State RegulationsMI specificDifficulty 2/5
A Michigan resident buys an individual disability policy issued in another state. One clause of the policy grants the insured fewer rights than Michigan law requires for such policies. What is the result?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
The conformity with state statutes provision authorized by M.C.L. 500.3450 automatically rewrites the conflict: a policy delivered to a Michigan resident is read as conforming to the minimum requirements of Michigan law, so a clause that grants less than the statute mandates is enforced only to the extent it complies. This protects Michigan insureds from out-of-state contract language that would undercut the statutory floors the Michigan Insurance Code establishes, without voiding the whole policy or requiring renegotiation.
Why the other options are wrong
- A) Lawful issuance elsewhere does not defeat Michigan's statutory minimums for a policy insuring a Michigan resident.
- B) No renegotiation is needed; the conformity provision operates automatically as a matter of law.
- C) The policy is not void; only the deficient clause is conformed upward to the statutory standard.
Memory hook
Out-of-state wording, Michigan floor: the clause rises to meet the statute.