Page 1 of 97
Michigan Property and Casualty Insurance License Exam
ACTUAL EXAM COMPLETE QUESTIONS AND CORRECT
ANSWERS LATEST UPDATE THIS YEAR
Michigan Property and Casualty Insurance License Exam:
ACTUAL EXAM COVERAGE (ALL CONTENT AREAS)
1. Insurance Basics & Principles
• Risk, peril, hazard (moral, morale, physical)
• Indemnity, insurable interest
• Subrogation, contribution
• Law of large numbers
2. Property Insurance
• Dwelling policies (DP-1, DP-2, DP-3)
• Homeowners policies (HO-2, HO-3, HO-5, HO-4, HO-6)
• Covered perils vs open perils
• Replacement cost vs actual cash value
• Personal property coverage
• Additional living expenses
3. Commercial Property
• Building and Personal Property Coverage Form
• Causes of Loss Forms (Basic, Broad, Special)
• Business Income & Extra Expense
• Commercial Package Policies (CPP)
4. Casualty Insurance (Liability)
• Legal liability concepts
• Negligence (duty, breach, proximate cause, damages)
• Bodily injury vs property damage
• Personal vs advertising injury
5. Auto Insurance
• Personal Auto Policy (PAP)
• Liability coverage
• Michigan No-Fault system
• Personal Injury Protection (PIP)
• Uninsured/Underinsured motorist coverage
6. Commercial Liability
• Commercial General Liability (CGL)
• Occurrence vs claims-made policies
• Professional liability (E&O)
7. Workers’ Compensation
• Employer responsibilities
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• Benefits provided
• Disability types
8. Policy Structure & Provisions
• Declarations, insuring agreement
• Conditions and exclusions
• Endorsements
• Cancellation and nonrenewal
9. Michigan-Specific Laws
• No-Fault Auto Law
• Insurance regulations
• Licensing requirements
• Unfair trade practices
1.
An insured intentionally sets fire to their own property to collect insurance benefits; what principle is
violated in this situation?
A. Indemnity
B. Insurable interest
C. Utmost good faith
D. Subrogation
Answer: C
Rationale: Intentional loss violates the duty of honesty required in insurance contracts.
2.
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Which type of hazard refers to a person’s careless attitude that increases the likelihood of a loss
occurring?
A. Physical hazard
B. Legal hazard
C. Morale hazard
D. Financial hazard
Answer: C
3.
A homeowners policy that provides open-peril coverage on both dwelling and personal property is
classified as which form?
A. HO-2
B. HO-3
C. HO-4
D. HO-5
Answer: D
4.
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If an insurer pays a claim and then seeks reimbursement from the responsible third party, what legal
principle is being applied?
A. Contribution
B. Subrogation
C. Indemnity
D. Waiver
Answer: B
5.
Under a Personal Auto Policy, which coverage pays for damage to the insured’s vehicle caused by
collision with another object?
A. Liability coverage
B. Comprehensive coverage
C. Collision coverage
D. Medical payments
Answer: C
6.
Michigan Property and Casualty Insurance License Exam
ACTUAL EXAM COMPLETE QUESTIONS AND CORRECT
ANSWERS LATEST UPDATE THIS YEAR
Michigan Property and Casualty Insurance License Exam:
ACTUAL EXAM COVERAGE (ALL CONTENT AREAS)
1. Insurance Basics & Principles
• Risk, peril, hazard (moral, morale, physical)
• Indemnity, insurable interest
• Subrogation, contribution
• Law of large numbers
2. Property Insurance
• Dwelling policies (DP-1, DP-2, DP-3)
• Homeowners policies (HO-2, HO-3, HO-5, HO-4, HO-6)
• Covered perils vs open perils
• Replacement cost vs actual cash value
• Personal property coverage
• Additional living expenses
3. Commercial Property
• Building and Personal Property Coverage Form
• Causes of Loss Forms (Basic, Broad, Special)
• Business Income & Extra Expense
• Commercial Package Policies (CPP)
4. Casualty Insurance (Liability)
• Legal liability concepts
• Negligence (duty, breach, proximate cause, damages)
• Bodily injury vs property damage
• Personal vs advertising injury
5. Auto Insurance
• Personal Auto Policy (PAP)
• Liability coverage
• Michigan No-Fault system
• Personal Injury Protection (PIP)
• Uninsured/Underinsured motorist coverage
6. Commercial Liability
• Commercial General Liability (CGL)
• Occurrence vs claims-made policies
• Professional liability (E&O)
7. Workers’ Compensation
• Employer responsibilities
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• Benefits provided
• Disability types
8. Policy Structure & Provisions
• Declarations, insuring agreement
• Conditions and exclusions
• Endorsements
• Cancellation and nonrenewal
9. Michigan-Specific Laws
• No-Fault Auto Law
• Insurance regulations
• Licensing requirements
• Unfair trade practices
1.
An insured intentionally sets fire to their own property to collect insurance benefits; what principle is
violated in this situation?
A. Indemnity
B. Insurable interest
C. Utmost good faith
D. Subrogation
Answer: C
Rationale: Intentional loss violates the duty of honesty required in insurance contracts.
2.
, Page 3 of 97
Which type of hazard refers to a person’s careless attitude that increases the likelihood of a loss
occurring?
A. Physical hazard
B. Legal hazard
C. Morale hazard
D. Financial hazard
Answer: C
3.
A homeowners policy that provides open-peril coverage on both dwelling and personal property is
classified as which form?
A. HO-2
B. HO-3
C. HO-4
D. HO-5
Answer: D
4.
, Page 4 of 97
If an insurer pays a claim and then seeks reimbursement from the responsible third party, what legal
principle is being applied?
A. Contribution
B. Subrogation
C. Indemnity
D. Waiver
Answer: B
5.
Under a Personal Auto Policy, which coverage pays for damage to the insured’s vehicle caused by
collision with another object?
A. Liability coverage
B. Comprehensive coverage
C. Collision coverage
D. Medical payments
Answer: C
6.
