Michigan Property and Casualty Insurance Pre-Licensing Course
Introduction
- Provided by Michigan School of Insurance for preparing for property and casualty lines of coverage licensing exam in Michigan.
- Aims to provide basics necessary to be an insurance producer.
Table of Contents
- General Insurance
- Insurance Regulation
- Property Basics
- Casualty Basics
- Homeowners Policies
- Dwelling Policies
- Personal Auto Policy
- Commercial Package Policy
- Commercial Property
- Commercial Crime
- Commercial Inland Marine
- Equipment Breakdown
- Farm Insurance
- Commercial General Liability
- Business Auto Policy
- Businessowners Policy
- Workers Compensation
- Other Coverages and Options
Chapter 1: General Insurance
Risk and Insurance
- Risk: Possibility of loss.
- Types: Speculative (chance of loss or gain) & Pure (only chance of loss).
- Insurance: Transfers risk from individual to insurance company.
Key Concepts
- Exposure: Potential for losses.
- Hazard: Increases the chance of loss (types: physical, moral, morale).
- Peril: Actual cause of a loss.
- Loss: Direct (physical) or Indirect (consequential).
Methods of Handling Risk (STARR)
- Sharing
- Transfer (via insurance)
- Avoidance
- Retention
- Reduction
Elements of Insurable Risks (CANHAM)
- Calculable, Affordable, Non-catastrophic, Homogeneous, Accidental, Measurable
Underwriting and Binder
- Underwriting: Evaluation of risk and premiums.
- Binder: Temporary insurance contract.
Law of Large Numbers
- Predicts losses based on large numbers of exposure units.
Types of Insurers
- Admitted: Stock & Mutual insurers.
- Non-Admitted: Surplus Lines insurers.
- Lloyd's Associations: Not insurance companies but a hub for underwriters.
Other Types
- Risk Retention Groups, Self-insurance, Reinsurers
Producer/Insurer Relationship
- Agency: Relationship between agent (producer) and insurer (principal).
- Authority: Express, Implied, Apparent.
- Fiduciary Responsibility: Trust in handling funds.
Contracts
- Elements: Competent parties, Legal purpose, Agreement, Consideration (CLAC).
- Characteristics: Adhesion, Aleatory, Personal, Unilateral, Conditional.
- Indemnity: Restore to pre-loss condition.
- Doctrine of Reasonable Expectations
- Representations, Misrepresentations, Warranties, Concealment, Fraud, Waiver, and Estoppel.
Chapter 2: Insurance Regulation
State Laws
- Regulated by Department of Insurance and Financial Services (DIFS).
- Director: Enforces laws, issues licenses, investigates, and can levy fines.
Licensing
- Requirements for Resident Producers and Agencies.
- Counselor's License: For those advising for a fee.
Appointments
- Producers must be appointed by insurance companies to sell policies.
Education & Compliance
- Continuing Education: 24 hours every 2 years.
Unfair Practices
- Fraudulent Activities: Misrepresentation, Coercion, False Advertising, etc.
Federal Regulations
- Privacy: Gramm-Leach-Bliley Act.
- Terrorism Insurance: TRIPRA of 2015.
Chapter 3: Property Basics
Insurable Interest
- Must exist at the time of loss.
Loss Ratio
- Key measure of insurance profitability.
Policy Structure
- DICEE: Declarations, Insuring Agreement, Conditions, Exclusions, Endorsements.
Valuation
- Actual Cash Value (RC - Depreciation), Replacement Cost, Functional Replacement Cost.
Co-Insurance
- Requires coverage of at least 80% of replacement cost.
Chapter 4: Casualty Basics
- Third-party contracts.
- Duty to Defend: Obligation to defend insured under liability policy.
- Negligence: Legal duty, Breach, Causation, Damages.
- Defenses: Contributory & Comparative Negligence.
- Liability Forms: Absolute, Strict, Vicarious.
- Damages: Compensatory (Special & General), Punitive.
The notes continue to cover each chapter in detail, discussing specific policies, coverages, exclusions, endorsements, and more, to provide a comprehensive overview of property and casualty insurance as outlined in the course materials.