Michigan Independent Adjuster Practice Test

Correct answer: C. An independent adjuster an insurer hires claim by claim

MCL 500.1222(1) bars anyone from adjusting losses, or holding out as an adjuster, without a license. Subsection (2) exempts attorneys admitted in Michigan, marine average adjusters, employees or managers of an authorized insurer adjusting under that insurer's own policies, licensed producers granted claim authority by an insurer, and certain supervised data entry staff. An independent adjuster hired claim by claim fits none of these exemptions.

Reference: MCL 500.1222(1) and (2)

Correct answer: A. He needs a license to adjust the affiliate's losses

The staff exemption in MCL 500.1222(2)(c) covers an employee or manager of an authorized insurer adjusting loss under a policy issued by that insurer. Losses under an affiliate's policies fall outside it, and DIFS licensing guidance, as published by NIPR, confirms the exemption does not extend to affiliated insurers in a holding company group or to adjusters leased through a management company. Michigan sets no dollar threshold for licensing.

Reference: MCL 500.1222(2)(c); NIPR Michigan nonresident adjuster requirements (staff adjuster note)

Correct answer: D. A Michigan license before he adjusts any losses

MCL 500.1222(1) requires a license to adjust loss in Michigan, and the exemptions in subsection (2) include no catastrophe or emergency category. DIFS's catastrophe guidance likewise requires emergency adjusters to be licensed before they adjust, so Tomas would apply for a nonresident Michigan license through NIPR based on his Texas license. Temporary 90-day or insurer-registration programs used in other states do not exist in Michigan.

Reference: MCL 500.1222; DIFS Adjuster Emergency/Catastrophe Licensing

Correct answer: B. It may be waived, since she was licensed within 12 months

MCL 500.1224(2) lets the commissioner give applicants a written examination but allows the commissioner to waive it for a person who has been licensed as an adjuster within the preceding 12 months. Keisha's license lapsed eight months ago, so a waiver is available. Michigan requires no prelicensing course for independent adjusters, and the statutory window is 12 months, not 30 days.

Reference: MCL 500.1224(2)

Correct answer: C. The commissioner may not issue him an adjuster license

MCL 500.1224(4) bars the commissioner from licensing as an adjuster anyone who is employed by, owns stock in, is an officer or director of, or is otherwise connected with a fire repair contractor. Disclosure does not cure the conflict, and the bar applies to every adjuster license, including the adjuster for the insured license. NIPR's Michigan application asks every adjuster applicant about fire repair contractor connections.

Reference: MCL 500.1224(4); NIPR Michigan nonresident adjuster business rules

Correct answer: A. Texas, the state she designated where she is licensed

MCL 500.1224(6)(a) defines home state as the state of principal residence or business where the adjuster holds a resident license or, if that state does not license adjusters, the state where the adjuster is licensed and in good standing and that the adjuster designates. Illinois does not license independent adjusters, so Hannah's designated Texas license is her home state license. NIPR lets applicants choose Michigan as a designated home state, but that is an election, not automatic.

Reference: MCL 500.1224(6)(a); NIPR Michigan adjuster designated home state rules

Correct answer: B. Within 30 days after the change

MCL 500.1238(1) requires applicants to report a mailing and email address and requires agents, solicitors, counselors and adjusters to report any change within 30 days. The address matters: under subsection (2), the commissioner may serve a notice of hearing or legal process by first class mail to the address on file, so an adjuster who fails to update it can miss an enforcement proceeding.

Reference: MCL 500.1238(1) and (2)

Correct answer: D. Send a written request within 30 days of mailing

MCL 500.1242(1) requires the commissioner to refuse a solicitor, counselor or adjuster license to an applicant who does not meet the chapter's requirements, with written notice stating the basis. If the applicant submits a written request within 30 days after the notice is mailed, the commissioner must promptly hold a hearing where the applicant can show compliance. A phone call does not start the process, and no waiting period applies.

