rental value, without requiring contents coverage.

How does Business Income coverage typically appear in a standard BOP compared to a CPP?

1. It is available only to manufacturing risks that meet the BOP eligibility rules
2. It is excluded from the BOP entirely
3. It must be added by endorsement with a stated limit
4. It is included automatically in the BOP without a separate limit ✓

Why: The BOP generally includes business income and extra expense automatically (often for up to 12 months) without requiring a separately scheduled dollar limit, unlike the CPP.

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.

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.

A tour operator asks which of three products it sells are travel insurance for the purposes of the licensing chapter: cover for cancellation of a booked trip; cover for sickness or accident occurring during a two-week holiday; and a comprehensive medical plan for clients posted overseas for a year.

1. All three are, cancellation cover and sickness or accident cover alike: the definition lists categories of risk incident to planned travel and the list is inclusive rather than exhaustive, so a medical plan written for a traveller is travel insurance whatever the length of the posting, the reference to expatriates and military personnel identifying who may buy such cover rather than excluding it; the sentence beginning “travel insurance does not include” is directed at plans sold as major medical products in their own right and not at plans sold as part of a travel package, however comprehensive the medical element of the package may be.
2. Only the first is: travel insurance is confined to the trip itself and to the property taken on it, so cancellation and baggage are within it while any cover responding to sickness, accident, disability or death is health or life insurance requiring the corresponding line of authority, whatever the duration of the travel.
3. The first two are and the third is not: travel insurance means coverage for personal risks incident to planned travel, including interruption or cancellation of trip or event, loss of baggage or personal effects, damage to accommodations or rental vehicles, and sickness, accident, disability or death occurring during travel, but does not include major medical plans providing comprehensive medical protection for travellers with trips lasting six months or longer, including expatriate workers and deployed military personnel. ✓
4. The first two are and the third is not, but the dividing line is different: the exclusion turns on the cover being comprehensive rather than on the length of the trip, so a comprehensive medical plan is excluded even for a two-week holiday and a limited medical cover for a year-long posting would remain travel insurance.

Why: Minn. Stat. 60K.383 subd. 1(b) defines “travel insurance” as “insurance coverage for personal risks incident to planned travel, including, but not limited to: (1) interruption or cancellation of trip or event; (2) loss of baggage or personal effects; (3) damages to accommodations or rental vehicles; or (4) sickness, accident, disability, or death occurring during travel”. Sickness and accident during travel are in the list, so an answer excluding them is contradicted by the text. The paragraph then carves out one thing: “Travel insurance does not include major medical plans, which provide comprehensive medical protection for travelers with trips lasting six months or longer, including those working overseas as an expatriate or military personnel being deployed.” The carve-out is defined by both the comprehensiveness of the plan and the six-month duration - the expatriate and military references are examples of who takes such trips, not a licence to ignore the exclusion as the all-three answer supposes, and the duration is part of the test rather than irrelevant to it as the comprehensiveness-only answer supposes. Paragraph (c) defines a “travel insurance producer” as an insurer designee such as a managing general underwriter, managing general agent or licensed limited lines producer of travel insurance, and paragraph (d) a “travel retailer” as a business entity that offers and disseminates travel insurance on behalf of and under the direction of a travel insurance producer.

An insurer settling a kitchen fire applies a depreciation deduction to the granite worktop, which is unaffected by age or use. It also applies a betterment deduction to a section of flooring, on the footing that new boards are worth more than old ones, although the repair has not raised the resale value of the house above what it was before the fire.

1. Both deductions are unfair settlement practices: reducing or attempting to reduce for depreciation any settlement or offer of settlement for items not adversely affected by age, use, or obsolescence is prohibited; and reducing or attempting to reduce for betterment is prohibited unless the resale value of the item has increased over the preloss value by the repair of the damage. ✓
2. Neither deduction is an unfair settlement practice: depreciation and betterment are ordinary incidents of indemnity, and the subdivision prohibits only a deduction taken without telling the insured what it is for and how it was calculated, so an insurer that has set out both figures and their basis in its settlement letter has complied whatever the condition of the worktop and whatever the repair did to the resale value of the house.
3. The depreciation deduction is an unfair settlement practice but the betterment deduction is not: betterment may be taken whenever the repair leaves the insured better off than before the loss in any respect, and new boards for old is such a case, the reference to resale value describing the usual way that improvement is measured rather than a condition that must be met before any deduction may be taken at all.
4. Both deductions are unfair settlement practices, and the depreciation rule is wider still: no depreciation may be applied to any part of a building claim, the clause reaching personal property alone, so a settlement on a structure is paid in full whether or not the component was worn out on the day of the loss.

