State RegulationsMI specificDifficulty 2/5
A Grand Rapids producer tells a client, 'Don't worry about that exclusion — I'll waive it for you, and the company will honor my word.' Under Michigan law, what is the effect of the producer's statement?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under the Michigan Insurance Code's modification rule, an agent has no authority to waive, alter, or amend the terms of an issued policy; changes are valid only when in writing and signed by an executive officer of the insurer. The producer's oral 'waiver' is therefore a nullity, and the policy's exclusion remains fully enforceable. Clients who rely on such promises gain nothing.
Why the other options are wrong
- A) Agency authority to sell and solicit does not include power to rewrite policy terms; the executive-officer signature rule controls.
- C) Paying a fee cannot substitute for the required written, officer-signed change to the contract.
- D) No action by the Insurance Director is involved in policy modification; the writing and signature requirements govern.
Memory hook
Agents talk; only an executive officer's pen changes the policy.