Michigan Guide To Property Insurance Claims: Deadlines & FAQs

In order to initiate a claim under a property insurance policy in Michigan, the policyholder must inform their insurance carrier of the loss (either directly or through their agent), and that they are making a claim. This means that the only requirement to initiate the process is that the insurance carrier is informed that there has been a loss, some details about the loss, the identity of the policy, and that the policyholder wants to make a claim.  

In many cases, an insurance company will call this communication a first notice of loss, or FNOL. In Michigan, insurance laws call this communication “receipt of claim.” 

Most insurance companies provide multiple ways to contact them after a loss to begin the claims process, these usually include: 
a. Phone call (a number is usually provided on the insurance company’s website);
b. Online portal – many insurance companies have an online form to notify the claims department of a loss, this may even be through a mobile app;
c. Your agent – many insurance companies even have a different section of their website or phone number for an agent to inform them of a policy-holder’s loss;
d. Online software as a virtual assistant. 

While it is easy and quick to start a claim, claimants need to continue to follow-up and provide more information. In many cases, the insurer will require more information and supporting documentation, including specific forms, to actually process and adjust the claim. In Michigan, these specific and necessary forms should be provided to the claimant by the insurance company within 30 days after receipt of claim. 

1. Promptly inform your insurance carrier of the loss (see above);

2. As soon as possible begin to mitigate the damage – protect the property and secure it against further damage as soon as it is safe and possible to do so.

3. Cooperate with your insurance company and communicate with them (and keep copies of all correspondence).

4. Make your property available for inspection as soon as it is safe and possible to do so.

5. Prepare supporting documents for your claim including:
– Inventory list;
– Description of damages;
– Photographs and/or videos of the damage;
– Receipts; etc.

Reporting Deadline: Michigan insurance law does not set forth any specific deadline for making a property insurance claim. This means that the deadline for informing the insurer of a claim is set by the policy itself. It is important to be familiar with the insurance policy so that deadlines are not missed. 

It is always best practice to inform an insurance company of the losses sustained and that a claim is being made as soon as it is reasonably possible to do so after the damage is incurred and a determination that a claim will be filed is made. While it is never a good idea to delay in providing the insurance company with information once it has been determined that a claim will be filed, the actual meaning of “immediate” or “prompt” or “reasonable” with respect to making a claim depends on the circumstances – if a home is completely destroyed by a storm and the phones, internet, and power are off, it may take a little longer to make the claim.  

Be sure to check the language of the insurance policy to determine the notification or reporting deadlines. But, in any event, remember that best practice is to provide notice of the loss and claim to the insurer as soon as possible.  

Documentation Deadline: Michigan does not have any statute that sets a specific deadline to provide support for a claim. Instead, Michigan allows this timeline to be set by the policy itself. Usually, property insurance policies in Michigan will require that a proof of loss document must be provided within 60 days of when it is requested by the insurer. 

Note, however, that Michigan specifically requires that an insurance company tell a claimant what is needed to process the claim, including providing any required proof of loss forms to the insured within 30 days from when the claim is made. 

In any event, however, the deadline for submitting a proof of loss may be extended by agreement between the parties if circumstances make it difficult or impossible for the policyholder to comply with the deadline as set forth by the policy. Many insurance companies’ proof of loss requirements need substantial information to be provided, so getting started quickly is crucial.

Note, however, that no matter the actual deadline for providing supporting documentation, it is always best practice to provide a proof of loss document and support of the claim as soon as possible (while noting that the document only presents the knowledge at the time and may be amended or updated). Payment deadlines for Michigan insurance companies claim start to run from the receipt of a sufficient and properly executed proof of loss, so getting one to the insurance company quickly is a good way to get the claim process moving along, and to get your payment. 

Michigan has adopted laws governing unfair claims settlement practices to protect policyholders and to provide a streamlined timeline for claims to be handled, and these laws provide timelines for the acknowledgment and payment of claims.

Deadlines for Acknowledgment: Michigan requires insurance companies to acknowledge property insurance claims promptly, and respond promptly to communications about the claim. Specifically, Michigan insurance companies must respond within 30 days after receiving notice of the claim by telling the claimant what information is required to begin processing the claim, and by providing any required forms, such as a proof of loss, unless payment is made within that time period.

Deadlines for Investigation: Michigan insurance regulations don’t really provide a specific breakdown of the time to begin an investigation of the claim, other than by inference related to the general deadline for payment. However, Michigan law does require that insurance companies “adopt and implement reasonable standards for the prompt investigation and settlement of claims.”

Michigan requires insurers to acknowledge communications with respect to claims arising under its policies to which a response is reasonably expected by the policyholder reasonably promptly after receipt of such communication.

Deadline for Acceptance/Denial: Michigan insurance law requires that an insurer must affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed. Note, however, that there is some tension or discrepancy between what courts have determined to be “reasonable time” and what different (and newer) Michigan statutes require as deadlines for payment. Michigan courts have determined that 2 years without affirming or denying a claim is not reasonable, but 4 months can be reasonable. Contrast with Michigan statutes for payment, (discussed below) that generally require payment within 60 days after the insurance company receives sufficient proof of loss. 

Deadline for Payment: Michigan requires insurance companies to “attempt in good faith to effectuate prompt, fair, and equitable settlements of claims.” Specifically, the general deadline for payment of a property insurance claim in Michigan is 60 days after receipt of sufficient proof of loss.

If a Michigan insurance company doesn’t pay any undisputed portion of the claim within 60 days after receipt of a sufficient proof of loss, they must pay interest on the amount due at a rate of 12% beginning from the date 60 days after the insurer’s receipt of the proof of loss.  

If an insurance company is determined to be in violation of the unfair claims settlement practices requirements, the insurer is subject to penalties. While the unfair trade practices requirements do not create a private right of action (the ability for a policyholder to sue the insurance company directly for breach) the policyholder can complain to the state insurance department and the insurer can be penalized.
 
Additionally, insurers have a requirement to act in good faith in investigating and settling the claim. A policyholder may file suit against the insurer for breach of contract. However, MIchigan does not generally allow the policyholder to recover attorneys’ fees in any suit pursuant to the insurance contract, and accordingly, many claimants do not feel the expense of a suit is worthwhile or justifiable when the coverage dispute is not large. 

It is commonly misunderstood that Michigan doesn’t allow actions against an insurance company for bad faith, but it is true that a claimant may be better off not using the “bad faith” language in a suit when they are attempting to use the insurance company’s bad faith conduct to support extra-contractual damages. Note, however, that even if technically allowed, the standard is high and in order to recover extra-contractual damages a claimant must show the insurance company committed a voluntary act which was not only outrageous, but malicious or so willful and wanton as to demonstrate a reckless disregard of the plaintiff’s rights.

Deadlines to File Suit: Michigan regulations state that the deadline to file a suit seeking repair or replacement of damaged property must be initiated within 3 years of the damage occurring. Note, however, that the mandatory provisions for fire policies in MIchigan include the requirement that: “an action must be commenced within 1 year after the loss or within the time period specified in the policy, whichever is longer. The time for commencing an action is tolled from the time the insured notifies the insurer of the loss until the insurer formally denies liability.” It would be in the claimant’s best interest to use whichever period is shorter in order to best protect any potential claim.