Chapter 8 State Specifics

Fire Policies

All fire policies may be canceled at any time at the request of the insured. Cancellation by the insurer must be preceded by providing notice to each named insured and/or any mortgagee at least 10 days' notice before the cancellation.

Assumed Names

An insurance producer doing business under any name other than the producer's legal name is required to notify the Commissioner prior to using the assumed name.

The Commissioner may waive the exam or prelicensing requirements for an applicant who:

Applies for a limited license, Has been a licensed insurance producer within the preceding 12 months, Has obtained the CPCU, CLU, CIC or other professional designations, Has an associate's, bachelor's, or master's degree with a concentration in insurance from an approved institution

Rental Vehicle Coverage

Coverage for a rented auto is provided by endorsement. It must provide the highest liability coverage that the PAP provides for covered autos. Under Michigan law, renting a vehicle for 30 days or more makes you an 'owner' and thus your existing PAP will not automatically cover the vehicle.

Michigan Automobile Insurance Placement Facility

The Michigan Automobile Insurance Placement Facility is available for individuals who have been unable to obtain auto insurance through normal markets. Every insurer authorized to write automobile insurance in Michigan must participate in the

Cancellation and Nonrenewal: An automobile liability policy that has been in effect for at least 55 days may be cancelled only for the following reasons:

The risk is unacceptable to the insurer, Revocation or suspension of the insured's driver's license, Refusal to renew any policy of automobile liability insurance does not constitute a cancellation unless the insurer fails to mail a notice 20 days prior to the termination date of the policy

Property Protection Coverage - Michigan (PP 05 91)

This endorsement provides $1 million of property protection coverage. This coverage applies only to accidents that occur in Michigan. Any legal action against the insurer must begin within 1 year after the accident.

An insolvent insurer

is an insurer against whom a final order of liquidation has been entered with a finding of insolvency.

Aftermarket Crash Parts Regulation

After Market Parts (also referred to as after crash parts) are replacement parts that are not made by or for the original equipment manufacturer. If an insurer specifies that nonoriginal equipment (aftermarket parts) are to be used in repairing the insured's vehicle, the insured must be notified beforehand as part of the estimate. The written estimate must clearly identify each aftermarket part intended to be used.

Eligibility for Automobile Insurance

Any qualified applicant has the right to request an assignment in the Facility. At least once each year, each designated participating member must notify all persons insured through the member on behalf of the facility, of the statutory eligibility standards for obtaining automobile insurance from insurers in the voluntary market.

Licensing Exam

Applicants for a resident producer license must pass a written examination. Before taking the exam, the applicant must complete a prelicensing course no more than 12 months before submitting the application for examination.

Defamation

Defamation includes making any false or maliciously critical statement regarding the financial condition of any person or business entity, with the intent to injure.

Applicability

Every policy of automobile insurance or home insurance issued, or renewed in Michigan must conform with the provisions of this act.

Boycott, Coercion, Intimidation

It is an unfair practice in the business of insurance to enter into action resulting in an unreasonable restraint of trade, or monopoly in, the business of insurance.

Catastrophic Claims Association

The catastrophic claims association provides reimbursement to all insurers engaged in writing insurance coverages for no-fault insurance for personal protection insurance losses that exceed $580,000 per occurrence. This amount is increased biennially. A person who suffers accidental bodily injury while not an occupant of a motor vehicle must claim personal protection insurance benefits under the assigned claims plan.

Required Limits of Liability

The default bodily injury/property damage (BI/PD) coverage liability limits are 250/500/10: $250,000 per person, $500,000 per occurrence for two or more persons in any one accident for bodily injury, and $10,000 per occurrence for property damage in another state. Drivers have the option of purchasing other limits, but the required minimum auto liability insurance limits in Michigan are 50/100/10.

Board of Governors

The fund exercises its powers through a board of governors, composed of 5 member insurers and 2 persons representing the general public, appointed by the Commissioner to serve for terms of 3 years.

Essential insurance Act

The purpose of The Essential Insurance Act is to make personal auto and home insurance available to all Michigan citizens.

Personal Injury Protection Coverage — Michigan (PP 05 90)

This endorsement to the personal auto policy provides the following benefits: Medical and funeral expense coverage, For the primary insured, a work loss benefit for up to 85% of the insured's lost income, subject to the limits stated in the endorsement, and a replacement services benefit

A nonresident owner of a vehicle not registered in this state may

not operate a motor vehicle or motorcycle in this state for more than 30 days in a calendar year unless they maintain security for the payment of benefits.

An owner or operator of a motor vehicle or motorcycle who does not maintain the required security is guilty

of a misdemeanor. They may be fined not less than $200 or more than $500, imprisonment for not more than 1 year, or both.