Why: Minn. Stat. 72A.201 subd. 5(9): "reducing or attempting to reduce FOR DEPRECIATION any settlement or any offer of settlement FOR ITEMS NOT ADVERSELY AFFECTED BY AGE, USE, OR OBSOLESCENCE." The test is the condition of the item, not the kind of property it belongs to; the clause neither permits nor forbids depreciation as such, which is the reading of the neither-deduction answer, and it draws no line between buildings and contents, contrary to the building-claim answer. Subd. 5(10): "reducing or attempting to reduce FOR BETTERMENT any settlement or any offer of settlement UNLESS THE RESALE VALUE OF THE ITEM HAS INCREASED OVER THE PRELOSS VALUE BY THE REPAIR of the damage." Resale value against preloss value is the whole of the test, not an illustration of it, so a repair that leaves the property no more valuable than it was cannot carry a betterment deduction however new the materials - which is the error in the answer allowing the betterment deduction. Both clauses sit in the fair settlement standards and bind an insurer, an adjuster, a self-insured and a self-insurance administrator alike.

Under comparative negligence (pure form), a plaintiff found 30% at fault for a $100,000 injury recovers:

1. $100,000
2. $30,000
3. $70,000 ✓
4. $0

Why: Pure comparative negligence reduces recovery by the plaintiff's percentage of fault: $100,000 − 30% = $70,000.

Defining key terms (often in quotation marks or bold) so they have a consistent meaning throughout the contract is the purpose of the:

1. Definitions section ✓
2. Endorsements
3. Exclusions section
4. Declarations

Why: The definitions section clarifies the precise meaning of specific terms used throughout the policy.

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.

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.

An insurer proposes a Minnesota auto policy that folds uninsured and underinsured protection into a single combined coverage of $25,000 per person and $50,000 per accident. Two people are then injured by an uninsured driver; one has damages of $45,000 and the other $5,000.

1. The combined coverage is permissible and the first claimant recovers $45,000: the statutory figures are per-accident aggregates within which the obligor may allocate as the damages require, the per-person figure operating only where a single person is injured.
2. The coverage must be written as separate uninsured and underinsured coverages, and the first claimant recovers $25,000: no plan may be renewed, delivered or issued for delivery, or executed in this state with respect to a motor vehicle registered or principally garaged here unless separate uninsured and underinsured motorist coverages are provided therein; each coverage, at a minimum, must provide $25,000 for injury to or the death of one person and $50,000 for two or more persons; and in the case of injury to or the death of two or more persons, the amount available to any one person must not exceed the one-person limit. ✓
3. The combined coverage is permissible but the first claimant recovers only $25,000: the requirement is that the limits be provided, not that the coverages be written separately, and the per-person cap applies as described.
4. The coverage must be written separately and the first claimant recovers $45,000: the separate-coverages requirement is as described, but the sentence capping the amount available to any one person is a limit on the obligor's aggregate exposure across the accident rather than on what a single claimant may draw, so where the second claimant's damages are small the balance of the per-accident figure remains available to the first, subject only to the $50,000 ceiling; reading it as a cap on the individual would mean that an insured with $45,000 of damages recovers less merely because somebody else in the same car suffered a scratch, which would make the amount of one person's recovery turn on the fortuity of another person's injury rather than on the limits actually purchased.

Why: Minn. Stat. 65B.49, subd. 3a, clause (1) is three sentences and each does separate work. First: NO PLAN OF REPARATION SECURITY MAY BE RENEWED, DELIVERED OR ISSUED FOR DELIVERY, OR EXECUTED IN THIS STATE with respect to any motor vehicle REGISTERED OR PRINCIPALLY GARAGED IN THIS STATE UNLESS SEPARATE UNINSURED AND UNDERINSURED MOTORIST COVERAGES ARE PROVIDED THEREIN. The word is SEPARATE, so a single combined coverage does not comply however generous its limits. Second: EACH COVERAGE, AT A MINIMUM, MUST PROVIDE LIMITS OF $25,000 BECAUSE OF INJURY TO OR THE DEATH OF ONE PERSON IN ANY ACCIDENT AND $50,000 BECAUSE OF INJURY TO OR THE DEATH OF TWO OR MORE PERSONS IN ANY ACCIDENT - EACH coverage, so the floor is $25,000/$50,000 twice over and not $25,000/$50,000 shared. Third: IN THE CASE OF INJURY TO, OR THE DEATH OF, TWO OR MORE PERSONS IN ANY ACCIDENT, THE AMOUNT AVAILABLE TO ANY ONE PERSON MUST NOT EXCEED THE COVERAGE LIMIT PROVIDED FOR INJURY TO, OR THE DEATH OF, ONE PERSON IN ANY ACCIDENT. That sentence is what caps the first claimant at $25,000 although $50,000 is available for the accident and the second claimant needs only $5,000 of it. The per-person figure is a ceiling on the individual, not a floor that dissolves once a second person is hurt.

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.

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.

Why does the CGL contain an Employer's Liability exclusion?

