Evergreen Insurance Prep

Michigan Property & Casualty Insurance License, Practice Exams

Michigan Property & Casualty producer licensing (PSI). National P&C insurance knowledge plus Michigan insurance law (no-fault auto, property and homeowners, workers' compensation), authored from public-domain statutes.
Content last updated 2 July 2026

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Each module is scored separately here so you know exactly where you stand. To pass the real Michigan exam you need 75%.

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The free sample gives you about 20 questions per module. The full bank contains every question — general insurance plus state law — with written, statute-cited explanations. $49, one time, lifetime access on up to 3 devices — every state and line we add later included.

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Frequently asked questions

How is the Michigan producer licensing exam structured?

Michigan licenses Property & Casualty producers through PSI, requiring 75% to pass. This bank covers the national property & casualty material plus Michigan law - no-fault auto (the post-2019 reform PIP medical choice levels, the 250/500 default liability limits and the $3,000 mini-tort), property and homeowners (the standard fire policy, the Michigan Basic Property/FAIR plan and the guaranty association), and workers' compensation (Michigan's 80%-of-after-tax-wage benefit).

What score do I need to pass?

You need 75%. Practice each module to that level and run the full exam simulation before your test date.

Are these real exam questions?

No vendor publishes the live exam. Every question here is original, written to the official content outline and grounded in public-domain sources — including the Michigan Insurance Code (MCL Chapter 500) and Worker's Disability Compensation Act (MCL Chapter 418) for the state-law questions, with the statute section cited in each explanation.

How many practice questions are included?

The full Michigan bank contains 1085 questions (general insurance plus Michigan law), with written, source-cited explanations. The free sample gives you about 20 questions per module.

What does access cost?

$49, one time, for lifetime access — and it includes every state and line we add later, at no extra charge. No subscription.

Can I use it on more than one device?

Yes. One purchase works on up to 3 of your devices, for example your laptop, phone and tablet, so you can practise wherever you are. Your progress is saved on each device.

Do I need to create an account?

No. The practice tests run in your browser with no signup. Your score history is saved on your own device.

Sample Michigan Property & Casualty Insurance License practice questions

A selection of free questions with answers and explanations. Use the interactive modules above for timed, scored drills.

Michigan's auto insurance system is best described as which type?

  1. A financial-responsibility-only system requiring no first-party coverage
  2. An add-on medical-payments system with unlimited tort recovery
  3. A no-fault system in which first-party PIP benefits are paid regardless of fault ✓
  4. A pure tort (fault) system

Why: Michigan is a no-fault state: PIP and PPI benefits are payable without regard to fault, and tort liability for the accident is abolished except in limited circumstances.

Of the 24 required continuing education hours, how many must be in ethics in insurance?

  1. 6 hours
  2. 2 hours
  3. 1 hour
  4. 3 hours ✓

Why: Section 1204c(2) requires that of the 24 hours, not less than 3 hours must be in ethics in insurance classes or coursework.

Under the FCRA, a consumer who is the subject of an adverse action based on a consumer report has the right to:

  1. Demand the agent's license
  2. Receive a free insurance policy
  3. Sue the federal government
  4. Obtain a free copy of the report and dispute inaccurate information ✓

Why: The FCRA gives consumers the right to a free copy of the report that led to an adverse action and the right to dispute inaccurate or incomplete information.

Show more sample questions with answers & explanations

The premium basis for workers' compensation insurance is generally expressed as a rate applied to:

  1. Square footage of the workplace
  2. Gross sales revenue
  3. Each employee per year
  4. Each $100 of payroll ✓

Why: WC premium is calculated using rates per $100 of payroll for each job classification, then adjusted by other factors.

The 'mysterious disappearance' of property is typically covered under which?

  1. DP-1 named peril
  2. HO open-peril personal property scheduling (e.g., personal articles floater) ✓
  3. Coverage F
  4. Coverage D

Why: Open-peril scheduled coverage (personal articles floater) can cover mysterious disappearance, which named-peril forms typically do not.

An overdue PIP benefit payment bears simple interest at what annual rate under the No-Fault Act?

  1. 6% per annum
  2. 18% per annum
  3. 12% per annum ✓
  4. 8% per annum

Why: MCL 500.3142(4) provides that an overdue payment bears simple interest at the rate of 12% per annum.

Under MCL 500.2027, charging a different rate for the same coverage based on factors such as residence or lawful occupation is permitted only if:

  1. The rate differential is based on sound actuarial principles, a reasonable classification system, and related to actual and credible loss statistics ✓
  2. The insurer first refunds prior premiums
  3. The agent obtains the applicant's written consent
  4. The factor is unrelated to the risk

Why: Sec. 2027(c) allows a rate differential only if based on sound actuarial principles and a reasonable classification system, related to actual and credible loss statistics (or, for new coverages, reasonably anticipated experience), unless the rate was already approved by the director.

