P&CMImedium
Under Michigan's Essential Insurance Act (MCL 500.2103+), what is the principal restriction on auto and home rating classifications by territory?
Territorial classifications must rest on actuarial principles and may not be arbitrary or geographically redlined
BInsurers must use one statewide rate for every Michigan policyholder
COnly ZIP codes ending in even digits may be used as a rating territory, and every odd-digit ZIP code is automatically excluded from all territorial rating by statute
DTerritory may not be used as a rating factor under any circumstance
Why this is the answer
The Essential Insurance Act (MCL 500.2103+) reformed Michigan personal auto and home rating to combat geographic redlining. Territorial classifications are permitted but must rest on sound actuarial principles and must not be arbitrarily drawn. A statewide single rate is not required, and territory is not categorically banned as a rating factor.
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