If a PIP medical option is not chosen by the insured,

the unlimited PIP medical option is selected by default. The coverage level selected applies to the named insured, their spouse, a relative in the same household, and any other person with the right to claim personal protection benefits under the policy. These limits also apply for a transportation network company vehicle.

Order of Priority

A person who suffers accidental bodily injury while an operator or a passenger of a motor vehicle operated in the business of transporting passengers must receive the personal protection insurance benefits to which the person is entitled from the insurer of the motor vehicle.

Grace Period

A producer has a 90-day grace period from the expiration date of his/her license within which to meet his/her continuing education requirements or the license will be canceled. During the 90-day grace period, the insurance producer may not solicit or sell new policies of insurance, bind coverage, or otherwise act as an insurance producer except to service policies previously sold and receive commissions on policies previously sold.

Amendment of Policy Provisions — Michigan (PP 01 80)

All Personal Auto policies issued in Michigan must include the Amendment of Policy Provisions endorsement, which amends the policy in the following ways: The insured's spouse is added to the definition of "named insured" to include the insured's spouse, The subrogation provision is amended so that the insured's right to recovery may not be waived, Adds definition of minimum liability limits (50/100/10), Adds to the definition of an owned auto any vehicle leased for over 30 days, Payment for prejudgment interest is moved from the insuring agreement to supplementary payments, Adds exclusion for intentionally causing bodily or property damage in excess of the minimum limits of liability, Adds insurer's right to recovery, Modifies cancellation and nonrenewable provisions to conform to Michigan law. Amends Insuring Agreement to provide compensatory damages when the insured is entitled to recover from an operator of an uninsured vehicle.

Personal protection insurance benefits are provided without regard to fault, and include the following:

Allowable expenses incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery, or rehabilitation, Burial expenses for at least $1,750, but not more than $5,000, Loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he/she had not been injured, Expenses up to $20 per day for obtaining ordinary and necessary services an injured person normally would have performed, providing during the first 3 years after the date of the accident A person who is 60 years of age or older who would not be eligible to receive work loss benefits may waive coverage for these benefits in exchange for reduced premium rate to a person who waives coverage for work loss benefits.

It is an unfair trade practice to offer any of the following as an inducement to purchase or renew an insurance policy:

Employment, Shares of stock or other securities issued or at any time to be issued, An advisory board contract promising special profits, Any prizes, goods, wares, merchandise or tangible property valued at more than $10

Personal Injury Protection (PIP)

Personal injury protection coverage applies to accidental bodily injury to the person named in the policy, the person's spouse, and a relative of either domiciled in the same household, if the injury arises from a motor vehicle accident. Michigan auto insurance law allows an insured to choose a level of medical coverage when a policy is issued or renewed. If an insured is injured prior to July 1, 2020, they will continue to receive unlimited benefits, regardless of the choice they make for the future.

Michigan Automobile Insurance Placement Facility for the purpose of:

Providing the guarantee that automobile insurance coverage will be available to any person who is unable to procure that insurance through ordinary methods, Preserving the benefits of price competition by encouraging maximum use of the normal private insurance system

Residual Liability Insurance

Residual liability insurance covers bodily injury and property damage which occurs outside of Michigan but within the United States, its territories and possessions, or in Canada. The coverage must be equivalent to that required as evidence of automobile liability insurance under the financial responsibility laws of the place in which the injury or damage occurs. The minimum required limits are 50/100/10.

A person who suffers accidental bodily injury arising from a motor vehicle accident that shows evidence of the involvement of a motor vehicle while an operator or passenger of a motorcycle will claim personal protection insurance benefits from insurers in the following order of priority:

The insurer of the owner or registrant of the motor vehicle involved in the accident, The insurer of the operator of the motor vehicle involved in the accident, The motor vehicle insurer of the operator of the motorcycle involved in the accident, The motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident

Mini-Tort Liability

Tort liability arising from ownership, maintenance, or use of a motor vehicle occurring within Michigan has been abolished as long as the required security has been obtained. However, under mini-tort liability, an individual has the right to sue for noneconomic damages for up to $3,000 to a motor vehicle to the extent that the damages are not covered by insurance. Damages must be assessed based on comparative fault to a party who is less than 50% at fault.

