Minnesota Property & Casualty Insurance Practice Exam Free - 2026

• A. $10,000 total, all for medical expenses
• B. $30,000 total, with no sublimits
• C. $40,000 total per person: $20,000 for medical expense loss and $20,000 for income loss, replacement services, funeral and survivor benefits
• D. $60,000 total per person: $30,000 medical and $30,000 income loss

Correct answer: C. $40,000 total per person: $20,000 for medical expense loss and $20,000 for income loss, replacement services, funeral and survivor benefits

Explanation: Basic economic loss benefits must provide a minimum of $40,000 for loss arising out of injury to any one person, consisting of $20,000 for medical expense loss and a total of $20,000 for income loss (85 percent of lost gross income up to $500 per week), replacement services ($200 per week), funeral expense ($5,000), and survivors' losses. The $10,000, $30,000 and $60,000 figures are not the statutory amounts. See Minn. Stat. § 65B.44, subds. 1 and 2.

• A. No; noneconomic damages require medical expenses exceeding $4,000, or permanent injury, permanent disfigurement, death, or disability for 60 days or more.
• B. Yes; anyone injured by a negligent driver may sue for pain and suffering.
• C. Yes; the threshold is $2,500 in medical expenses.
• D. No; Minnesota never allows suits for noneconomic damages in auto accidents.

Correct answer: A. No; noneconomic damages require medical expenses exceeding $4,000, or permanent injury, permanent disfigurement, death, or disability for 60 days or more.

Explanation: Minnesota's tort threshold permits recovery of noneconomic detriment only if the medical expense benefits paid, payable, or payable but for a deductible exceed $4,000, or the injury results in permanent disfigurement, permanent injury, death, or disability for 60 days or more. This claimant meets none of the thresholds. Option B ignores the threshold, $2,500 is not the Minnesota amount, and option D overstates the bar because suits are allowed once a threshold is met. See Minn. Stat. § 65B.51, subd. 3.

• A. Yes; Minnesota requires insurers to stack UM limits for all vehicles on a policy.
• B. Yes, but only if they paid a separate premium for each vehicle.
• C. No, and the family also had the option to reject UM coverage entirely.
• D. No; Minnesota law provides that UM and UIM limits for two or more vehicles may not be added together, and $25,000/$50,000 is the required minimum UM/UIM limit.

Correct answer: D. No; Minnesota law provides that UM and UIM limits for two or more vehicles may not be added together, and $25,000/$50,000 is the required minimum UM/UIM limit.

Explanation: The No-Fault Act requires every auto policy to include uninsured and underinsured motorist coverage of at least $25,000 per person and $50,000 per accident, and states that in no event may the UM/UIM limits for two or more motor vehicles be added together to determine the coverage available for any one accident (anti-stacking). UM/UIM coverage is mandatory in Minnesota and cannot be rejected, and paying separate premiums does not override the anti-stacking rule. See Minn. Stat. § 65B.49, subd. 3a.

• A. At least 30 days
• B. At least 10 days, stating that nonpayment is the reason
• C. At least 20 days
• D. At least 60 days

Correct answer: B. At least 10 days, stating that nonpayment is the reason

Explanation: Minnesota generally requires at least 30 days' notice of cancellation of an auto policy with the specific reason stated, but when nonpayment of premium is the reason, or the insurer is exercising its right to cancel within the first 60 days of coverage, at least ten days' notice with the reason must be given. Sixty days is the nonrenewal notice period under § 65B.17, and 20 days is a homeowners notice period under § 65A.01, not an auto figure. See Minn. Stat. § 65B.16.

• A. It converts the settlement basis from replacement cost to actual cash value for the policy term
• B. It guarantees payment of the full policy limit for any partial loss to the covered property
• C. It waives the deductible on all covered losses to the property listed on the statement
• D. It suspends the coinsurance clause for the covered property during the policy term

Correct answer: D. It suspends the coinsurance clause for the covered property during the policy term

Explanation: Agreed value suspends the coinsurance requirement because the insurer has already accepted the values on which the limit is based, so no penalty is calculated at claim time. It does not change the valuation method from replacement cost to actual cash value. Deductibles still apply, and partial losses are still paid based on the actual damage, not the full limit.

