Minnesota Property and Casualty Exam: What's on It and How to Master Every Section

The Minnesota Property and Casualty licensing exam covers the full range of personal and commercial insurance products that P&C producers sell — homeowners, personal auto, commercial property, commercial liability, workers' compensation, and more — plus the Minnesota-specific statutes and regulations that govern every transaction in this state. The combined P&C exam is 130 questions over 3 hours, and every question draws from a published content outline that PSI and the Minnesota Department of Commerce use to build the test. This post maps every content section, identifies the highest-priority topics by exam weight, covers Minnesota state law in the depth the exam requires, and provides the strategic preparation approach that produces first-attempt passes.

Exam Specifications

Exam administrator: PSI Services LLC Exam format: Multiple choice, four options per question, one correct answer Scored questions: 130 (combined Property and Casualty); 85 per standalone line Time allowed: 3 hours (combined); 2 hours per standalone Passing score: 70% (scaled score of 70 or higher) Results: Immediate — displayed on screen at conclusion Retakes: No limit; 24-hour wait; $45 fee per attempt Exam validity: 3 years from date of passing

Note on exam selection: First-time applicants in Wisconsin must select both the general and state-specific labeled exams — Minnesota uses a different structure where the general and state sections are integrated into a single exam. If you are taking only the Property exam or only the Casualty exam as a standalone, each is 85 questions over 2 hours. Most candidates take the combined P&C exam in a single sitting.

Section 1: Insurance Terms and Foundational Concepts

Before getting into specific product lines, the exam tests foundational insurance concepts that apply across all P&C lines. These questions appear early in the content outline and generate a consistent base of exam questions.

Risk, hazard, and peril: Risk is the uncertainty of loss. A peril is the cause of loss (fire, theft, windstorm). A hazard is a condition that increases the probability or severity of loss. Physical hazards are tangible conditions (faulty wiring, icy steps). Moral hazards involve dishonesty or intentional deception (arson, false claims). Morale hazards involve indifference to loss resulting from the existence of insurance (leaving a car unlocked because it is insured).

Insurable interest: The insured must have an insurable interest in the subject of insurance at the time of loss. For property insurance, insurable interest means a financial stake in the property — the insured would suffer a financial loss if the property were damaged or destroyed. Without insurable interest, the insurance contract is void.

Indemnity: The principle that insurance should restore the insured to the same financial position they were in before the loss — no better, no worse. Indemnity prevents profit from insurance losses. ACV coverage (actual cash value) is the primary indemnity mechanism in property insurance.

Actual cash value (ACV) vs. replacement cost: ACV equals the cost to replace the damaged property minus depreciation for age and condition. Replacement cost pays the full cost to repair or replace the property with new materials of like kind and quality, without depreciation deduction. Replacement cost coverage is more expensive but eliminates the coverage gap that depreciation creates.

Coinsurance: A property insurance requirement that the insured carry coverage equal to a specified percentage (typically 80%) of the property's replacement cost value. If the insured carries less than the required amount, they become a co-insurer and share in any partial loss. The coinsurance formula: (Amount of insurance carried ÷ Amount required) × Loss = Payment.

Subrogation: After paying a claim, the insurer steps into the insured's shoes and pursues recovery from the responsible third party. Subrogation prevents the insured from collecting twice — once from their insurer and once from the tortfeasor.

The principle of utmost good faith: Insurance contracts are contracts of utmost good faith (uberrimae fidei). Both parties — insurer and insured — must fully disclose all material information relevant to the contract. Concealment or misrepresentation of a material fact voids the policy.

Policy structure: Declarations (the who, what, where, and how much), insuring agreement (the promise to pay), conditions (obligations of both parties), exclusions (what is not covered), and definitions (terms used in the policy with specific meanings). Every P&C policy contains these components — questions about policy structure test whether you know which component a specific provision appears in.

Section 2: Property Insurance — Homeowners

Homeowners coverage is among the most heavily tested areas on the P&C exam. Know the HO form types, the six coverage sections, and the standard exclusions cold.

Homeowners Policy Forms

HO-1 (Basic Form): The most limited homeowners form. Covers only the 11 named perils including fire, lightning, windstorm, hail, explosion, riot, aircraft, vehicles, smoke, vandalism, and theft. Rarely sold today.

