Michigan Independent Adjuster Practice Test: Michigan law, Part 2

Correct answer: C. Unlimited allowable expense coverage

If no effective selection is made but a premium is paid, MCL 500.3107c(3) presumes the premium reflects the coverage level bought. When that presumption does not apply, subsection (4) makes the unlimited level in (1)(d) apply, so the policy is never left without PIP medical coverage. Under subsection (5), the level applies to the named insured, spouse, resident relatives and anyone else entitled to PIP under the policy.

Reference: MCL 500.3107c(3), (4) and (5)

Correct answer: D. One with Medicare Parts A and B whose household is covered

MCL 500.3107d lets a qualified person, defined in subsection (7) as someone with Medicare Parts A and B, opt out of PIP medical coverage if the spouse and resident relatives have qualified health coverage or PIP coverage from another policy. Medicaid enrollees may choose the $50,000 level under section 3107c instead, and people with other qualified health coverage may take the $250,000 level with exclusions under section 3109a.

Reference: MCL 500.3107d(1) and (7); MCL 500.3109a(2)

Correct answer: B. It reimburses insurers' unlimited-PIP losses above a retention

MCL 500.3104(2) has the MCCA indemnify member insurers for 100% of PIP losses above a statutory retention, adjusted every two years, on policies issued before July 2, 2020 and on later policies with unlimited PIP under section 3107c(1)(d). It is a private nonprofit association funded by an annual per-vehicle assessment on insurers, and it does not pay claimants directly: the insurer pays the claim and is reimbursed.

Reference: MCL 500.3104(1) and (2); MCCA, About the MCCA

Correct answer: A. $1,000

Michigan abolished most auto tort liability, but MCL 500.3135(3)(e) preserves a mini-tort claim of up to $3,000 for vehicle damage in accidents after July 1, 2020, only to the extent the damage is not covered by insurance. Maya's uncovered loss is her $1,000 deductible, so that is her recovery. Without collision coverage, she could have recovered up to the $3,000 cap.

Reference: MCL 500.3135(3)(e)

Correct answer: D. $0

MCL 500.3135(4)(a) applies comparative fault to mini-tort claims but bars any damages in favor of a party who is more than 50% at fault. At 55%, Chen recovers nothing, even though Priya was partly at fault. Had Chen been 45% at fault, he could have recovered 55% of his uninsured damage, within the $3,000 cap; $1,000 was the cap for accidents before July 2, 2020.

Reference: MCL 500.3135(3)(e) and (4)(a)

Correct answer: C. It lasts at least one year after the crash

Michigan keeps tort liability for noneconomic loss only when the injured person suffers death, serious impairment of body function or permanent serious disfigurement (MCL 500.3135(1)). Subsection (5) defines serious impairment by three requirements: it is objectively manifested, it involves an important body function, and it affects the person's general ability to lead his or her normal life. The statute sets no minimum duration such as one year.

Reference: MCL 500.3135(1) and (5)

Correct answer: B. $1,000,000

Property protection insurance pays, without regard to fault, for accidental damage to tangible property such as buildings and fences, measured as the lesser of reasonable repair cost or replacement cost less depreciation, plus loss of use. MCL 500.3121(5) caps total benefits per policy for one accident at $1,000,000. Unlike PIP medical coverage, PPI has no unlimited option. The $10,000 figure is the property damage liability limit in section 3009, and $3,000 is the mini-tort cap.

Reference: MCL 500.3121(1), (2) and (5)

Correct answer: A. $250,000 per person and $500,000 per accident

MCL 500.3009(1) sets residual bodily injury liability limits of $250,000 per person and $500,000 per accident for policies issued or renewed after July 1, 2020, with $10,000 for property damage. An insured may choose lower limits on a director-approved form, but not below $50,000 per person and $100,000 per accident. The 20/40 limits applied before July 2, 2020.

Reference: MCL 500.3009(1)

Correct answer: D. 30 days after reasonable proof; 12% simple interest a year

MCL 500.3142(2) makes PIP benefits overdue if not paid within 30 days after the insurer receives reasonable proof of the fact and amount of loss, and subsection (4) adds simple interest at 12% per year. If a provider's bill reaches the insurer more than 90 days after the service, subsection (3) gives the insurer 60 more days. Section 2006(6) yields to chapter 31 where they conflict, so its 60-day clock does not control PIP.

Reference: MCL 500.3142(2) to (4); MCL 500.2006(6)

Correct answer: C. Barred, as he sued after 1 year with no notice or payment

MCL 500.3145(1) bars a PIP action brought more than 1 year after the accident unless written notice of injury reached the insurer within that year or the insurer had already paid PIP benefits. Rafael did neither and sued about 13 months after the crash. Tolling under subsection (3) runs only from a specific claim for payment, which he never made, and the one-year-back rule applies only when notice or payment kept the claim alive.

Reference: MCL 500.3145(1) to (4)

Correct answer: B. Through the Michigan assigned claims plan

Under MCL 500.3115, a person injured while not an occupant of a motor vehicle claims PIP through the assigned claims plan, unless she has coverage through her own policy or a spouse's or resident relative's policy under section 3114(1); she does not claim from the insurer of the car involved. The MCCA only reimburses insurers, and the guaranty association pays covered claims of insolvent insurers. Assigned claims benefits are limited under section 3172.

Reference: MCL 500.3115; MCL 500.3172(1)

Correct answer: D. A claim for no-fault personal protection insurance benefits

MCL 500.7925 excludes from covered claims any amount above $5,000,000 per claim, adjusted each January 1 for inflation ($7,980,000 for 2026, according to the MPCGA), but the cap does not apply to workers' compensation or personal protection insurance claims. Homeowners, commercial property and liability claims are capped. Covered claims also exclude insureds whose net worth exceeds the statutory limit, which the MPCGA lists as $39,920,000 for 2026.

Reference: MCL 500.7925; MPCGA, Covered Claim Exclusions

Correct answer: A. To provide auto coverage to people the regular market declines

MCL 500.3301 requires every insurer authorized to write auto insurance in Michigan to participate in the placement facility, which guarantees auto coverage to people unable to obtain it through ordinary methods while encouraging maximum use of the private market. Catastrophic PIP reimbursement belongs to the MCCA, insolvency claims to the guaranty association, and basic property coverage for hard-to-place risks to the Michigan Basic Property Insurance Association.

Reference: MCL 500.3301

Correct answer: C. Yes, as one has worked 35+ hours a week for 13+ weeks

MCL 418.115(b) covers private, nonagricultural employers with fewer than three employees if at least one has been regularly employed 35 or more hours a week for 13 weeks or longer during the preceding 52 weeks. Twenty weeks at 38 hours meets that test, so the business is subject to the act. Section 115(a) separately covers private employers that regularly employ three or more at one time, and (c) covers all public employers.

Reference: MCL 418.115(a) to (c)

Correct answer: B. Ahmed from day 8; Bianca from the date of injury

MCL 418.311 pays nothing for an injury that does not keep the employee from earning full wages for at least 1 week. If incapacity extends beyond a week, compensation begins on the eighth day after the injury, and if it continues for 2 weeks or longer, compensation is computed from the date of injury. Ahmed's 10 days fall under the first rule, while Bianca's 3 weeks trigger the retroactive rule.

Reference: MCL 418.311