Property Protection Insurance

Under property protection insurance, an insurer is liable to pay benefits for accidental damage to tangible property arising out of the ownership, operation, maintenance, or use of a motor vehicle. Liability does not include accidental damage, other than the insured motor vehicle, that occurs within the course of a business of repairing, servicing, or otherwise maintaining motor vehicles. Property protection insurance benefits are paid without regard to fault as long as the accident occurs in Michigan, Damage to tangible property includes both physical damage or destruction of the property and loss of use, Damage must be caused accidentally and unintentionally, Property protection benefits consist of the lesser of reasonable repair costs or replacement costs less depreciation and, if applicable, the value of loss of use, Benefits for damage to tangible property arising from a single accident may not exceed $1 million

There are six medical coverage levels available to Michigan drivers. PIP medical coverage pays medical expenses per person/per accident under the following limits:

Unlimited coverage, Up to $500,000 in coverage, Up to $250,000 in coverage, Up to $250,000 in coverage with PIP medical exclusions - The exclusion is available for a named insured (and household members) with health care coverage, other than Medicare, that covers auto accident injuries, Up to $50,000 in coverage - Available if the named insured is enrolled in Medicaid and if their household members have another auto policy or health insurance that covers auto accident injuries, PIP medical opt-out - Available if the named insured has Medicare Parts A and B as long as any other household members have another auto insurance policy or health insurance that covers auto accident injuries. An employee, their spouse, or a relative of either domiciled in the same household, who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer, will receive personal protection insurance benefits to which the employee is entitled from the insurer of the furnished vehicle.

The Commissioner may waive the continuing education requirements for an insurance producer:

Who is unable to comply with the continuing education requirements due to military service, For whom the Commissioner determines that enforcement of the requirements would cause a severe hardship, Who is licensed to write only travel or baggage insurance policies and whose employment is for a purpose other than the sale of those policies, Who is licensed to write only limited line credit insurance

Report of Actions

Within 30 days of occurrence, a licensed agent must report any disciplinary action by the insurance regulatory agency of any other state or territory of the United States; each disciplinary action on an occupational license held by the licensee; each judgment or injunction entered against the licensee involving fraud, deceit, misrepresentation, or violation of any insurance law. Such information is confidential by law and is privileged.

Commission for Disability Policies

An agent may not receive a commission for a disability policy issued to an individual eligible for medicare, unless the amount of the commission paid in the first year of the policy is not more than the amount that the agent receives for the policy in each of the 2 subsequent renewal periods.

Unfair and Prohibited Insurance Trade Practices

The following acts are defined by statute as unfair methods of competition and unfair or deceptive acts or practices, and are strictly prohibited. Misrepresentation; False Information and Advertising.

Disputes Between Insured and Insurer

A person who has been denied automobile insurance or home insurance or has charged an incorrect premium is entitled to a conference with the insurer, and to a hearing before the Commissioner if the conference with the insurer fails to resolve the dispute.

Covered Claims

Covered claims (other than a Workers' Compensation claim or a claim for personal protection insurance benefits) may not exceed $5 million (this figure may be adjusted for inflation). Obligations to refund unearned premiums may not exceed the first $500 of unearned premiums per claimant from any single insolvent insurer.

Cease and Desist Order

If the Commissioner determines that a person has engaged in an unfair method of competition, or an unfair or deceptive act or practice, the Commissioner will issue an order requiring the person to cease and desist from engaging in the method of competition, act or practice.

Limited lines insurance is any of the following:

Marine insurance, Credit insurance, Surety and fidelity insurance, Legal expense insurance, Livestock insurance, Malpractice insurance, Plate glass insurance- A Limited lines producer is authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance.

A member insurer

is an insurer required to be a member of the association. All property and casualty insurers that are admitted to transact insurance in Michigan are member insurers under Michigan law.

Business Entity

A business entity applying for a resident insurer producer license will not be approved unless the Commissioner finds that the business entity has: Paid the applicable fees, Designated an individual licensed producer responsible for the business entity's compliance with Michigan's insurance laws, rules, and regulations, Not committed any act that would result in license revocation or other sanction

Penalties

A person, officer, member, or examining physician of any society authorized to do business who knowingly makes a false or fraudulent statement or representation in an application for membership, or for the purpose of obtaining any benefit is guilty of a misdemeanor and is subject to imprisonment for not less than 30 days or more than one year, or by a fine of not less than $100 or more than $500, or both. A person who willfully makes a false statement as to the death or disability of a certificate holder in a society for the purpose of procuring payment of a benefit is guilty of perjury.

Producer Appointment

A producer may not act as an agent unless he/she is appointed as an agent by the insurer.

Change of Name and Address

When applying for a license to act as an agent, solicitor, counselor, or adjuster, an applicant must report his/her mailing and electronic mail addresses to the Commissioner. Licensees must notify the Commissioner of any change in mailing/electronic mail address or name change within 30 days after the change.