HO-2 (Broad Form): Covers the 11 HO-1 perils plus additional named perils — falling objects, weight of ice/snow/sleet, freezing of plumbing, accidental discharge of water, sudden tearing of appliances, and electrical damage. Named perils basis.

HO-3 (Special Form): The most commonly sold homeowners policy. Dwelling and other structures covered on an open perils (all risk) basis — all perils except those specifically excluded. Personal property covered on a named perils basis. This distinction — open perils for the dwelling, named perils for personal property — generates a consistent exam question.

HO-4 (Renters/Tenants Form): Covers personal property (named perils) and liability for tenants who rent their residence. No coverage for the dwelling structure — the landlord insures the building.

HO-5 (Comprehensive Form): Both the dwelling and personal property covered on an open perils basis. The broadest homeowners coverage. Typically available only for well-maintained, high-value homes.

HO-6 (Condo Unit Owners Form): Covers personal property, the interior of the unit (walls-in), and liability for condominium unit owners. The condominium association's master policy covers the building structure and common areas.

HO-8 (Modified Coverage Form): Designed for older homes where the replacement cost significantly exceeds the market value. Pays ACV or repair cost rather than full replacement cost.

The Six Homeowners Coverage Sections

Coverage A — Dwelling: The structure of the home and attached structures (attached garage, attached deck). The primary coverage amount that all other limits are calculated from.

Coverage B — Other Structures: Detached structures on the residence premises (detached garage, fence, shed). Typically 10% of Coverage A.

Coverage C — Personal Property: The insured's personal belongings — furniture, clothing, electronics — both at home and worldwide. Typically 50–70% of Coverage A. Special limits apply to specific categories of high-value personal property (jewelry, furs, silverware, firearms, cash, and collectibles typically have sub-limits of $200–$2,500 per category).

Coverage D — Loss of Use / Additional Living Expenses: Pays the reasonable additional costs of living elsewhere while the damaged dwelling is being repaired. Typically 20–30% of Coverage A.

Coverage E — Personal Liability: Protects the insured against third-party bodily injury and property damage claims arising from the insured's premises or personal activities. Standard limit is $100,000 but higher limits are available and commonly recommended.

Coverage F — Medical Payments to Others: Pays medical expenses of third parties injured on the insured's property or by the insured's activities, regardless of fault. Does not cover the insured or residents of the household. Standard limit $1,000.

Standard Homeowners Exclusions

The HO-3 special form excludes specific perils on the open perils dwelling coverage. The most testable exclusions: flood (requires separate NFIP or private flood policy), earthquake (requires endorsement or separate policy), earth movement, governmental action, nuclear hazard, war, intentional acts of the insured, and business pursuits conducted from the home (beyond limited business property coverage).

Section 3: Property Insurance — Dwelling Policies

Dwelling policies (DP forms) are used for non-owner-occupied residential properties — rental properties, seasonal homes, or properties that do not qualify for homeowners coverage.

DP-1 (Basic Form): Named perils — fire, lightning, and internal explosion only in the base form. Extended coverage endorsement adds windstorm, hail, explosion, riot, aircraft, vehicles, smoke.

DP-2 (Broad Form): Named perils, broader than DP-1. Does not include theft coverage.

DP-3 (Special Form): Open perils on the dwelling; named perils on personal property. Closest to HO-3 in coverage breadth.

Key distinction from homeowners: DP policies do not include personal liability (Coverage E equivalent) or medical payments (Coverage F equivalent) as standard coverages — these must be added by endorsement.

Section 4: Commercial Property Insurance

Commercial property insurance protects businesses against physical loss to their buildings and business personal property. Key concepts tested on the Minnesota P&C exam:

Building and Personal Property (BPP) coverage form: The commercial equivalent of homeowners Coverage A and C. Covers the building (if owned), business personal property, and the personal property of others in the insured's care, custody, and control.

Business income and extra expense: Business income (BI) coverage replaces lost revenue during the restoration period after a covered property loss. Extra expense coverage pays the additional costs to continue operations during restoration (renting temporary space, leasing replacement equipment). BI and extra expense are essential commercial coverages that the exam tests regularly.

Causes of loss forms:

Basic form: Named perils — fire, lightning, explosion, windstorm, hail, smoke, aircraft, vehicles, riot, sinkhole collapse, volcanic action

Broad form: Basic perils plus falling objects, weight of ice/snow/sleet, water damage from appliances and sprinklers

Special form: Open perils — all causes except those specifically excluded. The broadest commercial property protection.

