Free Michigan Property & Casualty practice questions

Answer: D. Within 30 days after the final disposition, with a copy of the consent order

A Michigan producer must report to the commissioner any administrative action taken against him or her in another jurisdiction, or by another governmental agency in Michigan, within 30 days after the matter's final disposition, and the report must include a copy of the order or consent order or other relevant legal papers. The trigger is the end of the matter, not the date the action was first brought. The initial pretrial hearing date is the trigger for reporting a criminal prosecution, which is a separate duty. The deadline is tied to disposition of the matter, not to the producer's continuing education review cycle.

Answer: B. Within 30 days

Michigan requires a licensee who changes a legal name or address to notify the commissioner no later than 30 days after the change, using any method the commissioner accepts. The statute sets 30 days, so both 10 days and 60 days misstate the deadline. Waiting for the next renewal is wrong because the deadline runs from the change itself, not from the renewal cycle.

Answer: D. It is unfair, as marketing that tends to induce a purchase through fright or undue pressure

Michigan treats as an unfair practice any marketing method that has the effect of, or tends to, induce the purchase of insurance through force, fright, threat or undue pressure. A warning designed to frighten the prospect, combined with holding her on the phone until she agreed, fits that description. The practice does not require a false statement about the policy, and a threat counts whether it is explicit or implied. That the prospect said yes does not excuse the method, because the section is aimed at methods that produce or tend to produce a purchase in this way.

Answer: A. Not later than 30 days after the written denial

Before denying a producer license application, the director must tell the applicant in writing of the denial and the reason for it. The applicant then has 30 days from that written denial to make a written demand for a hearing before the director on whether the action was reasonable. The clock runs from the written denial, not from the date the application was filed, and the section states a 30-day window rather than 10 or 60 days. The hearing is conducted under the administrative procedures act of 1969.

Answer: A. It is an unfair or deceptive practice, since omitting a material fact misrepresented the policy terms

Michigan defines as an unfair or deceptive practice a sales presentation, statement or similar communication that, through an incorrect statement or the omission of a material fact, misrepresents a policy's terms, benefits, advantages or conditions. Leaving out the water damage limitation gave the buyer a false picture of the policy's terms, so accurate individual statements do not save the presentation. This part of the section does not depend on any aim of inducing the buyer to lapse or surrender another policy, which is a separate category in the same section. The section judges the presentation itself and contains no exception for a buyer who could have read the policy.

Answer: A. It is prima facie evidence that the producer violated the producer's fiduciary responsibility

In Michigan a producer is a fiduciary for money received in that capacity, and failing to turn that money over in a timely manner to the persons it is owed to is prima facie evidence of a breach of fiduciary responsibility. The statute attaches that consequence to the untimely turnover itself and contains no requirement to prove an intent to keep the money. Holding premium in a segregated account satisfies the separate-account rule but does not excuse late turnover, and premium a producer holds is fiduciary money under the code rather than a purely contractual matter.

Answer: D. A concerted boycott tending to cause unreasonable restraint of insurance business

Section 500.2012 makes it an unfair method of competition to agree to commit, or to commit through concerted action, a boycott, coercion, or intimidation that results in, or merely tends to result in, unreasonable restraint of the business of insurance. The agencies' joint refusal to place business is a boycott by agreement. Because conduct that only tends toward the restraint is enough, the section does not require proof that the insurer actually lost premium. The section's text contains no requirement of a prior criminal conviction, and it does not depend on publicizing the agreement; untrue advertising is addressed separately in Sec. 500.2007.

Answer: B. A single zip code under the U.S. Postal Service plan

Section 500.2027(a)(iii) lets an insurer rely on the location of a property risk only where that location has a statistically significant relationship with the risk of fire loss in the surrounding area, and it defines area as one zip code number under the Postal Service's zoning improvement plan. A county, a municipality served by a fire department, and a census tract are not the unit the section names.

Answer: B. Dana must first add a qualification that covers homeowners coverage before soliciting or negotiating it.

Michigan bars any person from selling, soliciting, or negotiating insurance in the state for a given line unless that person holds a license for that qualification. Recommending a homeowners policy and helping with its application is soliciting and negotiating homeowners coverage, so Dana needs a qualification covering that line first. The requirement is tied to the qualification for the line, so a life-only license does not authorize homeowners activity. Another producer's signature at the end does not change the fact that Dana personally solicited and negotiated without the qualification. The prohibition covers soliciting and negotiating as well as selling, so giving advice on terms is not a safe harbor.

Answer: C. Notify the commissioner before she starts doing business under the name

Michigan requires an insurance producer who does business under any name other than his or her legal name to notify the commissioner before using that assumed name. The duty is advance notice, so a notice sent after the name is already in use comes too late, however prompt it is. The section asks for notification, not approval, and it does not tie the notice to license renewal. It also reaches doing business under the name generally, not only printed advertising.