Summary Suspension

Without prior hearing, the Commissioner may order summary suspension of a license if he or she finds that protection of the public requires emergency action. If requested, the Commissioner may conduct a hearing on the suspension not later than 20 days after the suspension.

Assessments are made separately on the basis of 5 separate categories:

Workers' Compensation insurance, Automobile insurance, Title Insurance, Fire, allied lines, farm owner's multiple peril, homeowner's multiple peril, inland marine, earthquake, and credit insurance, All other insurance, except life and disability, which is excluded from association

Conspiracy to Defraud a Health Care Provider

A person who enters into an agreement to defraud a health care corporation or health care insurer by making or presenting, false claim for payment of health care benefits is guilty of a felony, punishable by imprisonment for not more than 10 years, or by a fine of not more than $50,000, or both.

False Report of Death or Sickness

Any agent, physician, insured or other person who presents to an insurer a false certificate of death, sickness or disability is guilty of a misdemeanor and is liable for a fine of up to $1,000, or to imprisonment in the county jail of up to 3 months.

Property and Casualty Guaranty Association

The purpose of the Guaranty Association is to establish a method to pay claims that are unpaid as a result of the insolvency of a member insurer.

Premium Discount Plan

An insurer may establish and maintain a premium discount plan if the plan is consistent with the purposes of this act and reflects reasonably anticipated reductions in losses or expenses.

Notice of Denial

Before denying an application for a license, the Commissioner must notify the applicant or licensee of the denial in writing, including the reason for the denial. Not later than 30 days after this notice, the applicant or licensee may request a hearing before the Commissioner to determine the reasonableness of the Commissioner's action.

Information Security Program

Each licensee must implement a comprehensive written information security program that includes administrative, technical, and physical safeguards for the protection of customer information.

Long-Term Care Education Requirements

Each producer whose duties include transacting long-term care insurance must complete a program of instruction before selling, soliciting, or negotiating long-term care insurance.

Casualty Insurance

No policy of casualty insurance (except Workers' Compensation and mortgage guaranty insurance) may be issued in Michigan without the following provisions: The policy may be canceled at any time at the request of the insured. The policy may be canceled at any time by the insurer by mailing at least 10 days' written notice of cancellation. The minimum earned premium on any policy canceled, other than automobile insurance, will be at least the pro rata premium or $25, whichever is greater An insurer may refuse to renew a malpractice insurance policy only by mailing to the insured at least 60 days' written notice of refusal to renew

All Dwelling Policies issued in Michigan must include the Special Provisions endorsement, which amends the policy in the following ways:

The insured's spouse is added to the definition of "named insured", The subrogation provision is amended so that the insured's right to recovery may not be waived, Losses are payable 30 days after insurer's receipt of proof of loss, rather than 60, The mortgagee clause is amended to conform with Michigan Public Act 217, regulating the licensure of electricians

Notice of Hearing

When a person has engaged in an unfair or deceptive act or practice, and the Commissioner determines that a hearing would be in the interest of the public, the Commissioner will give notice in writing to the person involved, including the general nature of the complaint and the proceedings contemplated. If an unfair or deceptive practice is not specified in the insurance code, the Commissioner may still serve upon the violator a statement of the charges and a notice of a hearing of at least 15 days.

Authority of Terminated Producer

When an insurance producer's authority to represent an insurer is terminated, the producer may continue to service existing policies of insurance until they are canceled, replaced, or have expired. An insurer may not cancel or refuse to renew a policy because of the termination of an insurance producer's contract. Following termination of the producer's appointment, he/she may continue to represent the insurer in servicing existing policies, but may not bind a new risk, renew a policy, nor increase the obligation of the insurer under the policy without the approval of the insurer.

Qualifications: Producer

An application for a resident producer license will not be approved unless the Commissioner finds that the applicant: Is at least 18 years of age, Has not committed any act that would result in license revocation or other sanction, Has completed a prelicensing course for the lines of insurance applied for, Has paid the applicable fees, Has successfully passed the examination for the lines of insurance applied for

Premium Discount for Senior Citizens

An insurer may establish or maintain for home insurance a premium discount plan for senior citizens in this state who are at least 55 years of age or older, if the plan is uniformly applied by the insurer throughout this state.

Notice of Appointment

An insurer must file a notice of appointment within 15 days after the contract is executed or the first application for insurance is submitted. Upon receipt of a notice of appointment, the Commissioner will determine within 30 days whether the producer is eligible for appointment. If the producer is not, the Commissioner will notify the insurer within 5 days after the determination is made. An insurer must pay an appointment fee and remit an annual renewal fee for each appointed producer. Notification of the appointment or termination of the appointment of a managing general agent must be submitted to the Commissioner within 30 days after entering into a contract or termination.