Coinsurance in commercial property: Commercial property policies commonly include an 80% coinsurance requirement. An insured who carries less than 80% of the property's insurable value becomes a co-insurer for partial losses.

Inland marine: Covers property in transit and property that moves from location to location — contractor's equipment, tools, scheduled valuable items. Inland marine is the "floater" category that fills gaps between property and auto coverage.

National Flood Insurance Program (NFIP): Flood coverage is excluded from standard commercial and homeowners property policies. The NFIP, administered by FEMA, provides flood insurance to property owners in participating communities. Producers who sell NFIP coverage must understand that standard policies do not cover flood and that NFIP is the primary mechanism for flood coverage. Minnesota's numerous lakes and rivers make flood insurance relevant for many Minnesota properties.

Section 5: Commercial General Liability

Commercial general liability (CGL) is the foundational liability product for commercial accounts and one of the highest-volume content areas on the casualty section of the P&C exam.

Three coverage parts of the CGL:

Coverage A — Bodily injury and property damage liability: Third-party claims for bodily injury or property damage caused by the insured's operations, products, or completed work

Coverage B — Personal and advertising injury liability: Claims for libel, slander, defamation, false arrest, malicious prosecution, copyright infringement in advertising, and wrongful eviction

Coverage C — Medical payments: Limited no-fault medical expense coverage for persons injured on the insured's premises or by the insured's operations, regardless of legal liability

Occurrence vs. claims-made forms:

Occurrence: Covers losses that occur during the policy period, regardless of when the claim is made. A policy in force during the year of an incident covers the claim even if the policy has since expired.

Claims-made: Covers claims made (reported) during the policy period, regardless of when the loss occurred (subject to the retroactive date). Requires tail coverage (extended reporting period) when the policy terminates to cover claims reported after expiration for occurrences during the policy period.

Key CGL exclusions: Expected or intended injury, contractual liability (with exceptions), workers' compensation obligations, employer's liability, pollution, professional liability, aircraft and watercraft, auto, and damage to property owned by or in the care of the insured.

Products and completed operations: Coverage for bodily injury or property damage arising from the insured's products after they have left the insured's possession (products) or from completed work after the work has been completed (completed operations). A contractor who completes a job and the work later causes damage has completed operations exposure.

Section 6: Personal Auto Insurance

Minnesota's no-fault auto insurance system is a high-priority topic on the P&C exam's state law section. Know both the general personal auto policy (PAP) structure and Minnesota's specific statutory requirements.

Personal Auto Policy Structure

Part A — Liability: Pays for bodily injury and property damage the insured causes to others. Does not cover the insured's own injuries or vehicle damage.

Part B — Medical Payments: Pays medical expenses for the insured and passengers injured in a covered auto accident, regardless of fault. Small limits ($1,000–$10,000 typically) for immediate medical expense coverage.

Part C — Uninsured Motorist: Pays the insured's damages (bodily injury) when the at-fault driver is uninsured or a hit-and-run driver.

Part D — Coverage for Damage to Your Auto:

Collision: Damage from collision with another object

Comprehensive (other than collision): Damage from perils other than collision — theft, fire, vandalism, falling objects, animal strikes, glass breakage

Named insured persons covered: The named insured and resident relatives while occupying a covered auto or any auto. Permissive users of the covered auto.

Minnesota-Specific Auto Insurance Law

Minnesota is a no-fault state under Minn. Stat. §65B.49. This fundamentally changes how auto claims work compared to at-fault states.

Minimum required coverages under Minnesota law:

Bodily injury liability: $30,000 per person / $60,000 per accident

Property damage liability: $10,000 per accident — the lowest property damage minimum in the United States

Personal Injury Protection (PIP): $40,000 mandatory ($20,000 for medical expenses + $20,000 for non-medical expenses including lost wages at 85% of gross income capped at $500/week, replacement services, and up to $2,000 in funeral expenses)

Uninsured Motorist (UM): $25,000 per person / $50,000 per accident — required

Underinsured Motorist (UIM): $25,000 per person / $50,000 per accident — required in Minnesota (both UM and UIM are mandatory)

How no-fault works in Minnesota: After an accident, the injured party files a PIP claim with their own insurer first, regardless of who caused the accident. PIP pays medical expenses, lost wages, and replacement services up to the $40,000 limit. Only after PIP is exhausted — or if the injury meets the tort threshold — can the injured party pursue a claim against the at-fault driver's liability insurer.

