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