MINNESOTA STATE INSURANCE LICENSING
MINNESOTA STATE INSURANCE LICENSING
EXAM 400 QUESTIONS AND CORRECT
DETAILED ANSWERS 2025
What is an agent? -Correct Answer ✔Someone who acts on behalf of another
(producer)
What is a principal? -Correct Answer ✔Party for whom action is taken (insurance
company)
What is an agency agreement? -Correct Answer ✔Legal agreement that establishes the
relationship between the principal and agent; outlines powers and responsibilities of
agents.
What is Express authority? -Correct Answer ✔Powers given to agent as part of agency
agreement(written)
What is implied authority? -Correct Answer ✔Powers not given by the agency
agreement, but necessary to complete the functions allowed in the agency agreement
What is apparent authority? -Correct Answer ✔Powers not given by the agency
agreement, but that a reasonable person would presume the agent has (between you
and consumer)
What are producer responsibilities? -Correct Answer ✔1. Have a fiduciary (trust)
responsibility to the insurer. Means the producer must always protect insurer's interests
and follow any lawful instructions from the insurer
2. Must also uphold high standards of commercial honor when dealing w/applicant.
Must act fairly and honestly, and disclose all info needed by the applicant to make well-
informed buying decision.
What is the McCarran-Ferguson Act? -Correct Answer ✔Individual states, not federal
gov, responsible for regulating insurance industry.
Who oversee the MN insurance industry? -Correct Answer ✔Department of Commerce
Who direct the dept of commerce? -Correct Answer ✔Headed by commissioner of
commerce who is appointed by the governor
What does the Dept of Commerce do? -Correct Answer ✔-Enforces all MN insurance
laws
-Establishes rules & procedures to ensure the consistent enforcement of the laws
MINNESOTA STATE INSURANCE LICENSING
,MINNESOTA STATE INSURANCE LICENSING
-Conduct investigations and hold hearings
-Examine books, records, documents of any person or entity engaged in regulated
activities at anytime w/no court order
-Publish info collected from investigations, hearings, and examinations
-Require reports of all sales/transactions that are regulated
How frequently are insurance companies audited? -Correct Answer ✔Once every 5
years
How much notice does an insurance company get of an audit? -Correct Answer ✔30
days notice identifying scope of investigation.
What happens if insurance company fails to obtain a license to sell insurance? -Correct
Answer ✔Company's policies remain valid, but company faces severe penalties.
What is a certificate of authority? -Correct Answer ✔An admitted or authorized carrier
must obtain a cert of authority to transact business.
What is a company appointment? -Correct Answer ✔Used to grant producers authority
to solicit insurance business for admitted carriers
What is a non-admitted carrier? -Correct Answer ✔Companies w/o cert of auth
(unlicensed)
What are surplus lines companies? -Correct Answer ✔May sell insurance in MN w/o a
cert of authority, but may only transact business through a licensed surplus agent.
Who is required to have an insurance license? -Correct Answer ✔Anyone who solicits,
or appoints others to solicit insurance on behalf of insurance company.
What is a resident producer? -Correct Answer ✔Issued to a person who resides in MN
or maintains person's principal place of business in MN.
What is a non-resident producer? -Correct Answer ✔Issued to a person if that person is
already a licensed resident producer in good standing in the person's home state.
What is a managing general agent? -Correct Answer ✔Hires producers, supervises a
territory, manages producer activities. Must be licensed as an insurance producer.
What is a temp license? -Correct Answer ✔A temp 180-day license may be used by
commissioner for:
-To surviving spouse, next of kin, admin/executor of the estate, employee, legal
guardian, court-appointed personal rep of deceased, disabled license producer
-To the designee of a licensed producer entering active service in armed forces of US
MINNESOTA STATE INSURANCE LICENSING
,MINNESOTA STATE INSURANCE LICENSING
-To an employee of a business entity (agency license) licensed as a producer, upon the
death or disability of the indiv designated on the license
-Any other circumstance that serves the public interest
-Can transition to a permanent or just use for transaction to sell policies
What are the requirements for licensing a producer? -Correct Answer ✔-18 years old
-Complete ed requirements- 20 hours of ed per major line of authorization
-Pass licensing exam
-Complete license application online w/Sircon
-Pay applicable license fee- $50 per line and added tech fee of up to $40
-Apply for perm insurance license within 3 years of passing exam
-License lasts 2 years
-License fee of $50 per line plus tech fee must be remitted w/online renewal app
-Indiv producer license expires on last day of producer's birth month
-License issued to business entity expire on 10/31 of renewal year
-24 hours of continuing ed required during each licensing period (No more than 1/2 of
required creds may come from courses offered by, sponsored by or affiliated w/an
insurance company or its producers.
-Must obtain 3 hours per licensing period from class/classes in area of ethics
-Can't carry over credits from one license period to another
-Licensing courses don't count towards continuing ed credit.
