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P&C Study Deck
| Question | Answer |
|---|---|
| What is risk? | Uncertainty about whether a loss will occur. |
| What is a pure risk? | A risk involving only loss or no loss. |
| What is a speculative risk? | A risk with potential for gain or loss. |
| What is a peril? | The cause of a loss, such as fire or wind. |
| What is a hazard? | A condition that increases the likelihood or severity of loss. |
| What is a physical hazard? | A tangible condition that increases risk, such as faulty wiring. |
| What is a moral hazard? | Intentional dishonesty that increases risk, such as application fraud. |
| What is a morale hazard? | Carelessness or indifference toward loss because insurance exists. |
| What is a loss? | A reduction or disappearance of value. |
| What does indemnity mean? | Restoring the insured financially after a covered loss, subject to policy terms. |
| What is insurable interest? | A legally recognized interest in avoiding a financial loss. |
| What is underwriting? | Evaluating, classifying, and selecting risks for insurance. |
| What does the law of large numbers help insurers do? | Predict losses more reliably across large groups of similar exposures. |
| What is risk avoidance? | Eliminating an activity that creates a risk. |
| What is risk reduction? | Taking steps to decrease the frequency or severity of losses. |
| What is risk retention? | Keeping responsibility for a potential loss. |
| What is risk transfer? | Shifting financial consequences of risk to another party, such as an insurer. |
| What is an exposure? | A condition or situation in which loss is possible. |
| What does a named-perils policy cover? | Only the causes of loss specifically listed as covered. |
| What does an open-perils policy cover? | Causes of loss unless excluded or otherwise limited. |
| What is an exclusion? | A policy provision removing specified coverage. |
| What is a deductible? | The amount of a covered loss the insured must pay before insurance responds. |
| What is a premium? | The price paid for insurance coverage. |
| What is a policy limit? | The maximum amount payable under a specified coverage. |
| What is a binder? | Temporary evidence of insurance pending issuance of a policy. |
| What is an endorsement? | A form that modifies the terms of an insurance policy. |
| What is a declaration page? | The policy section identifying insured, coverages, limits, and key details. |
| What is a policy condition? | A contractual rule describing duties or requirements under coverage. |
| What is subrogation? | An insurer's right to seek recovery from a responsible third party after paying a loss. |
| What is salvage? | Damaged property or remaining value recovered after a claim payment. |
| What is a warranty in insurance? | A statement or promise that may be required to remain true under a contract. |
| What is concealment? | Withholding a material fact relevant to insurance. |
| What is material misrepresentation? | A false statement important to an insurer's underwriting decision. |
| What is adverse selection? | The tendency of higher-risk applicants to seek or retain more coverage. |
| What is a direct loss? | Physical damage caused directly by a covered peril. |
| What is an indirect loss? | A consequential financial loss, such as lost rental income after property damage. |
| What is proximate cause? | The dominant cause that sets a chain of loss events in motion. |
| What is an occurrence? | An accident, including continuous or repeated exposure, under policy wording. |
| What is an aggregate limit? | The most an insurer pays for covered losses during a policy period. |
| What is an occurrence limit? | The maximum payable for one covered event or occurrence. |
| What is a coinsurance requirement? | A requirement to insure property to a stated percentage of its value. |
| What may happen if a coinsurance requirement is not met? | The insurer may reduce payment for a partial loss under the policy formula. |
| What is actual cash value (ACV)? | Replacement cost minus depreciation, under the usual valuation method. |
| What is replacement cost? | The cost to replace damaged property with comparable property without depreciation. |
| What is agreed value? | A value accepted by insurer and insured in advance, subject to policy terms. |
| What is stated amount coverage? | Coverage using a stated value that may not guarantee that amount at loss. |
| What is market value? | The price property would likely bring in an open market. |
| What is blanket insurance? | One limit covering multiple properties or locations. |
| What is specific insurance? | A separate limit applying to a particular property or location. |
| What is pro rata other insurance? | Sharing a covered loss proportionally among applicable policies. |
| What is primary insurance? | Coverage that pays before applicable excess coverage. |
| What is excess insurance? | Coverage responding after specified underlying coverage is exhausted. |
| What is an appraisal clause used for? | Resolving disagreement over the amount of property loss, not coverage. |
| What is arbitration? | Resolution of a dispute by a neutral decision-maker outside ordinary litigation. |
| What is a vacancy condition? | A policy provision changing coverage when property remains unoccupied and empty. |