Assessment

Member insurers are assessed amounts necessary to administer the program and pay covered claims, up to a maximum of 1% of each member insurer's net direct premiums written in Michigan during the previous calendar year. The Commissioner may exempt a member insurer from an assessment, or may defer the assessment, if it would cause the member insurers to carry amounts of capital or surplus less than the minimum required to keep its certificate of authority.

Misrepresentation in Insurance Applications

No licensee may furnish a fee, commission, money, or other benefit in exchange for false or fraudulent representations on an application for insurance.

Declination of Insurance

Upon making a declination of insurance, an agent or insurer must inform the applicant of the reason for the declination. A written explanation must be provided within 90 days after request. A refusal, by an insurer or agent, to provide upon request an application form or other means of making an application or request for coverage will be considered a declination.

Release of Information

Upon written request by an authorized agency to an insurer, the insurer or an agent authorized by the insurer may release any information that is considered important relating to any suspected insurance fraud If an insurer knows the identity of a person who it has reason to believe committed a fraudulent insurance act, the insurer may notify an authorized agency of such knowledge.

Lapsed Policies

An automobile insurer may not deny or limit coverage, charge a reinstatement fee, or increase the premiums solely because a person failed to maintain insurance during the 6-month period immediately preceding application if the person was on active duty in the armed forces of the United States for at least 30 consecutive days and that the vehicle was not driven or moved during the 6-month period immediately preceding application.

Consumer Privacy Regulation

Violation of privacy requirements is an unfair method of competition or an unfair or deceptive act and practice in the conduct of the business of insurance. These requirements are outlined below.

Insurers suspension

When it appears to the Commissioner that any person has committed a violation of insurance law which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the Commissioner, after giving notice and an opportunity to be heard, may suspend, revoke or refuse to renew the insurer's license or authority to do business in Michigan.

Inspection of Dwellings

If an insurer uses an inspection of a dwelling to determine if the insured/applicant is eligible for home insurance, criteria for selecting dwellings for inspection can't be based upon any of the following: Location, The age of the dwelling or its structural components, The market value, unless the value is used as a minimum value above which all dwellings will be inspected, The amount of insurance, unless the amount is used as a minimum above which all dwellings will be inspected, Race, color, creed, marital status, sex, national origin, residence, age, disability, or lawful occupation

Automobile Repair Rights

An insured may not be unreasonably restricted from using a particular person or business for an automobile repair, glass repair, or replacement service. An automobile insurer must disclose whether it has an agreement with any repair or replacement facility and must inform an insured that he/she is under no obligation to use a particular repair or replacement facility.

Licensees suspensions

The Commissioner may suspend, revoke or nonrenew any license issued to a licensee who: Provides incomplete or materially untrue information in the license application, Violates any insurance law, regulation, subpoena or order of the Commissioner, or of another state's insurance, Obtains a license through fraud or misrepresentation, Improperly withholds any monies or properties received in the course of doing business, Misrepresents the provisions, terms and conditions of an insurance policy, Has been convicted of a misdemeanor or felony, Commits any unfair trade practice, Has a license denied, suspended or revoked in another state, Forges another person's name in an application or document related to insurance, Cheats on an examination, Knowingly accepts business from a producer who is not licensed, Fails to comply with an administrative order for child support, Fails to pay single business tax

For renewal of automobile insurance, provide the following annually:

An explanation of the insurance eligibility point system, A statement that if the insured may qualify for insurance from more than one insurer, and possibly at a lower rate, A statement that the agent will, upon request, furnish quotations from all insurers represented by the agent

Lines of Insurance

An individual insurance producer may receive a license in 1 or more of the following lines of insurance: Life, Accident and health or sickness, Property, Casualty, Variable life and variable annuity products, Personal lines, Credit, Any other line of insurance permitted under state laws or rules

Insurance Fraud Regulation

It is an unlawful, fraudulent practice to knowingly make a material misrepresentations or concealments in an application for the issuance or renewal of an insurance policy, or in a claim for benefits under an insurance policy. A person who commits a fraudulent insurance act is guilty of a felony punishable by imprisonment for up to 4 years, a fine of up to $50,000, or both, and must pay restitution. A person who enters into an agreement, combination, or conspiracy to commit fraud is guilty of a felony, punishable by imprisonment of up to 10 years, or by a fine of up to $50,000, or both.

