Michigan Surplus Lines Practice Test

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• What must occur for a conditional contract to be enforceable?
• What is a document issued by the director that authorizes a person to act as an insurance producer?
• What must be disclosed if insurance is placed with a non-eligible unauthorized insurer?
• If a carrier advises Tina over the phone that coverage has been bound, can she issue evidence of insurance to her customer?
• What type of insurance company is organized by a group of businesses with similar risks?
• What potential punishment does Peter face for producing false reports?
• How long does George have to provide his customer with evidence of insurance after issuing the policy?
• Which statement about surplus lines coverage is correct?
• Does the director determine the punishment for an agent's misdemeanor violation?
• What is the component of a legal contract that includes offer and acceptance?
• What type of insurance is not solely offered by a risk retention group?
• What does it mean to solicit insurance?
• Which type of insurer acts as a last resort when private insurers cannot provide coverage for catastrophic risks?
• Surplus lines do not require much historical data to develop premium.
• What is the minimum deposit amount required for an alien insurer to be considered for eligibility?
• What is the maximum fine imposed for false statements?
• What facilitates the interaction between insurance buyers and sellers in the surplus lines market?
• True or False: A risk purchasing group must be domiciled in a specific state.
• What is the purpose of the report used when business is placed with a surplus lines insurer not domiciled in the US?
• What is the term for a false statement or lie in an application that can render the contract void?
• What does the Nonadmitted and Reinsurance Reform Act (NRRA) state about premium tax payments?
• What type of insurance might include surety and fidelity coverage?
• Which three components comprise Lloyd's of London?
• Each of the following must be included in an insurable risk, except?
• What must agents avoid to comply with ethical insurance practices?
• Can a director revoke a producer's license if they show incompetence in their business conduct?
• What fee is imposed on licensees who file late tax reports and payments?
• What act does twisting involve?
• What are the four elements of a legal contract?
• What needs to be communicated if a substantial portion of insurance is eligible through authorized insurers?
• If a person's producer's license is denied in one state, can they be licensed in Michigan?
• What term describes risks that are more prone to losses than the average risk?
• Which of the following is a correct statement about insuring with unauthorized insurers?
• Which of the following is a consequence of false reports in insurance?
• What defines a Domestic Insurer?
• What must an unauthorized insurer maintain as a requirement for eligibility?
• Who are Lloyd's Members?
• What is the maximum fine for rebating in insurance?
• In the context of Michigan insurance law, what is a Producer required to do?
• Which statement is included in the written notice to the insured when placing coverage with a non-eligible unauthorized insurer?
• Which law set up regulations preventing states from imposing eligibility requirements on surplus lines insurers?
• What should Agent Jason advise his customer in writing regarding liability coverage?
• What is a group of parties with similar coverage needs that combines for acquiring liability insurance called?
• Which of the following is NOT typically placed through Surplus Lines?
• If insurance is placed through multiple insurers and a substantial portion is assumed by authorized insurers, what action should be taken?
• Which benefit is NOT associated with Surplus Lines?
• What is a contract of insurance?
• What is the maximum fine for a producer who unknowingly commits a violation?
• Which of the following statements is true regarding surplus lines licensees' transaction documentation?
• What is referred to as the Home State for an insurance producer?
• What is the tax percentage for premium written in surplus lines insurance?
• What constitutes misrepresentation in insurance?
• For which of the following can a commissioner reject a license application?
• What term describes the willful hiding or obscuring of material facts related to insurance?
• What is the system of insurance marketing that employs agents as employees of the insurer?
• How does indemnity protect insured parties?
• How many authorized insurers must coverage be readily available for?
• Which method involves maintaining the risk without any action to mitigate it?
• What is the primary function of the Dodd-Frank Act regarding surplus lines insurers?
• What does the term 'risk reduction' refer to?
• After binding a new policy, how can producers ensure they are not liable for losses?
• Which of the following best describes the components of twisting?
• What is the minimum capitalization requirement for surplus lines insurers domiciled in the U.S.?
• What act imposes restrictions on how a state determines eligibility for surplus lines coverage?
• When is the deadline for producers to submit a tax report?
• What is a type of agreement where both parties must follow rules to make the contract enforceable?
• A direct mail or direct response company primarily sells insurance policies through which of the following?