Tort threshold: To sue for non-economic damages (pain and suffering) in Minnesota, the injured party must meet one of the following thresholds: medical expenses exceed $4,000 (excluding diagnostic tests), permanent injury, permanent disfigurement, or death.

Six-month PIP claim deadline: A PIP claim must be filed within six months of the accident. Claims filed after six months are barred.

SR-22: A certificate of financial responsibility filed by an insurer with the Minnesota DVS certifying that a specific driver carries at least the minimum required liability coverage. Required for certain violations — DUI, driving without insurance, certain traffic offenses. SR-22 is not an insurance policy — it is a certificate attesting to the existence of coverage.

Section 7: Workers' Compensation

Workers' compensation is a mandatory commercial coverage with significant Minnesota-specific regulatory content. It generates questions in both the general casualty section and the Minnesota state law section.

The exclusive remedy doctrine: Workers' compensation is the exclusive remedy for employees injured in the course and scope of employment. The injured employee cannot sue the employer in tort — they receive statutory workers' comp benefits in exchange for giving up the right to sue.

Coverage parts of the workers' comp policy:

Part One (Workers' Compensation): Pays the statutory benefits required by Minnesota law — unlimited medical treatment, indemnity benefits at two-thirds of the average weekly wage

Part Two (Employers Liability): Covers the employer's liability for work injuries that fall outside the statutory workers' comp framework — third-party suits, consequential bodily injury claims

Part Three (Other States): Extends Part One coverage to employees temporarily working in states not listed in the declarations

Minnesota workers' comp specifics:

Coverage threshold: One employee triggers mandatory coverage — no minimum headcount

Market structure: Competitive — not a monopolistic state fund. Minnesota Workers' Compensation Assigned Risk Plan serves as insurer of last resort

Maximum weekly benefit: $1,536.84 (effective October 1, 2025)

Indemnity benefit: Two-thirds of the average weekly wage

Unlimited medical treatment for work-related injuries

Penalty for non-coverage: Up to $1,000 per employee per week

Surcharge for claims during non-coverage period: 65% surcharge on benefits owed

Section 8: Minnesota State Law — P&C Provisions

Minnesota Department of Commerce: The Commissioner of Commerce holds full regulatory authority over P&C insurance in Minnesota. Department address: 85 7th Place East, Suite 280, St. Paul, MN 55101.

Minnesota unfair trade practices (Minn. Stat. §72A.20): Applies fully to P&C producers. Prohibitions include misrepresentation and false advertising, defamation, boycott/coercion/intimidation, unfair discrimination, rebating (both offering and accepting), and unfair claims settlement practices.

Minnesota Insurance Guaranty Association (Minn. Stat. §60C): Protects P&C policyholders when a licensed insurer becomes insolvent. Covers claims for policies in the state up to the statutory limits. The guaranty association is funded by assessments on solvent member insurers — not a state fund. Producers cannot use the existence of guaranty association protection in sales presentations.

Cancellation and nonrenewal requirements: Minnesota statutes specify required notice periods for mid-term cancellation and nonrenewal of P&C policies. Insurers must provide advance written notice — 10 days for non-payment of premium cancellation, 30 days for other cancellation reasons — and must state the reason for cancellation or nonrenewal. These requirements protect policyholders from unexpected coverage gaps.

Minnesota surplus lines: Non-admitted carriers can write coverage in Minnesota for risks that the admitted market will not insure, through licensed surplus lines brokers. The diligent search requirement must be satisfied — the broker must document that the risk was declined by admitted carriers — before placing coverage in the surplus lines market. Surplus lines policies are not covered by the Minnesota Insurance Guaranty Association.

Strategic Approach: How to Master Every Section

Prioritize the HO-3 and PAP above all other product content. These two policy forms generate the most exam questions on the P&C exam. Know the HO-3's six coverage sections and their standard limits relative to Coverage A. Know the PAP's four parts and which covers what. Know the distinction between open perils (HO-3 dwelling) and named perils (HO-3 personal property). Know Minnesota's required auto minimums cold — 30/60/10, $40,000 PIP, $25,000/$50,000 UM/UIM.

