MI Property & Casualty cheat sheet

Insurance regulation in the United States is primarily state-based under the McCarran-Ferguson Act; Michigan insurers are regulated by the Department of Insurance and Financial Services (DIFS).

An insurer must hold a certificate of authority from DIFS to transact insurance in Michigan; unauthorized insurers are generally prohibited except through limited surplus-lines rules.

Producers must be licensed for each line of authority they sell and must renew licenses and complete continuing education as required by Michigan law.

Premiums and client funds held by a producer are fiduciary funds; commingling with personal or business funds is prohibited.

Prohibited unfair trade practices include misrepresentation, twisting, rebating, false advertising, boycott, coercion, and unfair claim settlement practices.

Rates must not be excessive, inadequate, or unfairly discriminatory; rating factors must be based on actuarial support and state law.

A producer must promptly remit premiums to the insurer and cannot use premium funds for personal expenses.

Insurance fraud, including false claims and application misrepresentation, is a crime and may also void coverage.

Risk management techniques include avoidance, retention, reduction, sharing, and transfer; insurance is a transfer technique.

Pure risk involves only loss or no loss; speculative risk involves chance of gain or loss and is generally uninsurable.

Insurable interest must exist at the time of loss for property insurance and at the time of the policy for life insurance.

The principle of indemnity restores the insured to approximately the pre-loss financial position, with no profit from loss.

Utmost good faith requires honest disclosure; material misrepresentation can allow rescission.

Subrogation lets the insurer pursue a third party after paying a loss, preventing double recovery.

Hazards include physical hazards, moral hazards, and morale hazards.

ACV equals replacement cost minus depreciation; replacement cost pays new-for-old without depreciation deduction.

Coinsurance penalty formula: payment equals insurance carried divided by insurance required, multiplied by the covered loss, subject to the policy limit.

Property policies cover direct physical damage; indirect losses such as business income require separate or additional coverage.

Named-peril policies list covered perils; open-peril or special policies cover all risks except those excluded.

Common property perils include fire, lightning, windstorm, hail, explosion, riot, vandalism, and smoke.

Valuation methods include actual cash value, replacement cost, agreed value, and functional replacement cost.

Commercial property coinsurance requires the insured to carry a specified percentage of the property's value to avoid a penalty.

Duties after loss typically include prompt notice, proof of loss, protecting property from further damage, and cooperating with the insurer.

Mortgage clauses give the mortgagee rights to loss proceeds and notice, and allow the mortgagee to pay premium to maintain coverage.

Typical property exclusions include wear and tear, deterioration, insect damage, neglect, earth movement, and flood unless endorsed.

Pair-and-set, debris removal, and preservation of property provisions reduce gaps after a covered property loss.

Negligence requires duty, breach, proximate cause, and damages; liability insurance responds when the insured is legally liable.

Compensatory damages include special damages such as medical bills and lost wages and general damages such as pain and suffering; punitive damages punish conduct.

Strict liability applies without proof of negligence, such as for abnormally dangerous activities; absolute liability applies in limited statutory situations.

Vicarious liability holds one party responsible for another's acts, such as an employer for an employee acting within scope.

Occurrence policies cover injury or damage occurring during the policy period; claims-made policies cover claims first made during the policy period.

Supplementary payments, such as defense costs, are usually paid in addition to the liability limit.

Liability limits may be split, combined single, or aggregate; aggregate caps total payments in a policy period.

Medical payments coverage pays reasonable medical expenses regardless of fault, up to stated limits.

Common liability exclusions include intentional acts, expected injury, contractual liability, and business-use auto exposure in personal policies.

Dwelling policies cover residential property used for dwelling purposes, typically one-to-four family buildings; they are property-only forms.

DP-1 is basic named-peril, DP-2 is broad named-peril, and DP-3 is special/open-peril on the dwelling building.

Coverages typically include A dwelling, B other structures, C personal property, D fair rental value, and E additional living expense or fair rental value depending on form.

Dwelling policies generally do not include personal liability; liability must be added by endorsement or a homeowners policy.

Replacement cost on the dwelling is often optional and usually requires insurance to at least 80% of replacement cost.

Personal property is commonly valued at actual cash value unless replacement-cost coverage is endorsed.

Vandalism and malicious mischief may be excluded if the dwelling has been vacant beyond a stated period, often 30 or 60 days.

Dwelling forms usually exclude business property, money, securities, and property rented to others away from the premises, subject to limited exceptions.

A dwelling policy may be written for owner-occupied, rental, or seasonal occupancy, but eligibility rules vary by form and insurer.

Homeowners forms include HO-2 broad, HO-3 special, HO-5 comprehensive, HO-4 renters, HO-6 condominium, and HO-8 modified for older homes.

Section I provides property coverage: A dwelling, B other structures, C personal property, and D loss of use.