1. Because injuries to employees are already paid under Coverage B, Personal and Advertising Injury, which settles their medical bills directly
2. Bodily injury to employees in the course of employment is meant to be covered by Workers Compensation and Employers Liability ✓
3. Because employees can never qualify as insureds under any part of the CGL, so no coverage could ever be triggered on their behalf
4. Because it merely repeats the auto exclusion, since nearly every employee injury happens while driving a company vehicle on business

Why: The CGL excludes injury to employees in the course of employment because that exposure belongs to the WC/Employers Liability policy.

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.

Because an insurance policy is a contract of adhesion, any ambiguity in its wording is generally:

1. Considered void and unenforceable, so the provision containing it is struck out
2. Resolved in favor of the insured, against the insurer who drafted it ✓
3. Sent to the state insurance department for an authoritative interpretation
4. Resolved in favor of the insurer who drafted it, since it chose the wording

Why: Since the insurer drafts the contract, ambiguities are construed against the drafter and in favor of the insured.

The difference between cancellation and nonrenewal is that nonrenewal:

1. Requires the insurer to return the entire annual premium paid, not merely the unearned portion
2. Requires the insurance commissioner's prior written approval before the notice may be mailed
3. Ends coverage in the middle of the policy term once the statutory notice period expires
4. Lets the current policy run to expiration but does not continue it for a new term ✓

Why: Cancellation terminates a policy during its term, while nonrenewal allows the current term to expire and declines to issue a new term.

A homeowner with a finished basement suffers a flood. Under the NFIP, coverage for the finished walls and basement personal property is:

1. Generally excluded or sharply limited ✓
2. Fully covered at replacement cost
3. Covered after a 60-day wait
4. Covered only if contents coverage is doubled

Why: The NFIP generally excludes finished improvements and most personal property located in a basement, providing only limited coverage for certain mechanical equipment.

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.

A broker in another state arranges cover on a building located in Minnesota, placed with an insurer that holds no authority under Minnesota law. The parties sign the documents outside Minnesota and the broker argues that the contract is therefore governed by the law of the state where it was made.

1. The argument succeeds: a contract is made where the last act necessary to form it occurs, so one executed outside this state is a foreign contract however the subject matter is situated, and the prohibition in this subdivision reaches only persons physically present here when the risk was solicited.
2. The argument fails as to the location of the contract, every contract on property in this state being deemed made here; but the prohibition binds the insurer alone, so the broker who arranged the placement commits no offence and cannot be proceeded against under the subdivision.
3. The argument fails: all contracts of insurance on property, lives, or interests in this state shall be deemed to be made in this state; and it is unlawful for any person, firm or corporation to solicit or make, or aid in soliciting or making, any contract of insurance not authorised by the laws of this state. ✓
4. The argument fails as to the location of the contract; and the prohibition reaches a person who solicits or makes such a contract, but not one who merely aids in soliciting or making it, the subdivision confining liability to principals rather than to those who assist them.

Why: Minn. Stat. 60A.08 subd. 4 consists of two short paragraphs, each of which the item tests. The first is a deeming provision covering the whole field: “All contracts of insurance on property, lives, or interests in this state, shall be deemed to be made in this state.” It fixes the situs by reference to the SUBJECT MATTER - property, lives or interests here - and not by reference to where the parties signed, which is what the place-of-signing argument relies on. The second paragraph is the prohibition, and its breadth is the point: “It shall be unlawful for any person, firm, or corporation to SOLICIT OR MAKE, OR AID IN SOLICITING OR MAKING, any contract of insurance not authorized by the laws of this state.” Four things follow. It reaches any person, firm or corporation, not only insurers, so the attempt to confine it to the insurer fails. It reaches soliciting as well as making. It expressly reaches aiding in either, so the principal-only reading is contradicted by the words. And what is prohibited is a contract “not authorized by the laws of this state”, which is what ties the paragraph back to the deeming provision above it - once the contract is deemed made here, Minnesota's authorisation requirements are the ones that matter. Note that lawfully effectuated surplus lines placement is a separate regulated route under sections 60A.195 to 60A.209 rather than an exception written into this subdivision.

A tenant rents space and is contractually responsible for fire damage to the landlord's building. The best coverage is:

1. Legal Liability Coverage (fire legal/property) ✓
2. Personal property of others under Coverage C
3. Business income
4. Builders Risk

Why: Legal Liability Coverage protects a tenant against liability for fire (or other covered peril) damage to property of others in their care, such as a leased building.

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.

Under the PAP, diminution in value claims for the insured's own repaired vehicle are:

1. Paid under Part A once the insured's own repairs are completed and appraised
2. Paid as a supplementary payment along with towing and loss-of-use charges
3. Generally excluded under Part D physical damage ✓
4. Always paid under Part D whenever a licensed appraiser documents the lost resale value

Why: The PAP typically excludes any reduction in the vehicle's value (diminution) following repair as part of a physical damage claim.

A broker cannot place a risk with any licensed insurer or with any eligible surplus lines insurer, and places it with an ineligible one. He certifies the attempts to the commissioner, prints the required notice in black ink, and collects the premium tax. The insured later fails to pay those taxes when due, and an office manager who typed the paperwork asks what her exposure is.