Reference: MCL 500.1242(1)

Correct answer: C. $50,000

MCL 500.1244(1)(a) allows up to $1,000 per violation, or up to $5,000 per violation when the person knew or reasonably should have known of the violation, but an order may not require more than $50,000 in total. Twelve knowing violations at $5,000 would be $60,000, so the cap limits the fine to $50,000. The $100,000 cap applies to knowing violations of a cease and desist order under subsection (3).

Reference: MCL 500.1244(1)(a) and (3)

Correct answer: A. $8,650

MCL 500.1226(3) bars an adjuster for the insured from charging a rate that exceeds 10% of the amount the insurer pays in settlement of the loss. Ten percent of $86,500 is $8,650. The other figures are 15%, 20% and 33% of the settlement, all above Michigan's statutory cap. Grace also needed a written contract on a commissioner-approved form before starting work, under section 1226(4).

Reference: MCL 500.1226(3)

Correct answer: D. She may void it, since it was signed within 48 hours of the fire

Under MCL 500.1226(4), an adjuster for the insured may not provide services without a written contract on a commissioner-approved form, and a contract executed within 48 hours after the loss-producing occurrence ends is voidable at the insured's option for 10 days after execution. She signed less than a day after the fire was out and acted on day 8, inside the 10-day window. The statute attaches no payment condition to voiding.

Reference: MCL 500.1226(4)

Correct answer: B. No, not while the fire department is engaged there

MCL 500.1227(1) prohibits an adjuster for the insured from soliciting or attempting to solicit a loss while the loss-producing occurrence is in progress or while the fire department or its representatives are engaged at the damaged premises. Oral identification and a business card showing rates are required whenever he does solicit under section 1226(2), but they do not make soliciting at an active fire scene lawful.

Reference: MCL 500.1227(1); MCL 500.1226(2)

Correct answer: A. Charging 8% of the amount the insurer pays on the loss

A fee of 8% is within the 10% cap in MCL 500.1226(3). The other conduct is prohibited: section 1227(3) bars advancing money or anything of value to an insured pending adjustment, section 1227(2) bars collecting a fee from a repair contractor for obtaining repair work for it, and section 1226(2) bars claiming to be a fire investigator or to be connected with a fire department.

Reference: MCL 500.1226(2) and (3); MCL 500.1227(2) and (3)

Correct answer: C. At least 6 years after the transaction ends

MCL 500.1228(2) requires the records to be kept for at least 6 years after the transaction with the insured terminates and to be open to the commissioner's examination. Subsection (1) lists what they include: the insured's name, the date, location and amount of the loss, a copy of the contract, the policy details, recoveries, who solicited the adjustment and when, and the compensation received and paid to representatives.

Reference: MCL 500.1228(1) and (2)

Correct answer: B. Within 30 days after receiving the claim

MCL 500.2006(3) requires the insurer to specify in writing the materials that constitute a satisfactory proof of loss within 30 days after receiving a claim, unless the claim is settled within those 30 days. The 60-day figure is a different clock: a claim is paid on a timely basis if paid within 60 days after the insurer receives proof of loss, and late benefits then bear 12% interest.

Reference: MCL 500.2006(3)

Correct answer: D. $1,200

MCL 500.2006(4) says benefits not paid on a timely basis bear simple interest at 12% per year, running from 60 days after the insurer receives satisfactory proof of loss, when the claimant is the insured. Interest runs for six months: $20,000 x 12% x 6/12 = $1,200. The $1,600 answer wrongly counts the first 60 days, and $2,400 charges a full year.

Reference: MCL 500.2006(1) and (4)

Correct answer: A. Compelling insureds to sue by offering substantially less than is due

MCL 500.2026(1)(g) lists compelling insureds to institute litigation to recover amounts due by offering substantially less than the amounts due. Lowball offers on undisputed amounts that push insureds into court fit that item, and the pattern also breaches the duty in (f) to attempt prompt, fair and equitable settlements once liability is reasonably clear. The other choices are separate items, (k), (i) and (j), that do not describe this conduct.

