Michigan Personal Lines Insurance License Exam — All Questions

How does Michigan handle recovery of medical and related benefits after an auto accident?

• a.It is a pure at-fault (tort) state; the injured party always sues the other driver for medical bills
• b.It bans all auto injury claims and routes them through a state fund
• c.It is a no-fault state; the injured person turns first to his or her own policy's personal injury protection (PIP), regardless of fault✓
• d.It requires no medical coverage on auto policies at all

Michigan is a no-fault auto state. After a crash, an injured person's own personal injury protection (PIP) pays medical and related benefits regardless of who was at fault, rather than that person suing the other driver for those benefits. Every Michigan auto policy must include PIP. Source: Michigan no-fault law; verify current PIP options with DIFS (https://www.michigan.gov/difs).

Under MCL 500.3009, what are the DEFAULT minimum auto bodily-injury and property-damage liability limits in Michigan (after July 1, 2020)?

• a.$25,000 per person / $50,000 per accident bodily injury and $25,000 property damage
• b.$250,000 per person / $500,000 per accident bodily injury and $10,000 property damage✓
• c.$100,000 per person / $300,000 per accident bodily injury and $50,000 property damage
• d.$20,000 per person / $40,000 per accident bodily injury and $10,000 property damage

Under MCL 500.3009, the default minimum auto liability limits after July 1, 2020 are $250,000 per person / $500,000 per accident bodily injury and $10,000 property damage (250/500/10). A named insured may sign a form electing lower bodily-injury limits down to at least 50/100. Source: MCL 500.3009; verify current figures with DIFS.

Which statement about Michigan's personal injury protection (PIP) after the 2020 no-fault reform is correct?

• a.PIP was eliminated entirely; Michigan is now a pure tort state
• b.PIP is optional and rarely purchased
• c.Only commercial vehicles must carry PIP
• d.Drivers must carry PIP but may choose a PIP medical coverage level, including capped options and, for those with qualifying health coverage, an opt-out✓

The 2020 reform kept PIP mandatory on Michigan auto policies but let drivers choose a PIP medical coverage level (including capped-dollar options and, for those with qualifying health coverage such as certain Medicare/health plans, an opt-out). Because these options and their conditions can change, verify the current PIP choices with DIFS (https://www.michigan.gov/difs).

How are cancellation and nonrenewal of a personal auto or homeowners policy regulated in Michigan?

• a.An insurer may cancel any personal policy at any time for any reason with no notice
• b.Only the policyholder may ever cancel; insurers can never cancel mid-term
• c.There are no notice rules; cancellation is governed solely by the contract
• d.State law limits the reasons an insurer may cancel or nonrenew and requires advance written notice to the insured; confirm the exact notice period with DIFS✓

Michigan, like other states, restricts mid-term cancellation of personal auto and homeowners policies to specified reasons (such as nonpayment or material misrepresentation) and requires advance written notice of cancellation or nonrenewal. The exact number of days varies by reason and line — verify the current Michigan notice periods with the Michigan Department of Insurance and Financial Services (DIFS).

Which best describes the body that writes and enforces Michigan's insurance regulations affecting personal lines policies?

• a.The Michigan Department of Insurance and Financial Services (DIFS), a state agency that regulates insurers and financial institutions✓
• b.A private trade association of insurers with no government authority
• c.The federal Department of Insurance in Washington, D.C.
• d.The county register of deeds where the policy is issued

Insurance in Michigan is regulated at the state level by the Michigan Department of Insurance and Financial Services (DIFS). There is no federal department of insurance; each state (including Michigan) supervises its own market, licenses producers, and enforces cancellation, rating, and coverage rules. Source: Michigan DIFS (https://www.michigan.gov/difs).