1. The placement was lawful and the notice adequate, the insured faces a civil fine of not more than $3,000 plus accrued interest from the inception of the insurance, and the office manager has no exposure: the misdemeanour in the section reaches a person who procures the insurance, which means the broker, and clerical assistance in a transaction the Act expressly authorises cannot be an offence.
2. The placement was unlawful because insurance may never be placed with an ineligible insurer, and both the insured and the office manager are exposed: the Act recognises eligible insurers precisely so that nothing outside the list may be used, and the certification the broker filed is a report of a failed search rather than a permission to proceed. Anyone who assisted is caught by the section's penalty provision, which is drawn as widely as it is for that reason.
3. The placement was lawful but the notice is defective because it was not in red ink, the insured faces a civil fine of not more than $3,000, plus accrued interest from the inception of the insurance, and the office manager is exposed: a person who assists or in any manner AIDS directly or indirectly in the procurement of insurance from an ineligible surplus lines insurer in this state is guilty of a misdemeanor, punishable by imprisonment for not more than 364 days, or a fine of not more than $1,000, or both - the words except as provided in this section protecting a placement that complies, and this one does not. ✓
4. The placement was lawful, the notice adequate, the insured faces the civil fine, and the office manager is exposed only if she knew the insurer was ineligible: a misdemeanour requires a guilty mind, and a provision that criminalised typing would sweep in every clerk in every agency in the state, which cannot have been intended by a legislature that placed the provision in an Act whose whole purpose is to license and channel this business rather than to suppress it. The requirement that the notice be printed in a particular colour of ink is directed at the broker's own conduct and does not bear on the position of an employee at all.

Why: Minn. Stat. 60A.209 permits what its heading appears to forbid, on conditions. Subd. 1: A RESIDENT OF THIS STATE MAY OBTAIN INSURANCE FROM AN INELIGIBLE SURPLUS LINES INSURER IN THIS STATE THROUGH A SURPLUS LINES BROKER. THE BROKER SHALL FIRST ATTEMPT TO PLACE THE INSURANCE WITH A LICENSED INSURER, OR IF THAT IS NOT POSSIBLE, WITH AN ELIGIBLE SURPLUS LINES INSURER. IF COVERAGE IS NOT OBTAINABLE FROM A LICENSED INSURER OR AN ELIGIBLE SURPLUS LINES INSURER, THE BROKER SHALL CERTIFY TO THE COMMISSIONER, ON A FORM PRESCRIBED BY THE COMMISSIONER, THAT THESE ATTEMPTS WERE MADE. A three-step ladder, and section 60A.198, subd. 4(b) describes the same placement as one made IN STRICT COMPLIANCE WITH SECTION 60A.209. Clause (a) then requires a notice PRINTED, TYPED, OR STAMPED IN RED INK UPON THE FACE OF THE POLICY IN NOT LESS THAN 10-POINT TYPE - RED INK, which the eligible-insurer notice in section 60A.207 does not require - saying that the insurance is placed WITH AN INSURER THAT IS NOT LICENSED BY THE STATE NOR RECOGNIZED BY THE COMMISSIONER OF COMMERCE AS AN ELIGIBLE SURPLUS LINES INSURER, that IN CASE OF ANY DISPUTE ... THE COMMISSIONER OF COMMERCE WILL NOT BE ABLE TO ASSIST IN THE DISPUTE, and that IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED; and THE NOTICE MAY NOT BE COVERED OR CONCEALED IN ANY MANNER. Clause (b): the broker shall COLLECT FROM THE INSURED APPROPRIATE PREMIUM TAXES, AS PROVIDED UNDER CHAPTER 297I, and report the transaction to the commissioner of revenue - and IF THE INSURED FAILS TO PAY THE TAXES WHEN DUE, THE INSURED SHALL BE SUBJECT TO A CIVIL FINE OF NOT MORE THAN $3,000, PLUS ACCRUED INTEREST FROM THE INCEPTION OF THE INSURANCE. Subd. 2 is the criminal provision and it is very wide: EXCEPT AS PROVIDED IN THIS SECTION, A PERSON WHO ASSISTS OR IN ANY MANNER AIDS DIRECTLY OR INDIRECTLY IN THE PROCUREMENT OF INSURANCE FROM AN INELIGIBLE SURPLUS LINES INSURER IN THIS STATE IS GUILTY OF A MISDEMEANOR, PUNISHABLE BY IMPRISONMENT FOR NOT MORE THAN 364 DAYS, OR BY A FINE OF NOT MORE THAN $1,000, OR BOTH. The opening words are the key to it: compliance with the section is the defence, and this placement did not comply, because the notice was not in red ink. Subd. 3 puts a reporting and payment duty on the INSURED who procures, continues or renews insurance with an ineligible insurer, and on a self-insurer who procures excess of loss or catastrophe cover, OTHER THAN INSURANCE PROCURED PURSUANT TO SECTION 60A.201 OR SUBDIVISION 1. Subd. 6 adds a civil liability that has no counterpart elsewhere in the Act: where an ineligible insurer FAILS TO PAY A CLAIM OR LOSS WITHIN THE PROVISION OF THE CONTRACT, ANY PERSON WHO ASSISTED OR AIDED, DIRECTLY OR INDIRECTLY, IN THE PROCUREMENT OF THE CONTRACT SHALL BE LIABLE ... FOR THE FULL AMOUNT OF THE CLAIM OR LOSS - excepted only for a placement pursuant to section 60A.198, subdivision 4.