• Which type of agency primarily sells insurance directly to consumers through employees or contractors?
• Which type of agent sells insurance while maintaining their own office but does not recruit career agents?
• What is a requirement for alien insurers to become eligible?
• Which of the following is NOT a requirement for an unauthorized insurer's eligibility?
• If a producer knowingly commits a violation, what is the maximum fine they can incur?
• What does the commissioner require from licensees regarding tax reports?
• Which of the following options describes a characteristic of surplus lines?
• What is the total maximum charge for multiple violations committed by a producer?
• Mass marketing in insurance is used to target which of the following?
• What is the term for the exchange of an act for a promise?
• Which type of insurance covers credit life and credit disability?
• Which of the following are exemptions that may apply to the diligent search requirement?
• True or False: A tax report should be filed within 30 days after the date the insurance was procured, continued, or renewed.
• What is the fine for each violation of unfair discrimination?
• What is the maximum fine for each violation of twisting?
• Can a resident customer request coverage from a non-eligible unauthorized insurer?
• What amount must an alien insurer maintain in their US Trust Fund?
• What type of misrepresentation did Joanne commit when she falsely presented her agency's earnings?
• What is the focus of a contract where values are dependent on an uncertain event?
• Which of the following statements is NOT a characteristic of the insurer acting as the principal?
• What should Paul do when quoting an auto policy that includes comp and collision?
• What does the IID List refer to in the context of insurance?
• What is the term for insurance in Michigan that is procured from an unauthorized insurer?
• What document must be produced quarterly by the commissioner listing hard-to-place risks in the insurance market?
• What is NOT typically included in the export list?
• What is the relationship between concealment and the validity of an insurance contract?
• How does the law view the omission of material facts in insurance practices?
• What does indemnity refer to in the context of insurance?
• Why is understanding concealment important in the insurance industry?
• Which organizations are known for grading the financial strength and stability of insurers?
• What is the role of a producer in the insurance market?
• Name one form of evidence of insurance that can be provided by a licensee.
• Is a declination required from an admitted carrier for marine insurance?
• What factors necessitate the commissioner to take action against an insurer on the eligibility list?
• What is the regulatory fee on premium written?
• What is the minimum font size requirement when stamping a notice on the evidence of insurance?
• What structure involves a single parent company insuring its own risks and those of its affiliates?
• If part of a risk is acceptable to authorized insurers, how much of the risk should be placed with an eligible unauthorized insurer?
• What is the purpose of a binder issued by an insurance company?
• Is a diligent search required for risks that fall on the export list?
• Which contract type has only one party legally bound to contractual obligations after payment?
• Which of the following is NOT a purpose of creating a Risk Purchasing Group?
• What factor determines the grading and stability of insurance companies according to independent rating services?
• What is the maximum fine for failing to pay premium taxes when due?
• What role does an authorized carrier play in dealing with auto insurance?
• What is the term for the transfer of risk between insurance companies?
• Can Jerry provide a quote for insurance on his friend's vacant land before obtaining his license?
• Which concept would best describe a situation where a party cannot deny a previous admission of a fact?
• An agent acts as a ______________ for all money received in their capacity as an agent.
• What is essential for a licensee to provide evidence of insurance?
• What does a career agency system primarily focus on?
• Which type of agency has agreements with multiple insurers?
• In a unilateral contract, which party is bound to perform?
• What type of insurers are classified as unauthorized not domiciled in the United States?
• What term refers to the act of exchanging a contract of insurance for compensation on behalf of an insurance company?
• What is considered unfair discrimination in insurance?
• What is required for insurance liability coverage to become effective after a refusal?
• Which method for handling a risk implies sharing the risk with others?
• Which authority is necessary and usual for the producer to perform stated duties, but not specifically stated in the contract?
• True or False: The director may refuse to grant or renew a license based on practices likely to cause coercion.
• When may the commissioner examine the affairs of an eligible unauthorized insurer?
• What must an unauthorized insurer demonstrate to be entitled to public confidence?
• Who represents the insurance company when selling an insurance policy?
• In a Contract of Adhesion, any ambiguity is construed in favor of which party?
• Which of the following is NOT a function of an insurance agent?
• What is one purpose of surplus lines according to the insurance code?
• True or False: A risk retention group is restricted to only writing property insurance.