Section II provides liability coverage: E personal liability and F medical payments to others.

HO-3 insures the dwelling on an open-peril basis and personal property on a named-peril basis.

Standard HO-3 special limits apply to money, securities, jewelry theft, firearms theft, and silverware theft.

Dwelling and personal property replacement cost may be available; without endorsement, personal property is often ACV.

Coverage F medical payments to others pays necessary medical expenses for non-residents injured on the premises, regardless of fault, up to the limit.

Typical homeowners exclusions include earth movement, flood, ordinance or law, intentional loss, neglect, and business exposure.

Loss of use pays additional living expenses and fair rental value when a covered loss makes the residence unfit to live in.

Personal auto policy parts include A liability, B medical payments, C uninsured/underinsured motorists, D damage to your auto, plus duties and conditions.

Michigan is a no-fault state; PIP benefits are required and pay medical, wage loss, replacement services, and survivor benefits.

Michigan minimum liability limits are 20/40/10: $20,000 per person, $40,000 per accident bodily injury, and $10,000 property damage.

Michigan PIP medical coverage can be selected among unlimited, $500,000, $250,000, or $50,000 Medicaid options, or opted out for Medicare eligibles.

Michigan mini-tort allows recovery of up to $3,000 for vehicle damage from an at-fault driver in specified no-fault situations.

Part D collision covers impact with another object; other-than-collision covers theft, fire, vandalism, glass, and weather.

PAP exclusions include intentional acts, racing, using a vehicle as a public livery, and business use of a personal vehicle not rated.

Newly acquired autos receive temporary coverage if the insured reports them within the policy's required period.

Uninsured/underinsured motorist coverage is not required in Michigan but may be purchased to cover hit-and-run or underinsured drivers.

A commercial package policy combines two or more coverage parts under common declarations, conditions, and definitions.

Common CPP coverage parts include commercial property, commercial general liability, commercial auto, crime, inland marine, and equipment breakdown.

Commercial property covers building, business personal property, and personal property of others.

Causes of loss forms include basic, broad, and special; special is open-peril subject to exclusions.

Business income and extra expense cover lost income and continuing expenses during restoration after a covered loss.

CGL Coverage A covers bodily injury and property damage liability; Coverage B covers personal and advertising injury.

CGL limits include each occurrence, general aggregate, and products-completed operations aggregate.

Additional insured endorsements extend liability coverage to parties such as landlords or general contractors.

Commercial auto covers owned, hired, and non-owned autos when properly endorsed.

A businessowners policy packages commercial property and general liability for eligible small and medium businesses.

Eligibility is limited by occupancy, size, and risk type; offices, retail, service businesses, and apartments commonly qualify.

BOP property coverage includes building, business personal property, and business income, often on a special-form basis.

BOP liability coverage is similar to CGL premises and operations liability, with products-completed operations included.

A BOP generally does not include workers compensation, commercial auto, or professional liability.

Optional BOP coverages include crime, equipment breakdown, spoilage, outdoor signs, and employee dishonesty.

BOPs often have no coinsurance requirement, but replacement-cost valuation may require adequate limits.

Higher-risk operations such as bars, auto dealers, and large habitational risks are usually ineligible for a standard BOP.

Workers compensation covers work-related injury or disease without regard to fault and is the employee's exclusive remedy against the employer.

Michigan employers generally must provide workers compensation coverage for employees, subject to limited statutory exemptions.

Part One of a workers compensation policy provides statutory benefits; Part Two provides employers liability coverage.

Benefits include medical care, wage-loss replacement, rehabilitation, and death benefits for dependents.

Michigan wage-loss benefits are based on a statutory percentage of the employee's average weekly wage, subject to a state maximum.

Premium is based on payroll by employee classification, adjusted by experience modification and other rating factors.

Workers compensation excludes intentionally self-inflicted injury and injury caused by the employee's intoxication or horseplay.

Employers may purchase insurance from an authorized insurer or qualify as self-insured with state approval.

Flood insurance is generally excluded on property policies and must be purchased separately, often through the NFIP.

NFIP policies generally have a 30-day waiting period before coverage begins, with limited exceptions.

Earthquake coverage is usually excluded and must be added by endorsement or a separate policy.

Umbrella and excess liability policies provide limits above underlying auto, general liability, and employers liability coverage.

Michigan's no-fault system includes the Michigan Assigned Claims Plan for injured persons unable to obtain no-fault benefits from an insurer.

Michigan mini-tort allows up to $3,000 recovery for vehicle damage from an at-fault driver in specified situations.

Michigan Basic Property Insurance Association provides residual-market property coverage for eligible risks unable to obtain voluntary coverage.

Certificates of insurance summarize coverage but do not amend, extend, or create coverage in the underlying policy.

Surplus lines insurers may write Michigan risks when authorized insurers decline, subject to state eligibility and disclosure rules.