Reference: MCL 500.2026(1)(f), (g), (i), (j) and (k)

Correct answer: C. Not as a section 2026 violation, since it is isolated

MCL 500.2026(1) defines unfair claim practices as acts, other than isolated incidents, that form a course of conduct indicating a persistent tendency to engage in them. One misplaced letter in otherwise prompt files is an isolated incident, though the adjuster should still respond promptly. Fraud under section 4503 requires knowing intent to deceive, and the 12% interest in section 2006 applies to late benefit payments, not letters.

Reference: MCL 500.2026(1); MCL 500.2006(4); MCL 500.4503

Correct answer: B. She is immune unless she knew the information was false

MCL 500.4509(1) and (3) protect a person who, without malice, files a report or furnishes information about suspected insurance fraud to an authorized agency, the NAIC or another organization. No civil action for libel, slander or other tort lies unless the person knew the report contained false information about a material fact. A conviction is not required, and the protection covers an insurer's officers, employees and agents as well as the insurer itself.

Reference: MCL 500.4509(1) and (3)

Correct answer: D. Either party may ask a circuit judge to pick the umpire

MCL 500.2833(1)(m) gives each side 20 days after a written appraisal demand to choose a competent, independent appraiser. If the appraisers cannot agree on an umpire within 15 days, the insured or insurer may ask a judge of the circuit court for the county where the loss occurred or the property is located to select one. A written agreement signed by any 2 of the 3 sets the loss, and the umpire's costs are split equally.

Reference: MCL 500.2833(1)(m)

Correct answer: C. November 1, 2026

MCL 500.2833(1)(q) requires suit within 1 year after the loss or within the policy's period, whichever is longer, but tolls that time from when the insured notifies the insurer of the loss until the insurer formally denies liability. Lucia gave notice on the day of the loss, so no time ran before the November 1, 2025 denial, and her full year runs from then, to about November 1, 2026. March 1, 2026 ignores the tolling, and the 2027 dates add a second year the statute does not give.

Reference: MCL 500.2833(1)(q)

Correct answer: A. $20,000

MCL 500.2227 applies because the $80,000 settlement exceeds 49% of the $120,000 of insurance. The insurer withholds the lesser of 25% of actual cash value ($25,000) or 25% of the final settlement ($20,000), subject to a residential cap of $24,000 adjusted each July 1 since 2024, so $20,000 is withheld and the city treasurer is notified. Filing a repair contract within 15 days of settlement, with consent to pay the contractor directly, would have avoided it.

Reference: MCL 500.2227(1), (15) and (17)

Correct answer: B. The owner tried in good faith to buy coverage elsewhere first

MCL 500.2925(2) requires that the property was inspected by the inspection bureau within the preceding 6 months, that the applicant made a good faith, diligent effort to obtain the coverage through authorized insurers, that no premium is unpaid on prior insurance, and that the property is qualified and acceptable. Pool policies run 1 year under subsection (4), and section 2901 excludes farm property from qualified property.

Reference: MCL 500.2925(2) and (4); MCL 500.2901

Correct answer: D. Darius must get an estimate identifying each such part

MCL 257.1363 lets a repair facility or installer use non-OEM aftermarket crash parts requested by an insurer only if the insured receives a written estimate that clearly identifies each such part and carries a notice, in at least 10-point bold type, that the parts come from a source other than the manufacturer and that their warranties come from the parts maker, distributor or insurer. No DIFS approval or warranty waiver is required.

Reference: MCL 257.1362 and 257.1363

Correct answer: A. $50,000, $250,000, $500,000 or unlimited

MCL 500.3107c(1) offers $250,000, $500,000 or unlimited PIP medical coverage, and a $50,000 limit only when the named insured is enrolled in Medicaid and every spouse and resident relative has qualified health coverage, Medicaid or PIP coverage. Her husband's plan qualifies (no auto exclusion, deductible under $6,000), so all four levels are available. The full opt-out in section 3107d requires Medicare Parts A and B, not Medicaid.

Reference: MCL 500.3107c(1); MCL 500.3107d(1) and (7)