Michigan Property & Casualty Limited Lines Exam
Study Guide Questions Answered Correctly
Personal Contract - Answer personal in nature, there must be an insurable interest
Aleatory Contract - Answer "a one sided contract" equal value is not given by both parties in the
contract. Policyowner pays small premium - insurer provides a substantial benefit
Contract of Adhesion - Answer contract and its provisions are completed by one party - the insurer.
Ambiguities - Answer vagueness or uncertainty in the contract will be in favor of the insured
Unilateral Contract - Answer Only the insurer must abide by the terms of the contract.
Conditional Contract - Answer both parties to a contract must perform certain duties and follow rules of
conduct to make the contract enforceable
Waiver - Answer the giving up of a known or legally enforceable right
Estoppel - Answer one party is prevented or estopped from asserting a right that would be to the
detriment of another party
Warranty - Answer a statement that is considered and guaranteed to be true
Representation - Answer statement made by the applicant that is believed to be true. all statements on
the application are considered to be representations
Concealment - Answer the applicant failing to disclose a known material fact on an application
Fraud - Answer makes a contract null and void
, Loss Ratios - Answer underwriter report card, incurred losses / earned premiums
Class Rates - Answer refer to a large group with the same exposures
Individual Rates - Answer used when there are not enough similar exposures to justify a class rate
Merit Rates - Answer underwriters start with class rates then modify on the likelihood of losses
Schedule Rating - Answer usually applies an addition or reduction for special characteristics of the risk
Experience Rating - Answer usually applies an addition or reduction for the actual loss experience for the
risk in past years
Retrospective Rating - Answer usually adjusts the premium for losses in the same policy year
Errors and Omissions (E&O) Insurance - Answer protects agents who are sued by a client who has had
financial loss due to incorrect information given to the agent
inadequacy - Answer Failing to obtain proper type or amount of coverage for a client.
Negligence - Answer misrepresenting a plan, coverage or information about the policy or quoting
inflated information that will affect the client at a later date
Types of Perils - Answer Named & Open
Named Perils - Answer only perils listed are covered
Open Perils - Answer All perils are covered unless specifically excluded
Study Guide Questions Answered Correctly
Personal Contract - Answer personal in nature, there must be an insurable interest
Aleatory Contract - Answer "a one sided contract" equal value is not given by both parties in the
contract. Policyowner pays small premium - insurer provides a substantial benefit
Contract of Adhesion - Answer contract and its provisions are completed by one party - the insurer.
Ambiguities - Answer vagueness or uncertainty in the contract will be in favor of the insured
Unilateral Contract - Answer Only the insurer must abide by the terms of the contract.
Conditional Contract - Answer both parties to a contract must perform certain duties and follow rules of
conduct to make the contract enforceable
Waiver - Answer the giving up of a known or legally enforceable right
Estoppel - Answer one party is prevented or estopped from asserting a right that would be to the
detriment of another party
Warranty - Answer a statement that is considered and guaranteed to be true
Representation - Answer statement made by the applicant that is believed to be true. all statements on
the application are considered to be representations
Concealment - Answer the applicant failing to disclose a known material fact on an application
Fraud - Answer makes a contract null and void
, Loss Ratios - Answer underwriter report card, incurred losses / earned premiums
Class Rates - Answer refer to a large group with the same exposures
Individual Rates - Answer used when there are not enough similar exposures to justify a class rate
Merit Rates - Answer underwriters start with class rates then modify on the likelihood of losses
Schedule Rating - Answer usually applies an addition or reduction for special characteristics of the risk
Experience Rating - Answer usually applies an addition or reduction for the actual loss experience for the
risk in past years
Retrospective Rating - Answer usually adjusts the premium for losses in the same policy year
Errors and Omissions (E&O) Insurance - Answer protects agents who are sued by a client who has had
financial loss due to incorrect information given to the agent
inadequacy - Answer Failing to obtain proper type or amount of coverage for a client.
Negligence - Answer misrepresenting a plan, coverage or information about the policy or quoting
inflated information that will affect the client at a later date
Types of Perils - Answer Named & Open
Named Perils - Answer only perils listed are covered
Open Perils - Answer All perils are covered unless specifically excluded
