Michigan-2009-HB5020-Engrossed

HB-5020, As Passed House, August 19, 2009

SUBSTITUTE FOR

HOUSE BILL NO. 5020

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

(MCL 500.100 to 500.8302) by adding section 2203.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2203. (1) A property or casualty insurer obligated to pay

benefits or claims under a property or casualty insurance policy

has a duty to deal fairly and in good faith with an insured

claiming those benefits. A property or casualty insurer that

breaches this duty to deal fairly and in good faith is liable for

compensatory, consequential, and exemplary damages proximately

caused by the breach and the costs of litigation, including actual

attorney fees. A breach of the duty to deal fairly and in good

faith includes, but is not limited to, any of the following:

(a) Misrepresenting pertinent facts or insurance policy

provisions concerning coverages at issue.

(b) Failing to acknowledge promptly or to act reasonably and

promptly upon communications concerning claims arising under the

insurance policy.

the prompt investigation of claims arising under the insurance

policy.

(d) Refusing to pay claims without conducting a reasonable

investigation based upon the available information.

(e) Failing to affirm or deny coverage of claims within a

reasonable time after proof of loss statements have been completed.

(f) Failing to attempt in good faith to effectuate prompt,

fair, and equitable settlements of claims in which liability has

become reasonably clear.

(g) Compelling insureds to institute litigation to recover

amounts due under an insurance policy by offering substantially

less than the amounts due the insureds.

(h) Attempting to settle a claim for less than the amount to

which a reasonable person would believe the claimant was entitled,

by reference to written or printed advertising material

accompanying or made part of an application.

(i) Attempting to settle claims on the basis of an application

that was altered without notice to, or knowledge or consent of, the

insured.

(j) Making a claims payment to a policyholder or beneficiary

omitting the coverage under which each payment is being made.

(k) Making known to insureds or claimants a policy of

appealing from arbitration awards in favor of insureds or claimants

for the purpose of compelling them to accept settlements or

compromises less than the amount awarded in arbitration.

(l) Delaying the investigation or payment of claims by

requiring an insured, claimant, or the physician of either to

submit a preliminary claim report and then requiring subsequent

submission of formal proof of loss forms, seeking solely the

duplication of a verification.

(m) Failing to promptly settle claims where liability has

become reasonably clear under 1 portion of the insurance policy

coverage in order to influence settlements under other portions of

the insurance policy.

(n) Failing to promptly provide a reasonable explanation of

the basis in the insurance policy concerning the facts or

applicable law for denial of a claim or for the offer of a

compromise settlement.

(2) Whether an insurer has breached the duty under subsection

(1) is a question of fact and not of law.

(3) As used in this section, "property or casualty insurer"

means a home insurer, an automobile insurer, a commercial property

insurer, or a workers compensation insurer.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 95th Legislature are

enacted into law:

(a) House Bill No. 4244.

(b) House Bill No. 4844.