Michigan DIFS Solicitor Licensing Examination –
Comprehensive Practice Assessment
Overview
This comprehensive 300-question practice assessment is designed to prepare candidates for
the Michigan Department of Insurance and Financial Services (DIFS) Solicitor Licensing
Examination. The exam is administered by PSI Services LLC on behalf of DIFS and covers
general insurance principles, Michigan-specific insurance laws, property and casualty concepts,
policy provisions, and professional ethics.
Exam Specifications:
| Parameter | Detail |
|--|--|
| Exam Series | 16-67 (Property Producer/Solicitor), 16-68 (Casualty Producer/Solicitor), 16-69
(Personal Lines Producer/Solicitor) |
| Time Limit | 2–2.5 hours depending on exam series |
| Number of Items | 100–150 multiple-choice questions |
| Cut Score | 74–75% |
| Exam Fee | $41 |
| Application Fee | $10 plus transaction fee |
| Pre-licensing Education | Required (20 hours for Property/Casualty, 20 hours for Personal
Lines) |
| CE Requirements | 24 credits every 2 years, including 3 credits in ethics |
Exam Domains and Weighting
| Domain | Percentage |
|--||
| General Insurance Principles | 15% |
| Michigan Insurance Regulation & Licensing | 20% |
| Property Insurance Concepts | 20% |
| Casualty Insurance Concepts | 20% |
| Policy Provisions & Contract Law | 15% |
| Professional Ethics & Consumer Protection | 10% |
Section 1: General Insurance Principles (Questions 1-45)
Question 1
What is the primary purpose of insurance?
,A) To eliminate all risk
B) To transfer financial risk from an individual or entity to an insurer
C) To provide investment returns to policyholders
D) To regulate insurance companies
Answer: B) To transfer financial risk from an individual or entity to an insurer
Rationale: Insurance primarily functions by transferring the financial risk from the insured to the
insurer in exchange for a premium. This is the fundamental principle of risk transfer .
Question 2
A "hazard" in insurance is defined as:
A) The cause of a loss
B) A condition that increases the likelihood or severity of a loss
C) The financial consequence of a loss
D) An event that is insured against
Answer: B) A condition that increases the likelihood or severity of a loss
Rationale: A hazard is a condition that increases the likelihood or severity of a loss. It is distinct
from a peril, which is the actual cause of loss .
Question 3
Which of the following is an example of a "moral hazard"?
A) A person with a history of reckless driving purchasing auto insurance
B) A person exaggerating a claim after a minor fender bender
C) A person storing oily rags near a furnace
D) A person living in a flood-prone area
Answer: B) A person exaggerating a claim after a minor fender bender
Rationale: Moral hazard refers to a condition that increases the likelihood of loss because of the
insured's dishonest or fraudulent tendencies. Exaggerating a claim is a classic example of moral
hazard .
,Question 4
Which of the following best defines "pure risk"?
A) The chance of gain or loss
B) The chance of only loss
C) The chance of only gain
D) No possibility of loss or gain
Answer: B) The chance of only loss
Rationale: Pure risk involves the chance of loss only and is insurable, unlike speculative risk
which involves the chance of gain or loss .
Question 5
What is the principle of indemnity?
A) The insured profits from a loss
B) The insured is restored to their original financial position
C) The insured pays a deductible
D) The insurer can cancel at any time
Answer: B) The insured is restored to their original financial position
Rationale: The principle of indemnity states that the insured should be restored to their
approximate financial position prior to the loss, no better and no worse .
Question 6
Which type of insurer is owned by policyholders?
A) Stock insurer
B) Mutual insurer
C) Lloyd's association
D) Reciprocal insurer
Answer: B) Mutual insurer
Rationale: Mutual insurers are owned by their policyholders, who share in the profits of the
company .
, Question 7
Which of the following is NOT a method of handling risk?
A) Transfer
B) Retention
C) Avoidance
D) Multiplication
Answer: D) Multiplication
Rationale: Multiplication is not a risk management method. The standard methods of handling
risk are avoidance, retention, transfer, and reduction .
Question 8
Which type of hazard is represented by leaving oily rags near a furnace?
A) Physical hazard
B) Moral hazard
C) Morale hazard
D) Legal hazard
Answer: A) Physical hazard
Rationale: Physical hazards are tangible conditions that increase the chance of loss, such as
oily rags near a furnace .
Question 9
A deductible in an insurance policy serves to:
A) Increase the premium
B) Reduce the insurer's liability for small claims
C) Provide unlimited coverage
D) Eliminate coverage for certain perils
Answer: B) Reduce the insurer's liability for small claims
Rationale: Deductibles reduce the number of small, frequent claims the insurer must pay,
lowering costs .