| What is a liability exposure? | The possibility of legal responsibility for injury or damage to others. |
| What is negligence? | Failure to exercise reasonable care, resulting in harm. |
| What is a duty of care? | A legal obligation to act with reasonable care toward others. |
| What is causation in negligence? | A connection between a breach of duty and the injury or damage. |
| What are compensatory damages? | Damages intended to reimburse an injured party for actual harm. |
| What are punitive damages? | Damages intended to punish or deter especially wrongful conduct. |
| What are general damages? | Non-economic damages, such as pain and suffering. |
| What are special damages? | Quantifiable losses, such as medical bills or lost wages. |
| What is contributory negligence? | A negligence rule that can bar recovery if the claimant contributed to the harm. |
| What is comparative negligence? | A rule that allocates fault and may reduce recovery by the claimant's share. |
| What is vicarious liability? | Legal responsibility for another person's conduct in specified relationships. |
| What is strict liability? | Liability imposed without proving ordinary negligence in certain situations. |
| What is a claims-made liability policy? | Coverage generally triggered by a claim made during the applicable policy period. |
| What is an occurrence liability policy? | Coverage generally triggered by injury or damage occurring during the policy period. |
| What is a retroactive date on a claims-made policy? | A date before which incidents generally are not covered. |
| What is an extended reporting period? | Extra time to report claims under certain claims-made policies. |
| What is bodily injury liability? | Coverage for legal responsibility for injury to another person. |
| What is property damage liability? | Coverage for legal responsibility for damage to another person's property. |
| What is personal and advertising injury? | Liability coverage for specified offenses such as libel or wrongful eviction. |
| What is medical payments coverage? | Limited no-fault payment of qualifying medical expenses, subject to policy terms. |
| What is an umbrella policy? | Liability coverage that may add higher limits and sometimes broader protection. |
| What is a surety bond? | A three-party promise guaranteeing performance of an obligation. |
| Who are the three parties to a surety bond? | Principal, obligee, and surety. |
| Who is the principal on a surety bond? | The party obligated to perform the promised duty. |
| Who is the obligee on a surety bond? | The party protected by the bond. |
| Who is the surety on a bond? | The party guaranteeing the principal's obligation. |
| What is a fidelity bond? | Protection against specified dishonest acts, often by employees. |
| What is an admitted insurer? | An insurer authorized by the state to transact insurance. |
| What is surplus lines insurance? | Coverage placed with an eligible nonadmitted insurer under applicable rules. |
| What does Coverage A generally insure on an HO policy? | The dwelling described in the policy. |
| What does Coverage B generally insure? | Other structures, such as a detached garage. |
| What does Coverage C generally insure? | Personal property, subject to policy terms and limits. |
| What does Coverage D generally insure? | Loss of use or additional living expense after a covered loss. |
| What does Coverage E generally insure? | Personal liability. |
| What does Coverage F generally insure? | Medical payments to others. |
| What is the HO-3 form commonly used for? | Owner-occupied homes, with open-perils dwelling and named-perils personal property coverage. |
| What is the HO-4 form designed for? | Tenants or renters needing personal property and liability coverage. |
| What is the HO-6 form designed for? | Condominium unit owners. |
| What is the HO-8 form designed for? | Certain older homes where replacement cost differs greatly from market value. |
| What is the HO-5 form generally known for? | Broader open-perils coverage for dwelling and personal property, subject to exclusions. |
| What does a dwelling policy primarily insure? | Residential buildings and selected related property coverages. |
| What is the difference between DP-1 and DP-3? | DP-1 is basic named-perils; DP-3 generally covers dwelling on an open-perils basis. |
| What is additional living expense coverage? | Extra necessary living costs after a covered loss makes a home unfit to live in. |
| What is fair rental value coverage? | Lost rental income when covered damage makes rental property unusable. |
| What is scheduled personal property coverage? | Insurance listing specific valuable items with individual amounts. |
| What is inland marine insurance often used for? | Mobile or specialized property and goods in transit. |
| What is commercial property insurance? | Insurance for covered business buildings, contents, and related interests. |
| What is business income coverage? | Coverage for qualifying lost income after a covered interruption. |
| What is extra expense coverage? | Costs to avoid or reduce a business shutdown after a covered loss. |
| What is builders risk insurance? | Property coverage for a building during construction. |
| What is equipment breakdown coverage? | Protection against specified accidental breakdown of covered equipment. |
