STATE LAW – MICHIGAN LIBRARY – GUIDE 09
Michigan Claims Handling & Insurance Bad Faith
Michigan insurance remedies are coverage-specific. Statutory interest, no-fault attorney-fee provisions, unfair-claims rules, and third-party settlement duties should not be collapsed into a single generalized ‘bad faith’ cause of action.
Claims Handling
Identify the remedy before using the label ‘bad faith’
Michigan does not treat every unreasonable insurance dispute as one universal tort. The remedy may arise from the policy, the Insurance Code, the No-Fault Act, or the liability insurer’s separate duty to protect its insured from excess exposure.
General claims-practice statutes
MCL 500.2006 can require statutory interest on claims not timely paid in defined circumstances. MCL 500.2026 identifies specified unfair claim-settlement practices, including misrepresentation, unreasonable communication delay, inadequate investigation standards, and failure to attempt fair settlement when liability is reasonably clear. These statutes should be applied according to their own terms rather than described as an all-purpose tort remedy.
No-fault-specific remedies
MCL 500.3142 governs when PIP benefits become overdue and provides interest. MCL 500.3148 addresses attorney fees for unreasonable refusal or delay in paying PIP benefits and insurer fee recovery in specified circumstances. The no-fault statutory remedy is distinct from a third-party liability insurer’s potential excess-settlement exposure.
Mandatory coverage and eligibility
Meemic and Griffin are important reminders that mandatory no-fault rights and statutory eligibility must be analyzed directly. A claimant must still establish entitlement, priority, proof of loss, and statutory timing; the existence of a dispute does not itself establish misconduct.
Build a claims-handling record
- Chronology of notice, proof, requests, responses, and payments.
- Written explanation for every denial, reduction, or reservation.
- Policy and statutory provisions relied upon.
- Medical, wage-loss, and other proofs supplied to the carrier.
- Internal inconsistencies between the insurer’s stated reason and the available record.
Authorities
Primary Michigan authority for this topic
Use the current statute, controlling decisions, and the operative policy before legal reliance.