-Can take classes via classroom/online
-Sales & marketing, motivation, specific company product knowledge, office
management, use of calculators/machines
How long do you have to notify dept of commerce of agent's change of name/address? -
Correct Answer ✔10 days
How long do you have to notify dept of commerce of administration action taken against
producer by another MN gov agency? -Correct Answer ✔30 days of the final disposition
of the matter- must include copy of order and any other relevant legal docs
How long do you have to notify dept of commerce of criminal prosecution? -Correct
Answer ✔30 day so initial pre-trial hearing date, shall include a copy of initial complaint
and any other relevant legal doc
How long do you have to notify dept of commerce of criminal convictions and guilty
pleas? -Correct Answer ✔10 days of conviction
What do you have to do if you're going to do business under an assumed name? -
Correct Answer ✔Need prior approval for doing business as (DBA) from the
Commissioner. Name must be properly filed w/secretary of state.
What is first manifest? -Correct Answer ✔Sickness must first occur during the policy
period to be covered
MINNESOTA STATE INSURANCE LICENSING
, MINNESOTA STATE INSURANCE LICENSING
What is probationary period? -Correct Answer ✔Period of time beginning on the policy's
effective date during which there is no coverage for sickness.
What is occupational coverage? -Correct Answer ✔Covered on and off job(24 hours)
What is nonoccupational coverage? -Correct Answer ✔Covered off job only
What is risk? -Correct Answer ✔The uncertainty of loss
What is speculative risk? -Correct Answer ✔Involves change of loss or gain, and is not
insurable
What is pure risk? -Correct Answer ✔Involves change of loss only and is insurable.
What is loss? -Correct Answer ✔Unintended, unforeseen event(property damage/injury)
What is direct loss? -Correct Answer ✔Caused directly by a covered peril(fire loss to a
structure)
What is indirect loss? -Correct Answer ✔The loss of use claim for the loss incurred after
the fire (hotel, business)
What is a peril? -Correct Answer ✔Something that directly causes loss
What is a hazard? -Correct Answer ✔Condition that increases frequency or severity of a
loss
What is a physical hazard? -Correct Answer ✔Visible(ice on sidewalk)
What is a moral hazard? -Correct Answer ✔Dishonest tendencies (arson)
What is a morale hazard? -Correct Answer ✔Carless, irresponsible attitude (leaving
keys in locked car)
What is exposure? -Correct Answer ✔Susceptibility to loss
What is adverse selection? -Correct Answer ✔Those w/high-risk situations attempt to
purchase insurance before those w/average or below-average risk
What is insurance? -Correct Answer ✔transfer of risk from one to many
What is pooling of risk? -Correct Answer ✔Insureds exchange a small, certain loss(the
premium) for protection against a larger uncertain loss
MINNESOTA STATE INSURANCE LICENSING
MINNESOTA STATE INSURANCE LICENSING
EXAM 400 QUESTIONS AND CORRECT
DETAILED ANSWERS 2025
What is an agent? -Correct Answer ✔Someone who acts on behalf of another
(producer)
What is a principal? -Correct Answer ✔Party for whom action is taken (insurance
company)
What is an agency agreement? -Correct Answer ✔Legal agreement that establishes the
relationship between the principal and agent; outlines powers and responsibilities of
agents.
What is Express authority? -Correct Answer ✔Powers given to agent as part of agency
agreement(written)
What is implied authority? -Correct Answer ✔Powers not given by the agency
agreement, but necessary to complete the functions allowed in the agency agreement
What is apparent authority? -Correct Answer ✔Powers not given by the agency
agreement, but that a reasonable person would presume the agent has (between you
and consumer)
What are producer responsibilities? -Correct Answer ✔1. Have a fiduciary (trust)
responsibility to the insurer. Means the producer must always protect insurer's interests
and follow any lawful instructions from the insurer
2. Must also uphold high standards of commercial honor when dealing w/applicant.
Must act fairly and honestly, and disclose all info needed by the applicant to make well-
informed buying decision.
What is the McCarran-Ferguson Act? -Correct Answer ✔Individual states, not federal
gov, responsible for regulating insurance industry.
Who oversee the MN insurance industry? -Correct Answer ✔Department of Commerce
Who direct the dept of commerce? -Correct Answer ✔Headed by commissioner of
commerce who is appointed by the governor
What does the Dept of Commerce do? -Correct Answer ✔-Enforces all MN insurance
laws
-Establishes rules & procedures to ensure the consistent enforcement of the laws
MINNESOTA STATE INSURANCE LICENSING
,MINNESOTA STATE INSURANCE LICENSING
-Conduct investigations and hold hearings
-Examine books, records, documents of any person or entity engaged in regulated
activities at anytime w/no court order
-Publish info collected from investigations, hearings, and examinations
-Require reports of all sales/transactions that are regulated
How frequently are insurance companies audited? -Correct Answer ✔Once every 5
years
How much notice does an insurance company get of an audit? -Correct Answer ✔30
days notice identifying scope of investigation.
What happens if insurance company fails to obtain a license to sell insurance? -Correct
Answer ✔Company's policies remain valid, but company faces severe penalties.
What is a certificate of authority? -Correct Answer ✔An admitted or authorized carrier
must obtain a cert of authority to transact business.