Own the no-fault auto content. Minnesota's no-fault system generates state law questions that candidates who only study general insurance principles cannot answer correctly. The $40,000 PIP split ($20,000 medical, $20,000 non-medical), the $4,000 tort threshold, the six-month PIP claim deadline, the required UM/UIM at $25,000/$50,000 — these are Minnesota-specific facts that appear as exam questions precisely because this is the Minnesota exam.

Know the CGL coverage parts by letter. Coverage A (bodily injury/property damage), Coverage B (personal and advertising injury), Coverage C (medical payments) — these designations appear regularly in exam questions. Know what each covers and what the key exclusions are for each.

Build a numerical reference sheet. P&C exam questions frequently test specific numbers — coverage percentages (Coverage B at 10% of A, Coverage D at 20–30% of A), Minnesota auto minimums (30/60/10, $40,000 PIP), workers' comp penalty ($1,000/week plus 65% surcharge), coinsurance requirements (80%). Write these down and review them immediately before the exam.

Do not skip commercial lines. Many candidates studying for the P&C exam focus on personal lines — homeowners and personal auto — because those products feel more familiar. The exam dedicates significant question volume to commercial property, CGL, business income, and workers' compensation. Underpreparation in commercial lines is a consistent reason for first-attempt failures on the combined P&C exam.

Frequently Asked Questions

The combined P&C exam has 130 questions in 3 hours. How should I allocate my time?

At 130 questions in 180 minutes, you have approximately 83 seconds per question on average. In practice, straightforward definition questions take 20–30 seconds and complex scenario questions take 90–120 seconds. The most effective time management approach is to move through the exam at a steady pace — answer every question you know confidently, flag questions you are uncertain about, and return to flagged questions after completing the full exam. Do not spend more than two minutes on any single question during your first pass. With 130 questions, stalling on difficult questions risks running out of time before reaching questions you would have answered correctly. Most candidates who manage time well complete the exam in 2 to 2.5 hours, leaving a buffer for flagged question review.

I understand the HO-3 covers the dwelling on an open perils basis. What does that mean practically for the exam?

Open perils means the policy covers all causes of loss except those specifically listed as exclusions — the policy starts from a position of covering everything and then carves out exclusions. Named perils means the policy covers only the causes of loss specifically listed — the policy starts from a position of covering nothing and then lists what is included. The practical exam implication is this: if a loss occurs to the HO-3 dwelling from a cause that is not mentioned in the policy, it is covered (because open perils coverage applies unless excluded). If the same loss occurs to personal property under the HO-3 and the cause is not a named peril, it is not covered. The exam tests this distinction in scenario questions — "a windstorm causes a tree to fall on the insured's roof, damaging both the roof and furniture inside. Under the HO-3, which damage is covered?" The roof is covered under open perils Coverage A. The furniture is covered under Coverage C only if windstorm damage is a named peril, which it is in HO-2 and HO-3.

How deeply does the P&C exam test commercial lines compared to personal lines?

The combined P&C exam allocates questions across both personal and commercial lines in roughly equal proportion. Candidates who underweight commercial lines study — spending 80% of their preparation time on homeowners and personal auto — consistently find the exam harder than expected because the commercial lines questions they encounter are unfamiliar. The commercial property section (building and personal property, business income, causes of loss forms), the CGL section (three coverage parts, occurrence vs. claims-made, key exclusions), and the workers' compensation section (Minnesota-specific requirements, coverage parts, the exclusive remedy doctrine) all generate meaningful question volume. Study commercial lines with the same depth as personal lines — do not treat them as secondary content that you will figure out from general reasoning on exam day.

The Minnesota P&C exam is a comprehensive test of property and casualty insurance knowledge — from the six sections of a homeowners policy to the three coverage parts of a CGL form, from the HO form types to Minnesota's no-fault PIP requirements. Every question comes from the published content outline, every topic in that outline is learnable, and the 70% passing standard is achievable for any candidate who prepares the complete content rather than selecting favorite topics and hoping the exam cooperates.

Visit JustInsurance to enroll today and complete your Minnesota P&C prelicensing with a state-approved course built to the current PSI content outline, including practice exams covering every section in this guide.