| What is a businessowners policy (BOP)? | A package combining eligible business property and liability coverage. |
| What is the difference between flood and standard homeowners coverage? | Flood is generally excluded from standard homeowners and requires separate coverage. |
| What is a water backup endorsement? | Coverage added for specified sewer or drain backups, subject to terms. |
| What is a mortgagee clause? | A provision protecting a lender's interest in insured property. |
| What is ordinance or law coverage? | Coverage for specified extra costs caused by building-code enforcement after loss. |
| What is debris removal coverage? | Payment for qualifying removal of damaged property after a covered loss. |
| What is a pair-or-set condition? | A loss settlement rule for damaged items that are part of a matching set. |
| What does Personal Auto Policy Part A cover? | Liability for bodily injury or property damage to others. |
| What does Personal Auto Policy Part B cover? | Medical payments, subject to policy terms. |
| What does Personal Auto Policy Part C cover? | Uninsured motorists coverage, with underinsured coverage as applicable. |
| What does Personal Auto Policy Part D cover? | Physical damage to your covered auto. |
| What is Personal Auto Policy Part E? | Duties after an accident or loss. |
| What is Personal Auto Policy Part F? | General policy provisions. |
| What does collision coverage generally cover? | Damage from impact with another object or vehicle, or overturn. |
| What does other-than-collision coverage generally cover? | Specified noncollision losses, such as theft, hail, or fire. |
| What is uninsured motorist coverage? | Protection for qualifying injury caused by a driver without applicable liability insurance. |
| What is underinsured motorist coverage? | Protection when an at-fault driver's liability limits are insufficient. |
| What is a split liability limit? | Separate maximums for injury per person, injury per accident, and property damage. |
| What is a combined single limit? | One liability limit for covered bodily injury and property damage per accident. |
| What does a 30/60/10 liability limit mean? | $30,000 BI per person; $60,000 BI per accident; $10,000 property damage. |
| What is a commercial auto policy? | Coverage for business-related auto liability and/or physical damage. |
| What is hired auto coverage? | Coverage involving autos leased, hired, rented, or borrowed by a business, as defined. |
| What is nonowned auto liability coverage? | Liability protection for qualifying autos a business uses but does not own. |
| What is commercial general liability (CGL)? | Coverage for specified business liability exposures. |
| What does CGL Coverage A generally cover? | Bodily injury and property damage liability. |
| What does CGL Coverage B generally cover? | Personal and advertising injury liability. |
| What does CGL Coverage C generally cover? | Medical payments. |
| What is products-completed operations exposure? | Liability from products or completed work after they leave the insured's control. |
| What is workers' compensation insurance? | Coverage for statutory benefits to employees with work-related injuries or illnesses. |
| What is employers liability coverage? | Protection against specified employee injury lawsuits outside workers' compensation benefits. |
| What is professional liability insurance? | Coverage for specified errors or omissions in professional services. |
| What is directors and officers liability insurance? | Coverage for specified wrongful acts by organizational leaders. |
| What is employment practices liability insurance? | Coverage for specified employment-related claims, such as wrongful termination. |
| What is garagekeepers coverage? | Coverage for damage to customers' vehicles in an insured's care, custody, or control. |
| What is a certificate of insurance? | A document summarizing existing coverage; it does not itself change the policy. |
| Who enforces Minnesota insurance laws? | The Minnesota Commissioner of Commerce. |
| Who appoints Minnesota's Commissioner of Commerce? | The governor. |
| How often must Minnesota examine an insurer's condition, under the supplied state-law notes? | At least once every five years. |
| What may Minnesota's Commissioner investigate? | The affairs and records of persons engaged in insurance business. |
| What may the Commissioner do to enforce insurance laws? | Investigate, hold hearings, issue orders, and take other authorized actions. |
| What is a certificate of authority? | Authorization for an insurer to transact insurance in the state. |
| What is a resident insurance producer? | A producer licensed in the state of their principal residence. |
| What is a nonresident insurance producer? | A producer licensed in a state other than their home state. |
| What is an insurance appointment? | An insurer's authorization for a producer to act on its behalf. |
| What is continuing education (CE)? | Required ongoing education to maintain an insurance license. |
| What is rebating in insurance? | Offering an unlawful inducement not specified in the policy to encourage purchase. |
| What is insurance misrepresentation? | A materially false or misleading statement about insurance or its terms. |
| What is defamation in insurance trade practices? | Making false statements that harm an insurer's financial condition or reputation. |
