Other Regulation of Michigan Insurance
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MI Minimum Fire Insurance Provisions
- At a minimum, the policy provides coverage for
- the actual cash value of the property at the time of the loss,
- and 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.
Termination of Insurance
- Termination of insurance refers to automobile and home insurance policies in this context. It is a refusal by the insurer to continue to insure for reasons other than nonpayment of premium, provided both of the following conditions are met:
- The transfer of coverage for an insured between affiliated insurers results in higher rates or less coverage, unless the transfer was requested by the insured.
- The offer of coverage by the insurer contains less favorable terms or conditions than those previously provided, unless requested by the insured, or terms or conditions of coverage previously provided are no longer available from the insurer anywhere in Michigan.
Michigan Property & Casualty Guaranty Association (MPCGA)
Each insurer authorized to transact insurance in Michigan, other than life or disability insurance, must be a member of the Michigan Property and Casualty Guaranty Association (MPCGA) and must remain a member as a condition of its authority to continue to transact insurance in Michigan. The association was established to protect the public against financial losses to policyholders and claimants when property and casualty insurance companies become insolvent. MPCGA will pay certain obligations of insolvent insurers, which are defined by the Michigan Property and Casualty Guaranty Association Act as covered claims.
MPCGA Board of Governors
- The association is managed by a 7-member board of governors, which includes
- 5 member insurers representing, as nearly as possible, all the kinds of insurance covered under the MPCGA Act,
- and 2 persons representing the general public.
- Each is appointed by the Commissioner to serve a 3-year term. Three of the governors who are member insurers are domestic insurers and 2 are foreign insurers. At least 2 governors who are member insurers are stock insurers and at least 2 are non-stock insurers.
Michigan Essential Insurance Act (EIA)
The Michigan Essential Insurance Act (EIA) of 1979 requires insurers to accept most applicants for automobile or home insurance unless a specified condition is met that makes that person ineligible.
Rates for Automobile & Home Insurance
- All rates for automobile insurance and home insurance must be made in accordance with the following provisions:
- Rates may not be excessive. A rate will be considered excessive if it is unreasonably high for the insurance coverage provided and a reasonable degree of competition does not exist for the insurance to which the rate is applicable.
- Rates may not be inadequate. A rate will be considered inadequate if it is unreasonably low for the insurance coverage provided, and its continued use might endanger the solvency of the insurer, destroy competition among insurers, or cause insurance to be unavailable to a significant number of applicants.
- Rates may not be unfairly discriminatory. A rate will be considered 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, expenses, or both, or by differences in the uncertainty of loss, for the individuals or risks to which the rates apply.
Duties of an Insurance Agent
- provide each eligible person a premium quotation for the insurance coverages that are offered by the insurers represented by the agent and that are sought by the eligible person;
- inform the eligible person of the number of insurers that he or she represents and provide additional premium quotations as requested;
- not attempt to steer an eligible person away from insurance coverage with the purpose of avoiding an agent's obligation to submit an application;
- submit an application of the eligible person for automobile insurance or home insurance to the insurer selected by the eligible person;
- for automobile insurance only, at least annually, supply each insured, unless the information is available from the insurer an explanation of the insurance eligibility point system;
- a statement that if the insured is an eligible person he or she may qualify for insurance from more than one insurer, and possibly at a lower rate;
- a statement that the agent will, on request, furnish to the insured a set of quotations from insurers represented by the agent from whom the insured may obtain insurance.
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