The Homeowners Policy program differs from the Dwelling Policy primarily because it:

1. Excludes personal property entirely, leaving contents to be insured on a separate inland marine form
2. Is a package combining property and liability coverage ✓
3. Covers only the structure, because Section ii liability must be bought as a stand-alone personal liability policy
4. Never includes theft of personal property, which is available only by endorsement to a Dwelling Policy

Why: Homeowners policies are package policies bundling Section I property coverages with Section II liability coverages, whereas the basic Dwelling Policy is monoline property.

A private motorist's car is a total loss under a policy settling on actual cash value. No comparable car is available in her local market area. The insurer takes a single quotation from a dealer 200 miles away, offers that figure less the deductible, tells her nothing about the quotation, and adds nothing for tax or the unexpired portion of the licence.

1. The insurer has complied: where no comparable automobile is available in the local market area the insurer is released from the local sourcing requirement altogether and may take the best figure it can find anywhere, less the deductible, the alternative being that a claim cannot be settled at all; taxes and licence fees are payable only on the replacement-vehicle method, a cash settlement being a payment of value rather than a purchase; and the deviation clause is a third method standing alongside the replacement vehicle and the cash figure, available whenever the insurer records its reasoning in the file, so that a documented departure from the local market procedure needs no explanation to the insured at all.
2. The insurer has failed only in not disclosing the quotation: a single quotation is sufficient where no comparable automobile exists locally, the plural in the subdivision describing the usual case rather than imposing a minimum, and the distance is immaterial; but the insured must be given the information in the quotation before settlement, and taxes and pro rata licence fees are due on either method.
3. The insurer has failed to offer a permitted method, and it had no discretion in the first place: the subdivision requires the insurer to offer a comparable and available replacement automobile, a cash settlement being available only where the insured refuses the vehicle offered, so an insurer that opens with a cash figure has breached the clause before any question about quotations or taxes arises.
4. The insurer has failed to offer a permitted method of settlement: it must offer either a comparable and available replacement automobile with taxes, licence fees at least pro rata for the unexpired term, and transfer fees paid at no cost beyond the deductible, or a cash settlement based on the actual cost of purchase of a comparable automobile including those same taxes and fees; where no comparable automobile is available locally the cost must come from one of two or more quotations obtained from two or more qualified sources within the local market area, and the insured must be provided the information in all quotations before settlement. ✓

Why: Minn. Stat. 72A.201 subd. 6(1) applies where an automobile policy settles a total loss on actual cash value or replacement with like kind and quality and "the insured is not an automobile dealer". It makes it an unfair settlement practice to fail to offer ONE OF two methods, so the choice is the insurer's and ranking the replacement vehicle first is wrong. Method (a) is a "comparable and available replacement automobile, with all applicable taxes, license fees, AT LEAST PRO RATA for the unexpired term of the replaced automobile's license, and other fees incident to the transfer or evidence of ownership ... paid, at no cost to the insured other than the deductible amount". Method (b) is "a cash settlement based upon the actual cost of purchase of a comparable automobile, INCLUDING ALL APPLICABLE TAXES, LICENSE FEES, at least pro rata for the unexpired term ... and other fees incident to transfer of evidence of ownership, less the deductible" - so taxes and fees attach to the cash method too, which is the error in the answer confining taxes and fees to the replacement-vehicle method. The cost is determined by (i) "the cost of a comparable automobile, adjusted for mileage, condition, and options, IN THE LOCAL MARKET AREA of the insured, if such an automobile is available in that area"; or (ii) "ONE OF TWO OR MORE QUOTATIONS obtained from TWO OR MORE QUALIFIED SOURCES LOCATED WITHIN THE LOCAL MARKET AREA when a comparable automobile is not available in the local market area. The insured shall be provided the information contained in ALL QUOTATIONS PRIOR TO SETTLEMENT." The local market area constrains the SOURCES even when no comparable car is available in it, which is what the answers releasing the insurer from local sourcing and treating the distance as immaterial each miss in turn. Clause (iii) allows a settlement that deviates from the procedure, but only if it "must be documented and justified in detail" and the basis "must be explained to the insured".

A statement that is guaranteed to be true and becomes part of the contract is a:

1. Concealment
2. Representation
3. Warranty ✓
4. Waiver

Why: A warranty is a statement that is guaranteed true and becomes part of the policy; its breach can void coverage.