Liquor liability (dram shop) coverage is needed because the CGL excludes liability for businesses that:

  1. Sell food only
  2. Manufacture, distribute, sell, or serve alcoholic beverages and cause or contribute to a patron's intoxication ✓
  3. Rent premises
  4. Employ contractors

Why: The CGL liquor liability exclusion applies to those in the alcohol business; they need separate liquor liability coverage.

Pure risk differs from speculative risk in that pure risk involves:

  1. Only the chance of loss or no loss ✓
  2. Voluntary participation for reward
  3. Guaranteed profit
  4. Both loss and gain possibilities

Why: Pure risk presents only the possibility of loss or no loss, with no opportunity for gain, making it the only insurable type of risk.

Under MCL 418.301(2), mental disabilities are compensable only if they arise out of:

  1. any workplace stress the employee perceives
  2. actual events of employment, not unfounded perceptions, with the employee's perception reasonably grounded in fact or reality ✓
  3. events occurring off the employer's premises
  4. a single traumatic physical injury

Why: MCL 418.301(2) makes mental disabilities compensable if arising out of actual events of employment (not unfounded perceptions) and the employee's perception of the actual events is reasonably grounded in fact or reality.

Under MCL 500.7925, for a claim to be a 'covered claim,' the obligation must have been incurred or existed before, at the time of, or within what period after the receiver was appointed?

  1. Within 60 days after the receiver was appointed
  2. Within 6 months after the receiver was appointed
  3. Within 90 days after the receiver was appointed
  4. Within 30 days after the receiver was appointed ✓

Why: MCL 500.7925(1)(d) requires that the obligation was incurred or existed before, at the time of, or within 30 days after the date the receiver was appointed.

The primary method of handling risk that insurance represents is:

  1. Risk transfer ✓
  2. Risk reduction
  3. Risk avoidance
  4. Risk retention

Why: Insurance is fundamentally a transfer of the financial consequences of risk from the insured to the insurer.

Once an auto liability policy has been in effect more than 55 days (or is a renewal), how broadly may the insurer cancel it?

  1. Only with the insured's signed written consent to the cancellation
  2. For essentially any legitimate business reason with proper advance notice
  3. At any time and for any reason, without providing notice to the insured
  4. Only for the two specific statutory reasons enumerated in MCL 500.3220 ✓

Why: MCL 500.3220 restricts cancellation after the 55-day window (and immediately for renewals) to only the enumerated reasons: first-55-day unacceptable risk or a final license suspension.

A scenario: lightning strikes and starts a fire destroying the kitchen. Which forms would cover this loss to the dwelling?

  1. Only DP-3 and HO-3
  2. Only liability forms
  3. Only HO-4
  4. All standard dwelling and homeowners forms, since fire and lightning are basic perils ✓

Why: Fire and lightning are core covered perils in every standard dwelling and homeowners form, so the kitchen fire loss would be covered under all of them.

Under section 1244, if a person knew or reasonably should have known he or she was in violation, the director may order a civil fine of not more than what amount per violation?

  1. Not more than $5,000.00 ✓
  2. Not more than $1,000.00
  3. Not more than $2,500.00
  4. Not more than $20,000.00

Why: Section 1244(1)(a) authorizes a civil fine of not more than $5,000.00 for each violation if the person knew or reasonably should have known he or she was in violation.

A clothing store's stock is destroyed by fire. The BPP with the Special Causes of Loss form is in force. Coverage applies because:

  1. The Basic form lists fire
  2. Flood caused the fire
  3. Fire is not excluded under the open-perils form ✓
  4. Theft is the cause

Why: Under the open-perils Special form, fire is a covered cause of loss because it is a risk of direct physical loss that is not excluded.

The CGL Medical Expense (Coverage C) limit typically applies:

  1. Only to the named insured
  2. Per occurrence to all persons
  3. Per person and is subject to the each occurrence limit ✓
  4. As a separate aggregate

Why: The Medical Expense Limit applies per person and the total is subject to the Each Occurrence Limit.

To insure a $25,000 diamond ring for all-risk coverage with no special sublimit and often no deductible, the best option is:

  1. Increase Coverage A
  2. Add inflation guard
  3. Add a Scheduled Personal Property endorsement / Personal Articles Floater ✓
  4. Rely on Coverage C

Why: Scheduling the ring on a Personal Articles Floater (scheduled personal property endorsement) provides broad coverage above the Coverage C jewelry sublimit, typically with no deductible.