A rate is considered to be inadequate if:

It is unreasonably low for the insurance coverage provided, and its continued endangers the solvency of the insurer Use of the rate has the effect of destroying competition among insurers, creating a monopoly, or causing a kind of insurance to be unavailable to a significant number of applicants who are entitled to procure it, A rate for is unfairly discriminatory in relation to another rate for the same coverage if the differential between the rates is not reasonably justified by differences in losses or expenses, or by differences in the uncertainty of loss for the individuals or risks to which the rates apply.

License Not Required

A producer's license is not required of employees, officers, and directors who do not transact insurance, do not receive commissions, and who engage in the following capacities: Executive, administrative, managerial, or clerical tasks indirectly related to the transaction of insurance, Underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance, Providing technical advice and assistance to licensed insurance producers, Securing and furnishing information for the administration of group insurance,. Performing administrative services related to mass marketed property and casualty insurance, Administration of a program of employee benefits for the employer's or association's own employees who are not compensated by the company issuing the contracts, The inspection, rating, or classification of risks, or the supervision of the training of insurance producers, Advertising, Counsel to an employer concerning its insurance interests

Written Agreement Between Counselor and Client

Before rendering services, an insurance counselor must prepare a written agreement, signed by both the counselor and the client, outlining the nature of the work to be performed by the counselor and the fee. The agreement must clearly state that the counselor's fee may not be waived under any circumstances and disclose that the counselor will receive a commission from the insurer on any insurance placed by the counselor acting as insurance agent. The counselor must retain a copy of each agreement for 2 years after completion.

No-Fault Automobile Coverage

In addition to the Michigan financial responsibility requirements, an owner or registrant of a motor vehicle required to be registered must maintain security for payment of benefits for personal protection insurance, property protection insurance, and residual liability insurance. This security may be maintained as part of the personal auto policy, or by other methods approved by the Secretary of State, such as bonds or self-insurance. Security will only be required when the motor vehicle is driven or moved upon a highway. An insurer that has issued a motor vehicle policy may only delete portions of the coverage under the policy and maintain the comprehensive coverage portion on a motor vehicle that is not driven or moved on a highway.

Unfair Sex/Race Discrimination

Insurers may not restrict the amount of benefits payable on the basis of age, sex, race, creed, national origin or marital status, except to the extent the amount of benefits, term, conditions, or type of coverage vary as a result of the application of rate differentials.

Fees

Licensees and applicants for licensure must pay the following fees to the Commissioner: Application fee for license as resident agent, nonresident agent, surplus lines agent, solicitor, counselor, or adjuster (not transferable or refundable) $10, License examination fee for license as resident agent, surplus lines agent, solicitor, counselor, or adjuster (not transferable or refundable) $10, Solicitor's license $10 Annually, Insurance counselor license $10 Annually, Adjuster's license $5 Annually, Surplus lines agent license $100 Annually

Required Proof of Insurance

Proof of financial responsibility may be given by filing with the secretary of state the written certificate of insurance through a carrier authorized to do business in Michigan. The certificate must give the effective date of the policy and designate all motor vehicles covered. No vehicle may be registered in the name of any person required to file proof of financial responsibility unless such proof is furnished for the vehicle.

It is also a fraudulent practice to:

Solicit or accept insurance risks by or for an insolvent insurer, Conceal the records of an insurer, reinsurer or other licensee, Divert the monies of an insurer, reinsurer, or other licensee

Objectives of Information Security Program

A licensee's information security program must be designed to do all of the following: Ensure the security and confidentiality of customer information, Protect against any anticipated threats or hazards to the integrity of the information, Protect against unauthorized access to the information that could result in substantial harm or inconvenience to any customer, Disclosure of Policy or Account Numbers

Nonresident Producer

A nonresident insurance producer who satisfies the continuing education requirements in the producer's home state also satisfies the Michigan continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed on producers from this state on the same basis.

Counselor

An application for an insurance counselor license will not be approved unless the Commissioner finds that the applicant: Possesses a good business reputation good moral character, Has not committed any act that would result in license revocation or other sanction, Has completed a prelicensing course for the lines of insurance applied for, Has paid the applicable fees, Has successfully passed the examination for the lines of insurance applied for

License Duration

An insurance producer license will remain in effect (unless revoked or suspended) as long as education requirements are met.

Types of Licensees

An insurance producer is a person required to be licensed under Michigan law to sell, solicit, or negotiate insurance.