A homeowner with a detached garage she does not care about and few possessions asks her insurer for a policy with lower limits on those two heads. The insurer says its all-risk form comes with fixed percentages of the dwelling limit and cannot be varied.

1. The insurer is right: fixed percentages of the dwelling limit are how a package policy is rated, and an insurer is entitled to sell the form it has filed, an insured who wants different limits being free to buy a different product.
2. The insurer is right as to the garage and wrong as to the possessions: the option to specify a dollar amount is confined to personal property, structures other than the dwelling being an inseparable part of the dwelling risk for rating purposes and therefore written as a percentage of it in every filed form, which is why the section speaks of the coverage provided under Coverage C.
3. The insurer is wrong, and its obligation runs to every level of peril it offers: every insurer writing homeowner's insurance in this state shall make available at least one form of homeowner's policy for each level of peril coverage offered by the insurer in which the insured has the option to specify the dollar amount of coverage provided for structures other than the dwelling and for personal property, and the premium must be reduced to reflect the reduced risk of lesser coverage - the two heads being Coverage B, Other Structures and Coverage C, Personal Property, and level of peril meaning the basic, broad and all risk levels. ✓
4. The insurer is wrong, but it need only make one such form available across its whole book: the section requires at least one form in which the insured may specify the two dollar amounts, and an insurer offering one is not required to duplicate it at every level of peril it sells, the object being to make the option available in the market rather than to dictate the shape of each product line; the premium reduction follows as a matter of rating rather than as a separate statutory duty. The section speaks of making a form available in the market rather than of making one available in every product line an insurer sells.

Why: Minn. Stat. 65A.295 is three paragraphs and each supplies part of the answer. Paragraph (a): EVERY INSURER WRITING HOMEOWNER'S INSURANCE IN THIS STATE SHALL MAKE AVAILABLE AT LEAST ONE FORM OF HOMEOWNER'S POLICY FOR EACH LEVEL OF PERIL COVERAGE OFFERED BY THE INSURER IN WHICH THE INSURED HAS THE OPTION TO SPECIFY THE DOLLAR AMOUNT OF COVERAGE PROVIDED FOR STRUCTURES OTHER THAN THE DWELLING AND FOR PERSONAL PROPERTY. THE PREMIUM MUST BE REDUCED TO REFLECT THE REDUCED RISK OF LESSER COVERAGE. Two obligations, and the second matters as much as the first: an insurer that offers the option but prices it as though nothing had changed has not complied. FOR EACH LEVEL OF PERIL COVERAGE OFFERED is what defeats the one-form-across-the-book answer - the duty is repeated at every level the insurer sells, not discharged once. Paragraph (b) identifies the two heads by their standard names: COVERAGE FOR STRUCTURES OTHER THAN THE DWELLING IS THE COVERAGE PROVIDED UNDER 'COVERAGE B, OTHER STRUCTURES' IN THE STANDARD HOMEOWNER'S POLICY. COVERAGE FOR PERSONAL PROPERTY IS THE COVERAGE PROVIDED UNDER 'COVERAGE C, PERSONAL PROPERTY' IN THE STANDARD HOMEOWNER'S PACKAGE POLICY. Paragraph (c) defines the phrase the first paragraph turns on: 'LEVEL OF PERIL' REFERS TO BASIC, BROAD, AND ALL RISK LEVELS OF COVERAGE. The section is a consumer-choice provision rather than a coverage mandate: it does not tell the insured what to buy, it requires that a form in which he can choose be on the shelf, at a price that reflects the choice.

Under the PAP, "occupying" means:

1. Seated behind the wheel with the engine running and the transmission in gear
2. Driving the vehicle on a public road open to traffic
3. In, upon, getting in, on, out, or off a vehicle ✓
4. Holding title to or leasing the vehicle

Why: "Occupying" is defined as in, upon, getting in, on, out, or off of a vehicle, which is broader than merely riding inside it.

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.

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 registered travel retailer's staff describe the cover and its price, take applications, collect premiums and are paid a commission for it. A customer whose claim is refused says the staff misdescribed the cover to her. She asks who is answerable, and the retailer asks whether its staff were entitled to do any of this unlicensed.

1. They were: a travel retailer whose activities and those of its employees are limited to offering and disseminating travel insurance on behalf of and under the direction of a compliant licensed business entity is authorised to do so and to receive related compensation upon registration, and offering and disseminating expressly includes providing general information such as a description of the coverage and price, processing the application, collecting premiums and other nonlicensable activities; and the travel insurance producer, as insurer designee, is responsible for the acts of the travel retailer. ✓
2. They were not: collecting premiums is a licensable activity and takes the retailer outside the definition of offering and disseminating, which is confined to providing general information and processing applications; and because the retailer has exceeded the authorisation it is answerable itself, the producer's responsibility for its acts extending only to acts within the registration; the designee provision fixes the producer with responsibility for what it has authorised the retailer to do, and a retailer that goes beyond the authorisation is on its own and, having taken premium without a licence, is exposed to the criminal provision as well as to the customer.
3. They were, but the responsibility runs the other way: the travel retailer is responsible for the acts of its own employees and the travel insurance producer is responsible only for its own, the section making the producer the insurer's designee for the purpose of placing the business rather than for the conduct of retailers it registers.
4. They were, save as to the commission: a registered travel retailer may offer and disseminate the cover but may be compensated only by a fee for services that does not vary with the insurance sold, and the travel insurance producer, as insurer designee, is responsible for the acts of the travel retailer.