• A. At the lesser of the stated amount or the actual value of the item at the time of loss
• B. At the greater of the stated amount or the actual cash value of the item at the time of loss
• C. At the stated amount in full, because listing that figure makes it a guaranteed valued amount
• D. At the replacement cost of the equipment new, with the stated amount serving as the deductible

Correct answer: A. At the lesser of the stated amount or the actual value of the item at the time of loss

Explanation: A stated amount sets a ceiling on recovery but does not promise that figure, so the insurer pays the lower of the stated amount or the item's actual value when it is destroyed. That is what separates stated amount from a true valued or agreed amount arrangement, which does guarantee the figure. Neither unlimited replacement cost nor an averaging formula reflects how the provision works.

• A. One limit applies to each injured person, so several claimants in one accident can each collect the full amount without exhausting the limit
• B. One limit applies to bodily injury and property damage combined per accident, so it is not constrained by separate per person or per accident caps
• C. One limit applies per policy period rather than per accident, so multiple accidents during the year draw on a single larger pool of coverage that resets at renewal
• D. It automatically extends the same single limit to uninsured motorist and medical payments coverage without a separate premium charge

Correct answer: B. One limit applies to bodily injury and property damage combined per accident, so it is not constrained by separate per person or per accident caps

Explanation: A combined single limit gives the insurer one pool of money for all bodily injury and property damage arising from one accident, so a severe injury to a single claimant is not restricted by a per person sublimit. Split limits impose exactly those internal caps. The combined limit does not add uninsured motorist coverage, remove deductibles, or reduce what one claimant can receive.

• A. $6,000
• B. $1,000
• C. $1,900
• D. $5,000

Correct answer: A. $6,000

Explanation: A percentage deductible is applied to the insured value of the building, so two percent of $300,000 produces a $6,000 deduction rather than the flat amount used for ordinary losses. The $1,000 flat deductible applies only to non-wind perils. Applying the two percent to the $50,000 loss instead of to the insured value would yield only $1,000 and badly understate the deductible, which is the most common error candidates make on this calculation.

• A. An aggregate limit for the policy period
• B. A coinsurance penalty
• C. A sublimit within the personal property coverage
• D. A separate deductible applying only to jewelry

Correct answer: C. A sublimit within the personal property coverage

Explanation: A sublimit is a smaller cap carved out of a larger coverage limit for a specific category of property or type of loss, and it is why scheduling valuables is often recommended. Coinsurance penalties result from underinsuring, not from a category cap. An aggregate limit caps all losses across a period, and a deductible is the amount subtracted from a loss rather than a maximum payable.

• A. Express authority
• B. Fiduciary authority
• C. Implied authority
• D. Apparent authority

Correct answer: D. Apparent authority

Explanation: Apparent authority arises when the principal's own conduct leads a reasonable third party to believe the producer holds powers the producer does not actually have, and the insurer can be bound as a result. Express authority is what the agency contract states in writing, and implied authority covers the incidental acts needed to carry out express duties. Fiduciary duty concerns the handling of premium funds, not the scope of authority.

• A. Unilateral, because the insured's promise to pay premium is the sole enforceable obligation created by the contract
• B. Aleatory, because the values exchanged by the parties may be very unequal and depend on an uncertain event
• C. Conditional, because the insurer could not enforce payment of the premium until the covered fire actually occurred
• D. Adhesion, because the unequal exchange shows the insured had no power to negotiate the amount of the premium

Correct answer: B. Aleatory, because the values exchanged by the parties may be very unequal and depend on an uncertain event

Explanation: An aleatory contract is one in which the dollars exchanged depend on chance and may be wildly unequal, exactly as a small premium can produce a large claim payment. A unilateral contract means only the insurer makes an enforceable promise, so the choice that makes the insured's promise the enforceable one reverses the parties. Adhesion refers to take-it-or-leave-it wording and conditional refers to duties the insured must meet before payment, neither of which is about unequal value or about when premium can be enforced.

• A. In favor of the insurer, because the insurer accepted the risk and is entitled to the benefit of the doubt
• B. By referring the wording to the state insurance department, whose reading of an approved form is binding
• C. In favor of the insured, because the contract is one of adhesion drafted solely by the insurer
• D. By voiding the exclusion and the entire policy, since an ambiguous term makes the contract unenforceable

Correct answer: C. In favor of the insured, because the contract is one of adhesion drafted solely by the insurer

Explanation: Because the insured had no opportunity to negotiate the language, courts apply the rule that ambiguities are construed against the party that wrote them, which is the insurer. Resolving doubt in the insurer's favor would reward careless drafting. Courts interpret rather than void entire contracts, and regulators approve forms rather than settle individual coverage disputes.