MPCP - Minnesota Property and Casualty Producer Exam

Question 1: A commercial property policy requires the insured to carry insurance equal to at least eighty percent of the building's replacement cost, and it reduces payment on partial losses when that minimum is not met. Which provision imposes that requirement?

The pair or set condition

The other insurance provision

The coinsurance clause

The appraisal provision

Question 2: Oily rags left in a pile in a workshop corner do not by themselves burn a building down, but they make a fire considerably more likely if one starts. Which term describes a condition that increases the chance of loss?

Peril

Loss

Proximate cause

Hazard

Question 3: A restaurant owner decides four months into a one-year property policy that she wants out, and she notifies her insurer that she is ending the contract. She learns that she will not receive every unused dollar back. Which method of refund applies here?

Short-rate refund

Pro rata refund

Flat cancellation refund

Nonrenewal refund

Question 4: A classic car is insured for a figure the owner selected and supported with an appraisal obtained before the policy was written. After a total loss the company will pay that figure or the vehicle's actual cash value, whichever is lower. Which method applies?

Agreed value

Blanket valuation

Replacement cost

Stated amount

Question 5: One property policy lists each covered item separately with its own description and appraisal, while another applies a single limit to all personal property of a given type without any itemized list. Which pair of terms correctly labels these two approaches?

Blanket, then specific or scheduled

Primary, then excess coverage

Specific or scheduled, then blanket

Open peril, then named peril

Question 6: Two insurers write the same coverage. One insures four hundred homes; the other insures four hundred thousand. The larger insurer's loss forecast for the coming year is expected to come much closer to its actual results. Which statement explains why?

Larger groups guarantee an underwriting profit

Larger groups eliminate the chance of loss

Larger groups remove the need for underwriting

Larger groups make losses more predictable

Question 7: Six months into a one-year policy the insurer terminates coverage for a permitted reason and gives the required advance notice. The insured asks how the premium already paid for the remaining months will be handled. Which of the following describes the refund the insurer owes?

The full unearned premium, pro rata

A short-rate refund with a penalty

No refund until the term expires

Half the total premium, always

Question 8: A rental house stood entirely empty, with no contents and no one entering it, for more than sixty consecutive days before vandals damaged the interior. A windstorm during the same period also tore off part of the roof. How does vacancy affect these two losses?

Both losses are denied for vacancy

Vandalism is barred; the wind damage stands

Both losses are paid without reduction

Vacancy affects only personal property claims

Question 9: Before issuing a policy on a collection of antique furniture that would be difficult to value after a fire, the insurer and the insured set a figure in writing that the company guarantees to pay, reviewed each year. Which method is this?

Stated amount

Actual cash value

Market value

Agreed value

Question 10: An older home has ornate plaster walls that were damaged by a covered fire. The insurer offers to restore the walls with modern drywall, which performs the same job just as efficiently at lower cost. Which valuation approach is being used?

Market value settlement

Functional replacement cost

Salvage value

Agreed amount valuation

Question 11: An insured argues that her deductible should be subtracted from the policy limit rather than from the settlement figure the adjuster calculated for her fire damaged kitchen. Which statement correctly describes how a property deductible operates in a claim?

It reduces the policy limit each year

It applies only to total losses

It is subtracted from the premium

It reduces the amount after valuation

Question 12: In some jurisdictions a claimant who added to her own harm in any way at all is barred from collecting anything from the other party, even where that other party was clearly careless. Which defense against a negligence claim works that way?

Comparative negligence

Assumption of risk

Contributory negligence

Statute of limitations

Question 13: Fire damages a duplex that the owner rents out. Repairs take four months, and during that time the owner collects no rent from either unit. The lost rental income is a separate kind of loss. Which term describes it?

Direct loss

Indirect or consequential loss

Physical hazard

Pure peril

Question 14: A general liability policy responds to bodily injury caused by continuous exposure to harmful conditions as well as to sudden mishaps at a single moment in time. Which of the following terms describes the broader trigger that covers both sudden events and harm developing gradually?

Accident

Binder

Endorsement

Occurrence

Question 15: A producer explains that one measure of worth reflects what a willing buyer would pay under current supply and demand conditions, a figure real estate agents track closely but that property insurers seldom use for settling claims. Which measure is described?

Market value

Actual cash value

Replacement cost

Functional replacement cost

Question 16: A client asks his producer to insure the money he plans to bet during a weekend trip to a casino, and also asks about coverage for theft of the jewelry he will take along. The producer can help with only one request. Which explains the difference?

Both exposures are speculative and insurable

Gambling is speculative risk, theft pure

Theft is speculative and gambling is pure

Gambling is a morale hazard only

Question 17: A consumer is hurt by a power tool that left the factory with a defect. In her suit against the manufacturer she does not have to establish that the company failed to use reasonable care. Which doctrine allows her case to proceed on those terms?

Strict liability

Vicarious liability

Assumption of risk

Last clear chance

Question 18: A business owner wants her existing commercial policy to name her landlord as an additional insured and to broaden one of her coverages. Her producer prepares a form that attaches to the policy and becomes part of the legal contract. Which of the following is that form?

A binder

An endorsement

A short-rate notice

An application

Question 19: A homeowner leaves a side door unlocked while away for the weekend. A thief walks in through that door and takes a television. The adjuster must label each part of the sequence properly on the claim file. Which labeling is correct?

Unlocked door hazard, theft peril

Unlocked door peril, theft hazard

Thief is the hazard, theft peril

Both the door and theft perils

Question 20: An insurer cannot say which of its policyholders will suffer a house fire next year, yet it can estimate quite closely how many fires it will pay for, because it insures a very large group. Which principle makes that estimate reliable?

The principle of adverse selection

The doctrine of utmost good faith

The law of large numbers

The rule of insurable interest

MPCP Minnesota Property and Casualty Producer Exam - Set 3 - Part 1