Why: Minn. Stat. 60K.383 subd. 3 provides that a travel retailer whose activities, and those of its employees, “are limited to offering and disseminating travel insurance on behalf of and under the direction of a licensed business entity meeting the conditions stated in this section, is authorized to do so and receive related compensation, upon registration by the licensed business entity”. It then defines the phrase: “'offering and disseminating' means providing general information, including a description of the coverage and price, as well as processing the application, collecting premiums, and performing other nonlicensable activities permitted by the state”. Collecting premiums is named inside the definition, so excluding it is contradicted by the text, and “related compensation” is permitted without any restriction on how it is calculated, so a fee-only limit is an addition. Subdivision 4 is one sentence and answers the customer: “As the insurer designee, the travel insurance producer is responsible for the acts of the travel retailer.” The responsibility is for the retailer's acts, which is what the answer making the retailer responsible for its own employees reverses.

Civil Authority coverage under a Business Income form provides for loss when:

1. The insured voluntarily closes the premises for a remodeling project and loses income during the shutdown
2. A government order prohibits access to the premises due to a covered cause of loss to nearby property ✓
3. Employees walk off the job in a strike and the plant cannot operate
4. A competitor opens a store nearby and sales fall sharply

Why: Civil Authority extends Business Income/Extra Expense when access to the insured premises is prohibited by a civil authority because of a covered cause of loss to property in the vicinity.

An insurer accepts an applicant's first premium without any surcharge disclosure, its agent having mentioned the website but noted nothing. It later surcharges the insured for a speeding charge on which she forfeited bail and was afterwards acquitted, and for an accident in which she was a passenger on a bus.

1. The disclosure was adequate and both surcharges stand: an oral reference to a published statement is disclosure, a bail forfeiture is an admission for rating purposes, and a claimant who collects benefits has had a claim whatever seat she was in.
2. The disclosure was inadequate but both surcharges stand: a bail forfeiture is expressly a basis on which a violation becomes chargeable and nothing in the section unwinds it, and the passenger protection is confined to a taxi or commuter van, a bus being a common carrier whose passengers are covered by its own insurance.
3. The disclosure before the premium was accepted, by reference to the website, was adequate, but neither later surcharge stands: an insurer that publishes its surcharge plan has done what the section asks, since the object is that an applicant be able to compare plans among insurers and a published plan can be compared by anyone; but a violation is chargeable only on conviction, so bail forfeited, even before she was acquitted, never supports a surcharge in the first place and no question of rebate arises, and the passenger protection applies as described. The object of the disclosure is comparison between insurers, which a published plan serves as well as a posted one; and a rating consequence that can be attached to an unproved allegation and then unwound is a poor mechanism, so the better reading is that the conviction is what makes the violation chargeable and the forfeiture reference describes the case where a conviction follows.
4. The disclosure was inadequate, the traffic surcharge must be rebated, and the bus surcharge is prohibited: a surcharge disclosure statement must be provided before accepting the initial premium payment, and the website alternative requires the applicant to be advised of its availability and of the availability of a written version on request, an oral notice being presumed delivered only if a contemporaneous notation is made or an audio recording retained; if a surcharge is applied because bail is forfeited and if the driver is later acquitted, the insurer shall rebate the surcharge; and no surcharge is chargeable to an insured who collects benefits because the insured is a passenger in a bus, taxi, or commuter van involved in an accident. ✓