• Who are Lloyd's Brokers?
• How are fines collected from violations handled by the director?
• Who is primarily responsible for understanding an applicant's insurance needs?
• When should Charles submit his filing if he has only bound 10 policies in the first quarter?
• What happens to the funds from collected violation fines?
• Which characteristic does NOT describe the surplus lines market?
• What is the term for an insurer not authorized to transact insurance in Michigan but eligible to write insurance business?
• Which provision is associated with Surplus Lines Insurance?
• What are Risk Retention Groups primarily associated with?
• What unfair practice did Agent Brooke commit by promising a new car for insurance placement?
• In terms of a surplus lines licensee's authority, who determines the agent or broker capacity?
• Who is responsible for directly advising clients about insurance contracts?
• What is the impact of misrepresentation on an insurance application?
• What principle must be adhered to when creating an insurance contract regarding truthful statements?
• What method involves eliminating the risk altogether?
• What do dividends from Mutual Companies represent for policyholders?
• If a producer's license was revoked, can they reapply immediately?
• Can the director apply to the court of claims for an order enjoining a violation?
• Which qualities do commissioners consider when reviewing surplus lines insurers' applications?
• What is a key component that differentiates various insurance policies?
• What does it mean to negotiate in the context of insurance?
• Which of the following is a characteristic of marine, inland navigation, and transportation insurance under surplus lines?
• What defines the placement of insurance with an unauthorized insurer?
• Which of the following is NOT one of the five main methods for handling a risk?
• What action is warranted for a person who fails to meet child support obligations?
• Unauthorized insurers must abide by the rates and forms specified by the state.
• What is one of the goals of the surplus lines market?
• What is a key characteristic of Fraternal Benefit Societies?
• Is Joe's insurance license at risk if he pays his child support late?
• What is the potential outcome of transferring a risk?
• What is the report requested when the licensee has conducted no business during each six-month period?
• What association protects the public against financial losses from property and casualty insurance insolvencies in Michigan?
• What primarily distinguishes surplus lines from the involuntary market?
• Which of the following is NOT a required component of a tax report when filing with the director?
• What action can the commissioner take regarding a producer’s license after a law violation?
• A producer must report any _________ __________ to the insurer that may affect underwriting.
• What is the maximum fine for a producer who knowingly violates a cease and desist order?
• What is the role of a person who sells, solicits, or negotiates limited line credit insurance?
• Which type of insurance is offered in connection with an extension of credit to alleviate credit obligations?
• Which of the following are NOT considered a component of a legal contract?
• Must an agent notify the customer that insurance is being placed with an unlicensed insurer prior to placing insurance on the risk?
• Who does an "Agent of the Insurer" represent?
• According to the Law of Large Numbers, as the number of units in a group increases, what becomes more likely?
• What is required for a person to act as an agent or broker in surplus lines insurance?
• Which statement is TRUE regarding placing insurance with an unauthorized insurer?
• A contract where one party writes the terms without input from the other is known as what?
• Who is authorized by the director to sell or negotiate limited lines insurance?
• Which type of insurer is most likely to serve a narrow, specific market or niche?
• What is the maximum fine for violations related to false advertising?
• Must each surplus lines licensee keep a separate account of each transaction?
• What does the term "terminate" refer to in the insurance context?
• Which company type is owned by stockholders who receive taxable corporate dividends?
• What must agents disclose if an Exempt Commercial Purchaser requests to place coverage with a surplus lines insurer?
• What is necessary for placing surplus lines insurance when an admitted insurer's coverage is unavailable?
• Is the surplus lines market considered inflexible?
• Which of the following is an accurate statement about the agent's responsibilities?
• Which of the following is NOT a form of limited line credit insurance?
• What is a requirement that must be included in the Notice to Insured for placing Surplus Lines Insurance Coverage?
• What does the act of inducement/twisting refer to in insurance?
• Is a hearing required before withdrawing an insurer from the eligibility list?
• How does the surplus lines market respond to market needs?
• Which of the following would enhance the likelihood of a surplus lines insurer being granted eligibility?
• In insurance, what is the primary purpose of a warranty?
• In the scenario where Jamie wishes to transfer her homeowner's policy to her brother, what is her option?
• What document must an unauthorized insurer file to apply for eligibility?
• Which category of insurance includes marine insurance and malpractice insurance?
