Policyholder Notices, Disclosures, and Documentation
Required notice
Michigan requires the insured to be told, in writing and prominently, that the policy is issued by an unauthorized insurer, that the insurer is not regulated by DIFS in the same manner as an admitted carrier, and that the policy is not protected by the Michigan guaranty association. The notice should be clear enough that a reasonable buyer understands the lack of guaranty fund protection. The file should show delivery and, where required, the insured’s acknowledgment.
Documentation package
A complete file typically contains the diligent search record, evidence of the insurer’s eligibility, the policy or binder, the signed or acknowledged notice, premium and tax records, and any exempt commercial purchaser disclosure. Retention matters because DIFS market conduct examinations may occur years after placement.
Worked example
An agent places a surplus lines cyber policy and delivers the policy with a bold notice stating the insurer is unauthorized and not guaranty-fund protected. The insured signs the acknowledgment. Two years later, DIFS asks for the file. The agent produces the search record, eligibility screen, notice, and acknowledgment. Without the acknowledgment, the agent would have to explain the missing documentation.
Traps that cost marks
Burying the notice in an application or a footer; using another state’s wording; failing to obtain an acknowledgment; delivering the notice after a claim; and treating a certificate of insurance as a substitute for the policy notice. Also do not omit the exempt commercial purchaser disclosure when relying on that exception.