| What is an unfair claims settlement practice? | A prohibited pattern or act of improper claims handling under applicable law. |
| What is misappropriation of premium funds? | Wrongfully taking or using money held for insurance purposes. |
| Can a Minnesota certificate of insurance change coverage? | No. It cannot amend, extend, or alter the underlying policy. |
| What does the Minnesota Insurance Guaranty Association address? | Certain covered claims when a member property/casualty insurer becomes insolvent. |
| Can a producer advertise guaranty association protection to induce a sale? | No. The supplied Minnesota notes identify this as prohibited. |
| What is Minnesota's required minimum auto liability limit? | 30/60/10 for bodily injury and property damage. |
| What does Minnesota's no-fault auto system emphasize? | Prompt payment of specified basic economic loss benefits regardless of fault. |
| What are Minnesota's minimum basic economic loss benefit categories? | At least $20,000 medical and $20,000 other qualifying economic losses per injured person. |
| Does Minnesota's basic economic loss coverage include rental vehicles? | Yes, according to the supplied Minnesota P&C state-law notes. |
| What is Minnesota's standard fire policy? | The prescribed standard form governing fire insurance policy provisions in the state. |
| What is the Minnesota Automobile Insurance Plan (MAIP)? | An assigned-risk mechanism for eligible drivers unable to obtain coverage normally. |
| What is proof of insurance for a Minnesota vehicle? | An insurer-issued identification card or permitted electronic evidence of coverage. |
| May a Minnesota auto insurance identification card be electronic? | Yes, if the insured agrees, according to the supplied state-law notes. |
| What is the purpose of Minnesota workers' compensation law? | To provide prescribed benefits for covered work-related injuries and illnesses. |
| How many continuing education credits does the Minnesota P&C producer guide require per licensing period? | 24 credit hours. |
| How many Minnesota CE hours must cover ethics? | At least 3 hours per licensing period. |
| How long is the standard Minnesota producer license renewal cycle after the initial term? | 24 months. |
| When is a Minnesota individual producer license due for renewal? | On the last day of the producer's birth month in the applicable renewal year. |
| How many prelicensing education hours does the Minnesota P&C guide specify per line of authority? | 20 hours per line of authority. |
| How old must an applicant be to obtain a Minnesota resident producer license? | At least 18 years old. |
| Within how many days of a name or address change must a Minnesota producer notify the Commissioner? | 10 days. |
| How long after a license lapses may a Minnesota producer seek reinstatement without retaking the written exam, under the guide? | Within 12 months of the renewal fee due date. |
| What late-renewal penalty does the Minnesota P&C guide specify? | Twice the unpaid renewal fee. |
| Within how many days after the first application must an insurer appoint a producer acting with its permission? | Within 15 days. |
| Within how many days of termination must an insurer notify the Commissioner of a producer appointment termination? | Within 30 days after its effective date. |
| Within how many days after notifying the Commissioner must the insurer send the producer the termination notice? | Within 15 days. |
| How long may a Minnesota temporary producer license last under the guide? | Up to 180 days. |
| What is the maximum CE extension the Commissioner may grant for good cause under the guide? | Up to 90 days. |
| How many days after a denied CE waiver or extension does the guide allow to meet the requirement? | 30 days. |
| How many days does the Minnesota guide allow to acknowledge receipt of a claim notice? | 30 days. |
| How many days after receiving proof of loss does the Minnesota guide allow to approve or deny a claim? | 60 days. |
| How many days does the Minnesota guide allow to supply a policyholder's claims history upon request? | 30 days. |
| How much notice is required to cancel a Minnesota homeowners policy in force at least 60 days for a permitted midterm reason other than nonpayment? | At least 30 days' notice. |
| How much notice does the 2022 Minnesota P&C guide require to cancel homeowners coverage for nonpayment? | At least 20 days' notice. |
| How much advance notice is required to nonrenew Minnesota homeowners coverage under the guide? | At least 60 days. |
| How long does the Minnesota Standard Fire Policy allow to submit proof of loss? | 60 days under the guide. |
| When is payment due under the Minnesota Standard Fire Policy after receipt of proof of loss? | 60 days after receipt, under the guide. |
| What lawsuit deadline does the Minnesota Standard Fire Policy guide state? | Within 2 years after the loss. |
| What is the maximum term of a Minnesota fire policy described in the guide? | 5 years. |
| For Minnesota auto policies beyond the initial 60 days, how much cancellation notice is generally required for reasons other than nonpayment? | At least 30 days. |
| For Minnesota auto policies, how much cancellation notice does the guide require for nonpayment? | At least 10 days. |
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FarmersTNS
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