Personal property is covered worldwide under a Homeowners policy, but property usually at another residence is limited to:

  1. 100% of Coverage C
  2. No coverage at all
  3. Coverage B limits
  4. The greater of 10% of Coverage C or $1,000 ✓

Why: Personal property usually kept at a residence other than the insured location is limited to the greater of 10% of Coverage C or $1,000.

Under the Michigan Insurance Code, sections 2001 to 2050 of Chapter 20 are known and may be cited as what?

  1. The producer conduct act
  2. The fair claims settlement act
  3. The uniform trade practices act ✓
  4. The unfair competition prevention act

Why: Sec. 2001 provides that sections 2001 to 2050 shall be known and may be cited as 'the uniform trade practices act.'

Part Two (Employers Liability) of the policy is primarily designed to cover which of the following?

  1. Statutory benefits owed directly under the WC law
  2. Fines and penalties assessed by the state
  3. Suits brought against the employer for work injuries that fall outside the WC statute ✓
  4. Damage to the employer's business property

Why: Part Two covers the employer's liability for damages because of bodily injury by accident or disease arising out of employment that is not compensable as statutory benefits under Part One, such as certain lawsuits.

In an insurance contract, the consideration given by the insured is:

  1. The promise to pay claims
  2. The certificate of authority
  3. The policy itself
  4. The payment of premium and the statements made in the application ✓

Why: The insured's consideration is the premium plus the representations made in the application; the insurer's consideration is its promise to pay covered losses.

The MCCA per-vehicle attachment point of $580,000 is adjusted how often and by how much?

  1. It never changes at all once the attachment point is first set by statute
  2. Biennially on July 1 of odd-numbered years, by the lesser of 6% or the CPI ✓
  3. Annually every July 1, by the full Consumer Price Index with no percentage cap
  4. Once every five years, by a fixed statutory increase of exactly ten percent

Why: MCL 500.3104(2)(o) provides for a biennial increase each odd-numbered year of the lesser of 6% or the CPI, rounded to the nearest $5,000.

Which of the following is a possible result of the underwriting process?

  1. Acceptance with modified terms or higher premium
  2. Rejection of the risk
  3. All of the above ✓
  4. Acceptance of the risk as applied for

Why: Underwriting can result in accepting the risk as is, accepting with modifications/conditions, or rejecting the application.

Under PAP Part A, which of the following is an "insured" while using a non-owned auto?

  1. The named insured and family members for any auto, and others only for the covered auto ✓
  2. Any person operating the named insured's vehicle for a fee
  3. Only the registered owner of the non-owned auto
  4. Anyone in the world driving any vehicle

Why: For Part A, the named insured and family members are insureds for the ownership/use of any auto, while other persons are insureds only for use of the named insured's covered auto.

Section 1232 does NOT apply to which of the following persons?

  1. A person admitted to the practice of law in this state ✓
  2. An unlicensed financial planner
  3. A salaried clerk
  4. A retired agent

Why: Section 1232 states it does not prohibit the customary advice offered by a licensed insurance agent, nor does it apply to a person admitted to the practice of law in this state.

An insured runs a small in-home daycare for several children. The appropriate way to address the liability and incidental property exposure is the:

  1. Mortgage clause
  2. Home Day Care / business pursuits-type endorsement ✓
  3. Inflation guard endorsement
  4. Personal Injury endorsement

Why: A home day care endorsement (a form of permitted incidental occupancy/business endorsement) addresses the liability and limited property exposure of running a daycare from the home.

Before workers' compensation laws, employers defending common-law negligence suits could use several defenses. Which of the following was one of those defenses that WC laws effectively removed?

  1. The collateral source rule
  2. The fellow-servant rule ✓
  3. The statutory employer rule
  4. The exclusive remedy rule

Why: The common-law defenses WC removed were contributory negligence, assumption of risk, and the fellow-servant rule (injury caused by a coworker). WC made these defenses irrelevant to benefit eligibility.

How must an agent handle premiums and return premiums under the fiduciary rules of section 1207?

  1. Treat them as fiduciary money and segregate them from the agent's own money, not commingling them ✓
  2. Send them immediately to the state treasurer
  3. Hold them as cash on hand
  4. Deposit them in the agent's personal operating account

Why: Section 1207(2) requires an agent to treat all premiums and return premiums as fiduciary money and segregate them from the agent's own money, and not commingle them (with limited exceptions).

Under Section 2006, an insurer must specify in writing the materials that constitute a satisfactory proof of loss within how many days after receipt of a claim, unless the claim is settled within that period?

  1. 30 days ✓
  2. 10 days
  3. 45 days
  4. 60 days

Why: Sec. 2006(3) requires the insurer to specify in writing the materials that constitute satisfactory proof of loss not later than 30 days after receipt of a claim, unless the claim is settled within the 30 days.