Michigan Property and Casualty Guaranty Association (MPCIGA)

The Michigan Property and Casualty Guaranty Association (MPCIGA) protects Michigan residents when P&C insurance companies become insolvent.

Purpose and Function

MPCIGA:

• Protects policyholders of insolvent P&C insurers
• Pays covered claims up to statutory limits
• Funded by assessments on member insurers
• Operates under state law supervision

How It Works

When a P&C insurer becomes insolvent:

1. Court order - Places insurer in liquidation
2. MPCIGA activates - Takes responsibility for covered claims
3. Claims processed - MPCIGA pays covered claims
4. Assessments made - Member insurers pay assessments

Coverage Limits

MPCIGA provides coverage up to specific limits:

Claim Limits

Important Limitations

• $300,000 maximum per claimant
• $100 deductible may apply
• Net worth reduction may apply
• Large commercial claims may have different treatment

What Is Covered

MPCIGA covers claims under:

Covered Policies

• Homeowners insurance
• Auto insurance (most coverages)
• Commercial property
• Commercial liability
• Workers' compensation

What's NOT Covered

Funding

MPCIGA is funded by assessments on member insurers:

Assessment Process

• Member insurers pay assessments when needed
• Based on premium volume in Michigan
• May be recouped through rate increases
• Separate accounts by line of insurance

Assessment Accounts

Producer Restrictions

Advertising Prohibition

Producers cannot:

• Use MPCIGA coverage as a selling point
• Advertise guaranty association protection
• Imply policies are "guaranteed" by MPCIGA
• Compare MPCIGA to FDIC
• Suggest choosing insurer based on MPCIGA

Required Conduct

• Provide accurate information if asked directly
• Cannot misrepresent coverage limits
• Cannot suggest coverage exceeds actual limits
• Must not use to induce sales

Exam Tip: Remember that producers CANNOT use MPCIGA coverage as a selling point. This is a frequently tested rule in Michigan.

Claims Process

When an insurer becomes insolvent:

1. Notice sent - MPCIGA notifies policyholders
2. Claims submitted - Directly to MPCIGA
3. Claims evaluated - Within statutory limits
4. Benefits paid - If claim is covered
5. Policy may end - Policyholder finds new coverage

Net Worth Reduction

For commercial insureds with high net worth:

• Coverage may be reduced
• Encourages large companies to use other risk management
• Does not apply to workers' comp claims

Relationship to MCCA

For auto insurance claims:

• MPCIGA handles most auto claims
• MCCA (Michigan Catastrophic Claims Association) handles PIP claims above threshold
• Coordination between MPCIGA and MCCA for insolvencies