What is a company appointment? -Correct Answer ✔Used to grant producers authority
to solicit insurance business for admitted carriers
What is a non-admitted carrier? -Correct Answer ✔Companies w/o cert of auth
(unlicensed)
What are surplus lines companies? -Correct Answer ✔May sell insurance in MN w/o a
cert of authority, but may only transact business through a licensed surplus agent.
Who is required to have an insurance license? -Correct Answer ✔Anyone who solicits,
or appoints others to solicit insurance on behalf of insurance company.
What is a resident producer? -Correct Answer ✔Issued to a person who resides in MN
or maintains person's principal place of business in MN.
What is a non-resident producer? -Correct Answer ✔Issued to a person if that person is
already a licensed resident producer in good standing in the person's home state.
What is a managing general agent? -Correct Answer ✔Hires producers, supervises a
territory, manages producer activities. Must be licensed as an insurance producer.
What is a temp license? -Correct Answer ✔A temp 180-day license may be used by
commissioner for:
-To surviving spouse, next of kin, admin/executor of the estate, employee, legal
guardian, court-appointed personal rep of deceased, disabled license producer
-To the designee of a licensed producer entering active service in armed forces of US
MINNESOTA STATE INSURANCE LICENSING
,MINNESOTA STATE INSURANCE LICENSING
-To an employee of a business entity (agency license) licensed as a producer, upon the
death or disability of the indiv designated on the license
-Any other circumstance that serves the public interest
-Can transition to a permanent or just use for transaction to sell policies
What are the requirements for licensing a producer? -Correct Answer ✔-18 years old
-Complete ed requirements- 20 hours of ed per major line of authorization
-Pass licensing exam
-Complete license application online w/Sircon
-Pay applicable license fee- $50 per line and added tech fee of up to $40
-Apply for perm insurance license within 3 years of passing exam
-License lasts 2 years
-License fee of $50 per line plus tech fee must be remitted w/online renewal app
-Indiv producer license expires on last day of producer's birth month
-License issued to business entity expire on 10/31 of renewal year
-24 hours of continuing ed required during each licensing period (No more than 1/2 of
required creds may come from courses offered by, sponsored by or affiliated w/an
insurance company or its producers.
-Must obtain 3 hours per licensing period from class/classes in area of ethics
-Can't carry over credits from one license period to another
-Licensing courses don't count towards continuing ed credit.
-Can take classes via classroom/online
-Sales & marketing, motivation, specific company product knowledge, office
management, use of calculators/machines
How long do you have to notify dept of commerce of agent's change of name/address? -
Correct Answer ✔10 days
How long do you have to notify dept of commerce of administration action taken against
producer by another MN gov agency? -Correct Answer ✔30 days of the final disposition
of the matter- must include copy of order and any other relevant legal docs
How long do you have to notify dept of commerce of criminal prosecution? -Correct
Answer ✔30 day so initial pre-trial hearing date, shall include a copy of initial complaint
and any other relevant legal doc
How long do you have to notify dept of commerce of criminal convictions and guilty
pleas? -Correct Answer ✔10 days of conviction
What do you have to do if you're going to do business under an assumed name? -
Correct Answer ✔Need prior approval for doing business as (DBA) from the
Commissioner. Name must be properly filed w/secretary of state.
What is first manifest? -Correct Answer ✔Sickness must first occur during the policy
period to be covered
MINNESOTA STATE INSURANCE LICENSING
, MINNESOTA STATE INSURANCE LICENSING
What is probationary period? -Correct Answer ✔Period of time beginning on the policy's
effective date during which there is no coverage for sickness.
What is occupational coverage? -Correct Answer ✔Covered on and off job(24 hours)
What is nonoccupational coverage? -Correct Answer ✔Covered off job only
What is risk? -Correct Answer ✔The uncertainty of loss
What is speculative risk? -Correct Answer ✔Involves change of loss or gain, and is not
insurable
What is pure risk? -Correct Answer ✔Involves change of loss only and is insurable.
What is loss? -Correct Answer ✔Unintended, unforeseen event(property damage/injury)
What is direct loss? -Correct Answer ✔Caused directly by a covered peril(fire loss to a
structure)
What is indirect loss? -Correct Answer ✔The loss of use claim for the loss incurred after
the fire (hotel, business)
What is a peril? -Correct Answer ✔Something that directly causes loss
What is a hazard? -Correct Answer ✔Condition that increases frequency or severity of a
loss
What is a physical hazard? -Correct Answer ✔Visible(ice on sidewalk)
What is a moral hazard? -Correct Answer ✔Dishonest tendencies (arson)
What is a morale hazard? -Correct Answer ✔Carless, irresponsible attitude (leaving
keys in locked car)
What is exposure? -Correct Answer ✔Susceptibility to loss
What is adverse selection? -Correct Answer ✔Those w/high-risk situations attempt to
purchase insurance before those w/average or below-average risk
What is insurance? -Correct Answer ✔transfer of risk from one to many
What is pooling of risk? -Correct Answer ✔Insureds exchange a small, certain loss(the
premium) for protection against a larger uncertain loss
MINNESOTA STATE INSURANCE LICENSING