Mandatory Fire Policy Provisions

Each fire insurance policy issued in Michigan must contain provisions specifying the following: Coverage for no less than the actual cash value of the property at the time of the loss, Coverage for direct loss by fire and lightning and pro rata coverage for 5 days for insured property removed to another location if it is moved to preserve it from damage by a covered peril, Misrepresentation, fraud, or concealment will void the policy, List of property not covered under the policy, List of perils not covered under the policy, Conditions which suspend or restrict coverage, Requirements for waiving or changing a provision under the policy, That the insurer's liability will not be greater than the pro rata share with other insurance for the peril involved. The notification requirements in case of loss That if the insured and insurer fail to agree on the actual cash value or amount of the loss, either party may make a written demand that the amount of the loss or the actual cash value be set by appraisal

Commissions

No insurer or producer may pay a commission, service fee, or other valuable consideration to a person for selling, soliciting, or negotiating insurance if that person is required to be licensed and is not so licensed. Nor may anyone accept a commission, service fee, or other valuable consideration for selling, soliciting or negotiating insurance if that person is required to be licensed and is not so licensed. Renewal or other deferred commissions may be paid to a person who is no longer actively licensed if the person was licensed when the transaction of insurance occurred. An insurance agent may pay a commission or other valuable consideration to any person who does not transact insurance in this state unless the payment or assignment violates state law.

Ratemaking Standards

Rates must not be excessive, inadequate, or unfairly discriminatory. A rate is considered to be excessive if it is unreasonably high for the coverage provided, and a reasonable degree of competition does not exist for the insurance to which the rate is applicable.

Rebating and Illegal Inducement

Rebating is the offer of any rebate of premiums due, any special favor in dividends or other benefits, or any valuable consideration or inducement not specified in the policy. A producer whose license is revoked for rebating, or an insurer whose certificate of authority is revoked for rebating, cannot reapply for a new license or certificate for 1 year following the violation.

Continuing Education Requirements

To maintain a producer's license, each licensee must complete a minimum of 24 credit hours, 3 hours of which must be in ethics, of approved insurance continuing education (CE) courses every 2 years.

A motorcycle is

not defined as a motor vehicle. An owner of a motorcycle must provide security against loss from liability for property damage, bodily injury, or death suffered by a person arising out of the ownership, maintenance, or use of that motorcycle. First-party medical payments must be offered by insurers of motorcycles in increments of $5,000.

Duties of Agents

An agent must, as a condition of licensure, do all of the following: Provide each eligible person seeking automobile insurance or home insurance the lowest available premium quotation for the forms or types of insurance offered by the insurers represented by the agent, Inform the eligible person of the number of insurers that the agent represents, Refrain from channeling an eligible person away from an insurer or coverage with the purpose of avoiding the obligation to submit an application, or to accept an eligible person Upon request, submit an application to an insurer selected by the eligible person

Fiduciary Responsibility

An agent or solicitor is a fiduciary for all money received or held by the agent in his/her capacity as a producer, and must abide by the following practices: No agent/solicitor may accept payment of a premium for a Medicare supplemental policy or certificate in the form of a check or money order made payable to the agent instead of the insurer, Upon receiving payment of a premium for a Medicare supplemental policy or certificate, an agent/solicitor must immediately provide a written receipt to the insured, An agent/solicitor must use reasonable accounting methods to record funds received in his/her fiduciary capacity including the receipt and distribution of all premiums due each insurer, An agent/solicitor must record return premiums received by or credited to him/her which are due an insured. The records must be open to examination by the Commissioner., An agent/solicitor may not reward or remunerate any person for procuring or inducing business, furnishing leads or prospects, or acting in any other manner as an agent, A person may not sell or attempt to sell insurance by means of intimidation or threats, whether express or implied, A person may not induce the purchase of insurance through a particular agent or from a particular insurer by means of a promise to sell goods, to lend money, to provide services, or by a threat to refuse to sell goods, to refuse to lend money, or to refuse to provide services An agent/solicitor may not be a party to a contract under which the agent assumes any responsibility or obligation for payment, from his/her commission or any allocation of premium to him/her by the insurer, of any losses on insurance policies sold by the agent unless the claim adjusting is done by insurance company adjusters or licensed independent adjusters

Exemption for Nonresidents

An applicant for an insurance producer license in Michigan who was previously licensed for the same qualifications in another state is not required to complete any prelicensing education or examination. To qualify the applicant must be currently licensed in the originating state, or have applied for a Michigan license within 90 days of the cancellation of the applicant's previous license.

Termination of Appointment

An insurer who terminates an appointment, employment, or other relationship of a producer must notify the Commissioner within 30 days after the effective date of the termination. Within 15 days after notifying the Commissioner of termination of appointment, the insurer will mail a copy of the notification to the producer. If a producer's authority to represent an insurer is terminated, the responsibility of an insurance producer having property rights in the renewal will continue until the existing policies of insurance are canceled, replaced, or have expired.

