Why Acting in Bad Faith Is Bad News for Insurance Providers

You’ve probably heard their reassuring slogans for years: catchy mottos like “You’re in good hands with Allstate,” or “Nationwide is on your side.” America’s insurance companies big and small do their best to put their policyholders’ minds at ease with these kinds of snappy catchphrases, not to mention such comforting logos as umbrellas and patriotic statues, or humorous gimmicks like emus, geckos, and countless TV ads featuring hapless young homeowners who are apparently striving not to turn into their parents.

Beneath all this promotion is one simple goal: convincing insurance company customers that the companies will have their backs when something bad happens. And for the most part, insurance companies live up to their word. But as always happens, there are some bad actors that slip through the cracks and cause their policyholders no end of trouble by making empty promises or not acting properly when presented with legitimate claims.

We call them “bad faith insurers.” They’re companies that delay providing coverage, withhold Personal Injury Protection (PIP) benefits, ghost loyal policyholders in their time of need, and essentially do anything possible to hold back your money when you’ve been consistently sending them your premium payments for years.

Hopefully you won’t encounter this terrible kind of experience with your insurer… but if you do, we’re here to help with some advice and a bit of information on a piece of proposed legislation we strongly support: the Michigan Policyholder Bill of Rights.

A Proposed Law Putting “Bad Faith” Insurance Companies on Notice

This bipartisan piece of legislation is currently under consideration by state lawmakers and has already received support from dozens of senators and representatives across Michigan. Specifically, it would add protections for insurance policyholders by allowing them to sue insurers who act in “bad faith” by not honoring their obligations and contracts; by not handling claims properly; by delaying or slow-walking the claims process; or by not paying claims made on legitimate homeowners, auto, life, or business policies among other unethical practices.

Why Does Michigan Need a Policyholder Bill of Rights?

Our home state is one of just eight nationwide that have failed to protect policyholders from predatory insurance companies that act in bad faith – companies that take money from customers and then refuse to honor claims, or use well-documented and unscrupulous delay tactics to discourage policyholders from receiving the coverage to which they’re entitled.

This bill would enhance consumer protections and permit Michiganders to take legal action against insurance companies acting in bad faith. And it’s essential legislation because, as things stand today, there are very few safeguards currently in place for Michigan policyholders who are dealing with these types of challenging issues. For instance, now the only time at-fault drivers can sue their insurance companies for bad faith occurs when a court judgment is issued for an amount higher than their insurance liability limits – which then puts their personal property and other assets at risk if the insurer refuses to pay. In such a case, those defendants will most likely ask an accident victim to agree not to pursue their personal assets and to accept any settlement they may recover from the insurance company – which is not necessarily a wise move for the person who was injured (in this case that would be the plaintiff who has brought a successful personal injury suit).

Other than that uncommon situation, there are two others where accident victims may be able to sue an insurer. In one, if an insurer fails to pay claims for no-fault coverage, victims can attempt to file suit to receive interest on unpaid benefits along with payment for legal costs they have incurred. In the second, if an insurer doesn’t pay underinsured motorist benefits on a “timely basis,” the Michigan insurance code allows victims to sue for interest on unpaid sums.

Beyond these relatively rare circumstances, Michiganders currently have limited legal recourse to help them hold insurance companies accountable if they believe they’re acting in bad faith (other than filing a complaint with the Michigan Department of Insurance and Financial Services). That’s why the Policyholder Bill of Rights is – to our way of thinking – an essential protection for Michigan drivers, homeowners, business owners, and indeed all the citizens of our fair state.

How Can You Help Ensure Your Rights Are Protected?

As a Michigan citizen and a registered voter, you have the power to protect your own interests by contacting your state senator and representative and letting your thoughts be known. You can also sign up for email alerts from the Michigan Association for Justice, which is the non-profit group behind this much-needed legislation.

Hopefully, by enacting this law, Michigan will join the vast majority of states that have put “bad faith” insurers on notice that we’re not going to stand for their unethical, unprincipled, and essentially shameless actions any longer. As the sponsors of this bill note, if you pay your premiums, the insurance companies should keep their promises.

What Else Can You Do if Your Insurance Company Acts in Bad Faith?

Regardless of the eventual status of the Policyholder Bill of Rights, you can reach out to our offices and we’ll do everything in our power to provide you with the help you need to receive all the insurance benefits, coverage, and compensation to which you’re entitled. Our team of dedicated attorneys will be happy to provide you with a no-cost consultation to help you determine how to most effectively proceed depending upon your specific situation and the surrounding circumstances. To get in touch with us right away, call 855-MIKE-WINS (855-645-3946) or contact us right here.

Content checked by Mike Morse, personal injury attorney with Mike Morse Injury Law Firm. Mike Morse is the founder of Mike Morse Law Firm, the largest personal injury law firm in Michigan. Since being founded in 1995, Mike Morse Law Firm has grown to over 200 employees, served 40,000 clients, and collected more than $1.5 billion for victims of auto, truck and motorcycle accidents. The main office is in Southfield, MI but you can also find us in Detroit, Sterling Heights and many other locations.