• What is the first step in the service of process for placing insurance?
• What is an insurance producer also commonly referred to as?
• What does the term waiver refer to in an insurance context?
• What is a primary function of the Michigan Property and Casualty Guaranty Association?
• Which of the following is classified as generally unavailable in the authorized market?
• Who oversees and supports the insurance market, promoting it globally?
• What type of contract allows one party to dictate the terms without negotiation?
• What does the term "Exempt Commercial Purchaser" (ECP) refer to?
• How many days does the commissioner have to grant or deny a request to add or remove coverage from the list of unavailable lines?
• What is the fine for misrepresenting terms and benefits in an insurance policy?
• What is Lloyd's of London primarily recognized as?
• What does the direct writing system do in terms of marketing insurance?
• Which of the following does surplus lines insurance aim to provide?
• What does a Certificate of Insurance provide to the insured?
• What is defined as a corporation, association, partnership, or legal entity in Michigan insurance law?
• What principle involves two parties relying on each other's statements and promises, assuming no deception has occurred?
• What should be included when filing with the director semi-annually?
• Which term is used to describe the potential financial loss faced by an insurance company?
• Which of the following is NOT a form of evidence of insurance?
• Who is exempt from conducting a diligent search if they have requested coverage in writing?
• What is the consequence of demonstrating incompetence in business conduct as a producer?
• Agents who represent solely one company are known as which type of agency?
• What is the time limit for an applicant to make a written demand for a hearing after a license application denial?
• What type of companies are owned by policyholders who receive non-taxable dividends?
• Which of the following actions can constitute an illegal act in insurance practices?
• How long do licensees have to inform the commissioner of a change in legal name or address?
• Which of the following best defines a warranty in the context of an insurance application?
• Which of the following describes estoppel?
• What action is not required when placing a risk with an unauthorized insurer?
• What is the primary role of Lloyd's of London?
• Agents recruited, trained, and supervised by a managing employee are part of which agency system?
• What happens if an insurer is found unqualified to provide coverage?
• Which of the following is NOT a responsibility of the producer toward the insured?
• The fee must be included as a part of the policy premium in the computation of premium taxes.
• Which term refers to an insurer organized outside of the United States?
• Which of the following best describes a Stock Company?
• If Mary is a surplus lines producer from Illinois with a nonresident license in Michigan, what percentage of the surplus lines tax should she pay to Michigan?
• What is the term for a person licensed under Chapter 19 in the Michigan Insurance Code?
• Is the producer liable for expenses incurred in the case of a loss if they collected the premium after binding a new policy?
• What type of authority is written into the producer's agency contract?
• Can the commissioner waive examination requirements for someone previously licensed?
• In the context of surplus lines, what does the term 'alien insurer' refer to?
• What must the insured or their representative receive if a noneligible unauthorized insurer is involved?
• Which of the following markets can issues not be declined for marine insurance?
• Can a person who violates a cease and desist order obtain a hearing before a fine is imposed?
• What disciplinary actions may the director impose on a violating producer?
• What type of authority is created when a producer exceeds their expressed authority?
• What is a class of insurance designed for insureds that do not meet standard market underwriting guidelines?
• What is the role of an insurance producer who is considered an "Agent of the Insured"?
• If a person was convicted of a felony for domestic violence, can they apply for an insurance producer license?
• What is a common consequence of engaging in misrepresentation practices?
• What action can result in termination of a policy under twisting?
• What must be provided before a civil fine is imposed for violating a cease and desist order?
• What does the term "insurance premium" refer to?
• Which organizations provide life and health insurance to members on a nonprofit basis?
• What type of contract is defined as one where values exchanged are unequal and depend on an uncertain event?
• Which agency structure requires agents to operate under a single insurer’s branding?
• Who is responsible for remitting premiums in Surplus Lines Insurance?
• When does the 6 month period for reporting charges and returned premiums end?
• In terms of insurance, what does the term "underwriting" refer to?
• What is one of the components involved when alien insurers seek eligibility?
• What type of insurer is organized under the laws of a different state or jurisdiction within the United States?
• What does the term "Agent of the Insured" imply about the insurance producer's relationship with the insurer?
• What is the requirement for a person to be considered an Insurance Producer in Michigan?
• Which of the following can make a policy void?