Nonrenewal

Except for reasons of nonpayment or premium, no termination (nonrenewal) of insurance is effective unless the insurer provides 30 days' notice of the termination. The notice must state each specific reason for the termination. During the first 55 days after the initial issuance of a policy, termination may be made effective by providing 20 days' notice.

Civil Immunity

Insurers, employees, producers, or other persons acting without malice, fraudulent intent, or bad faith, may not be subject to civil liability for libel, slander, or any other related action when information is given to law enforcement officials, the National Association of Insurance Commissioners (NAIC), the Department of Insurance, or a federal or state agency established to detect and prevent fraudulent insurance acts.

Unfair Discrimination

It is an unfair trade practice to charge different rates for individuals of the same class and life expectancy for life and health insurance policies.

Twisting

No insurer, officer, director, agent or solicitor, may make any misrepresentation of policies for the purpose of inducing an insured to lapse his/her existing insurance therein, and to take out a another policy in its place. Violators are subject to license revocation, and may not seek a new license for one year following the violation.

Duties

No one may transact insurance unless he/she is licensed for the line(s) of insurance being sold, solicited, or negotiated.

False Statements

No one may willfully withhold information from, or give false or misleading information to, the Commissioner, any statistical agency, rating organization, data collection agency, or insurer, that might affect rates or premiums. A violation of this section is subject to a fine of up to $1,500.

In addition to a cease and desist order, the Commissioner may:

Order payment of an administrative penalty of up to $1,000 per violation, not to exceed $10,000 for the same violation, Order payment of an administrative penalty of up to $5,000 per violation (not to exceed $50,000 for the same violation) if the person should have known that his/her actions could result in license suspension or revocation. Violation of the statutes regulating rebating and misrepresentation is a misdemeanor, subject to a fine of up to $100 per rebating or inducement violation, or up to $2,000 for each misrepresentation violation. Both types of violation are also subject to a jail term at the discretion of the Commissioner. The amount of the insurance will be reduced in proportion to the value of any rebate.

Motor Vehicle Liability Policy: A motor vehicle liability policy is provided to the owner or operator for the benefit of the person named as the insured by an insurance carrier authorized to transact business in this state. The owner's policy of liability must:

State the name and address of the named insured, the coverage afforded by the policy, the policy period, and limits of liability, Designate all motor vehicles with respect to coverage granted, Insure the person named and any other person, as insured, using any motor vehicle listed with the express or implied permission of the named insured against loss from the liability for damages arising out of the ownership, maintenance, or use of such motor vehicles. The policy cannot be cancelled by the insurer after the occurrence of an injury or property damage.

All Homeowners Policies issued in Michigan must include the Special Provisions endorsement, which amends the policy in the following ways:

The insured's spouse is added to the definition of "named insured", The subrogation provision is amended so that the insured's right to recovery may not be waived, Losses are payable 30 days after insurer's receipt of proof of loss, rather than 60, The mortgagee clause is amended to conform with Michigan Public Act 217, regulating the licensure of electricians, The policy may be cancelled by the insurer for any reason when it has been in effect for less than 55 days, rather than 60. Coverage will not become effective until other coverage has terminated if policy replaces coverage under other policies terminating. The insurer's limit of liability for damages does not include prejudgement interest, The exclusion for controlled substance is amended to include coverage for an insured who can show he/she was unaware of their use of the controlled substance, If there is other liability insurance, the insurer's limit of liability is its pro rata share of the loss

Misrepresentation

is the issuing of any statement that falsely represents the benefits, advantages, conditions or terms of any insurance policy. Publishing or disseminating in any fashion, or through any media, any untrue, deceptive, or misleading statement about the business of insurance or, with respect to any person, in the conduct of the person's insurance business, or misrepresents the identity of the insurer. A person who knowingly makes any misrepresentation in the sale of insurance is guilty of a class 5 felony. If an insurer falsely represents that its financial standing is greater than its actual amount, every director or officer will be deemed guilty of a misdemeanor punishable by a fine of $100, imprisonment of up to 3 months, or both. No insurer doing business in Michigan, or its officers or agents, may issue any false or misleading advertisement concealing its true identity, subject to a fine of up to $500.

The Gramm-Leach-Bliley Act

requires state insurance regulatory authorities to establish appropriate standards relating to all of the following administrative, technical, and physical safeguards for the following reasons: To ensure the security and confidentiality of customer records and information, To protect against any anticipated threats or hazards to the security or integrity of such records, To protect against unauthorized access to or use of records or information that may result in substantial harm or inconvenience to a customer, To release private or privileged health or medical information in Michigan generally requires the informed, written consent of the patient or his or her authorized representative.