Comprehensive Practice Assessment
Overview
This comprehensive 300-question practice assessment is designed to prepare candidates for
the Michigan Department of Insurance and Financial Services (DIFS) Solicitor Licensing
Examination. The exam is administered by PSI Services LLC on behalf of DIFS and covers
general insurance principles, Michigan-specific insurance laws, property and casualty concepts,
policy provisions, and professional ethics.
Exam Specifications:
| Parameter | Detail |
|--|--|
| Exam Series | 16-67 (Property Producer/Solicitor), 16-68 (Casualty Producer/Solicitor), 16-69
(Personal Lines Producer/Solicitor) |
| Time Limit | 2–2.5 hours depending on exam series |
| Number of Items | 100–150 multiple-choice questions |
| Cut Score | 74–75% |
| Exam Fee | $41 |
| Application Fee | $10 plus transaction fee |
| Pre-licensing Education | Required (20 hours for Property/Casualty, 20 hours for Personal
Lines) |
| CE Requirements | 24 credits every 2 years, including 3 credits in ethics |
Exam Domains and Weighting
| Domain | Percentage |
|--||
| General Insurance Principles | 15% |
| Michigan Insurance Regulation & Licensing | 20% |
| Property Insurance Concepts | 20% |
| Casualty Insurance Concepts | 20% |
| Policy Provisions & Contract Law | 15% |
| Professional Ethics & Consumer Protection | 10% |
Section 1: General Insurance Principles (Questions 1-45)
Question 1
What is the primary purpose of insurance?
,A) To eliminate all risk
B) To transfer financial risk from an individual or entity to an insurer
C) To provide investment returns to policyholders
D) To regulate insurance companies
Answer: B) To transfer financial risk from an individual or entity to an insurer
Rationale: Insurance primarily functions by transferring the financial risk from the insured to the
insurer in exchange for a premium. This is the fundamental principle of risk transfer .
Question 2
A "hazard" in insurance is defined as:
A) The cause of a loss
B) A condition that increases the likelihood or severity of a loss
C) The financial consequence of a loss
D) An event that is insured against
Answer: B) A condition that increases the likelihood or severity of a loss
Rationale: A hazard is a condition that increases the likelihood or severity of a loss. It is distinct
from a peril, which is the actual cause of loss .
Question 3
Which of the following is an example of a "moral hazard"?
A) A person with a history of reckless driving purchasing auto insurance
B) A person exaggerating a claim after a minor fender bender
C) A person storing oily rags near a furnace
D) A person living in a flood-prone area
Answer: B) A person exaggerating a claim after a minor fender bender
Rationale: Moral hazard refers to a condition that increases the likelihood of loss because of the
insured's dishonest or fraudulent tendencies. Exaggerating a claim is a classic example of moral
hazard .
,Question 4
Which of the following best defines "pure risk"?
A) The chance of gain or loss
B) The chance of only loss
C) The chance of only gain
D) No possibility of loss or gain
Answer: B) The chance of only loss
Rationale: Pure risk involves the chance of loss only and is insurable, unlike speculative risk
which involves the chance of gain or loss .
Question 5
What is the principle of indemnity?
A) The insured profits from a loss
B) The insured is restored to their original financial position
C) The insured pays a deductible
D) The insurer can cancel at any time
Answer: B) The insured is restored to their original financial position
Rationale: The principle of indemnity states that the insured should be restored to their
approximate financial position prior to the loss, no better and no worse .
Question 6
Which type of insurer is owned by policyholders?
A) Stock insurer
B) Mutual insurer
C) Lloyd's association
D) Reciprocal insurer
Answer: B) Mutual insurer
Rationale: Mutual insurers are owned by their policyholders, who share in the profits of the
company .
, Question 7
Which of the following is NOT a method of handling risk?
A) Transfer
B) Retention
C) Avoidance
D) Multiplication
Answer: D) Multiplication
Rationale: Multiplication is not a risk management method. The standard methods of handling
risk are avoidance, retention, transfer, and reduction .
Question 8
Which type of hazard is represented by leaving oily rags near a furnace?
A) Physical hazard
B) Moral hazard
C) Morale hazard
D) Legal hazard
Answer: A) Physical hazard
Rationale: Physical hazards are tangible conditions that increase the chance of loss, such as
oily rags near a furnace .
Question 9
A deductible in an insurance policy serves to:
A) Increase the premium
B) Reduce the insurer's liability for small claims
C) Provide unlimited coverage
D) Eliminate coverage for certain perils
Answer: B) Reduce the insurer's liability for small claims
Rationale: Deductibles reduce the number of small, frequent claims the insurer must pay,
lowering costs .