Why: Minn. Stat. 65B.133, subd. 2 fixes the moment: BEFORE ACCEPTING THE INITIAL PREMIUM PAYMENT, AN INSURER OR ITS AGENT SHALL PROVIDE A SURCHARGE DISCLOSURE STATEMENT TO ANY PERSON WHO APPLIES FOR A POLICY. The website alternative is available on the same conditions as the homeowner's notice in section 65A.29, subd. 13, and fails here for the same reason: the insurer or agent MAY NOTIFY THE APPLICANT ORALLY OR IN WRITING OF ITS AVAILABILITY FOR REVIEW ON THE INSURER'S WEBSITE ... IF THE INSURER SO NOTIFIES THE APPLICANT OF THE AVAILABILITY OF A WRITTEN VERSION OF THIS STATEMENT UPON THE APPLICANT'S REQUEST, and AN ORAL NOTICE SHALL BE PRESUMED DELIVERED IF THE AGENT OR INSURER MAKES A CONTEMPORANEOUS NOTATION IN THE APPLICANT'S RECORD ... OR IF THE INSURER OR AGENT RETAINS AN AUDIO RECORDING. No notation, no recording, no presumption. Subd. 5 governs the traffic surcharge: NO TRAFFIC VIOLATION IS CHARGEABLE TO A DRIVER UNLESS THE DRIVER IS CONVICTED OF, OR FORFEITS BAIL FOR, THE OFFENSE, OR THE DRIVER'S LICENSE IS REVOKED PURSUANT TO SECTION 169A.52 OR 171.177 - so a bail forfeiture DOES support a surcharge, which is why the conviction-only answer is wrong - but IF A SURCHARGE IS APPLIED BECAUSE BAIL IS FORFEITED AND IF THE DRIVER IS LATER ACQUITTED OF THE OFFENSE, THE INSURER SHALL REBATE THE SURCHARGE. A violation of section 169.685, subd. 5 is not chargeable at all. Subd. 5a: NO SURCHARGE IS CHARGEABLE TO AN INSURED WHO COLLECTS BENEFITS UNDER A POLICY BECAUSE THE INSURED IS A PASSENGER IN A BUS, TAXI, OR COMMUTER VAN INVOLVED IN AN ACCIDENT - all three are named. Subd. 4 forbids changing a surcharge plan unless a statement or written website notice is mailed or delivered before the change, and provides that SURCHARGES CANNOT BE APPLIED TO ACCIDENTS OR TRAFFIC VIOLATIONS THAT OCCURRED PRIOR TO A CHANGE IN A SURCHARGE PLAN EXCEPT TO THE EXTENT PROVIDED UNDER THE PRIOR PLAN. Subd. 6 borrows the rate regulation chapter for its sanction: FAILURE TO COMPLY WITH THIS SECTION CONSTITUTES A VIOLATION OF SECTION 70A.04 AND IS SUBJECT TO THE PENALTIES PRESCRIBED IN SECTION 70A.21. Two neighbouring sections are worth knowing: section 65B.132 requires an insurer that gives a discount to students at colleges and universities to give it to ELIGIBLE STUDENTS ENROLLED IN TECHNICAL COLLEGES, and section 65B.134 requires any automobile policy providing comprehensive coverage to provide, AT THE OPTION OF THE INSURED, COMPLETE COVERAGE FOR REPAIR OR REPLACEMENT OF ALL DAMAGED SAFETY GLASS WITHOUT REGARD TO ANY DEDUCTIBLE OR MINIMUM AMOUNT.

Business property on the residence premises is subject to a Coverage C special limit of approximately:

1. $5,000
2. $2,500 ✓
3. $200
4. $1,500

Why: Property used for business while on the residence premises carries a special limit (commonly $2,500) under Coverage C.

Cyber/Network security liability insurance is designed primarily to address:

1. Fire and smoke damage to the insured's server room and its hardware, valued at replacement cost
2. Workplace injuries to employees who develop repetitive strain from long hours at their computer terminals
3. Auto liability arising when an employee drives a company car to a client's office to fix network security and causes a crash
4. Liability and expenses from data breaches, privacy violations, and network security failures ✓

Why: Cyber policies cover first- and third-party costs from data breaches, privacy claims, and network security incidents.

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.

A contractor's CGL would NOT cover which of the following because of the 'your work' exclusion?

1. Medical payments under Coverage C for a visitor hurt on the job site
2. The cost to repair the contractor's own defective workmanship on the completed project ✓
3. Property damage to a neighboring building when the contractor's crane collapses
4. Bodily injury to a passerby struck by debris that fell from the contractor's scaffolding on the site

Why: The 'your work' exclusion bars coverage for damage to the insured's own completed work; the CGL is not a warranty of workmanship.

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.

An insured who, knowing they are fully covered, becomes careless about locking doors exhibits which type of hazard?

1. Morale hazard ✓
2. Moral hazard
3. Legal hazard
4. Physical hazard

Why: A morale hazard is carelessness or indifference to loss because the person knows insurance will cover it.

Personal property is covered worldwide under a Homeowners policy, but property usually at another residence is limited to:

1. The full 100% of the Coverage C limit
2. No coverage at all once off premises
3. The Coverage B other structures limit
4. The greater of 10% of Coverage C or $1,000 ✓

Why: Personal property usually kept at a residence other than the insured location is limited to the greater of 10% of Coverage C or $1,000.

A loss payable clause in a property policy primarily protects:

1. The state guaranty association, which is reimbursed first out of any loss payment
2. A secured creditor or lender with an interest in covered personal property ✓
3. A bailee holding the property for repair, giving it a direct claim on the proceeds
4. The named insured alone, to the exclusion of any lender

Why: A loss payable clause directs claim payments to a designated party (such as a lender) holding an interest in the covered property.

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.

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.

Rating that relies on the underwriter's individual judgment when little statistical data exists is called:

1. Class rating
2. Loss-cost rating
3. Judgment rating ✓
4. Experience rating

Why: Judgment rating is used for unique or hard-to-classify risks where the underwriter sets the rate based on experience and judgment.