Question 29

An insurance company is in violation of Minnesota Insurance law if it declines to write a Homeowners policy solely because of the age of the dwelling.

Declining to write a Homeowners policy solely based on the age of the dwelling is a violation of Minnesota Insurance law. This regulation exists to ensure that applicants are not discriminated against for factors that do not reflect their risk as homeowners.

A) applicant's claims frequency

This option is incorrect because an insurance company can consider an applicant's claims frequency when deciding whether to issue a policy. Claims frequency is a legitimate factor that reflects the risk associated with insuring a property.

B) age of the dwelling

This option is correct as Minnesota Insurance law prohibits insurers from denying coverage based solely on the age of a dwelling. This law aims to protect homeowners from being unfairly discriminated against, regardless of the property's age.

C) availability of fire protection services

This option is also incorrect because the availability of fire protection services can be a valid reason for an insurer to decline coverage. Insurers assess risks based on the services available to mitigate potential losses, which includes fire protection.

D) applicant's poor credit score

This option is incorrect as well, as insurers are permitted to consider an applicant's credit score. A poor credit score can be indicative of the applicant's reliability and has been shown to correlate with the likelihood of filing claims.

Conclusion

The correct answer is B because Minnesota law specifically prohibits insurers from denying policies based solely on the age of a dwelling, which protects homeowners from potential discrimination. In contrast, options A, C, and D represent valid underwriting considerations that insurers may legally use to assess risk and make coverage decisions. Thus, B stands out as the only option that highlights a violation of the law.