Insurance DOI Complaint and Bad-Faith Demand — Michigan

Insurance DOI Complaint and Bad-Faith Demand (MICHIGAN)

Quick-Reference Summary

PART A — DOI COMPLAINT COVER LETTER

Sender Letterhead

[ATTORNEY OR FIRM / INSURED NAME]
[STREET ADDRESS]
[CITY], MI [ZIP]
Phone: [____________]
Email: [____________]
Michigan Bar No. (if attorney): [____________]

Date and Recipient

Date: [__/__/____]

Sent Via:
☐ DIFS online portal (https://difs.state.mi.us/Complaints/FileComplaint.aspx)
☐ Email to [email protected]
☐ U.S. Certified Mail, Return Receipt Requested (Tracking No. [____________])
☐ Fax to 517-284-8837

To:
Michigan Department of Insurance and Financial Services
Office of Consumer Services
PO Box 30220
Lansing, MI 48909-7720

Subject: Consumer Complaint Against [INSURER LEGAL NAME], NAIC No. [_____] — Unfair Claims Settlement Practices Under MCL § 500.2026 and Untimely Payment Under MCL § 500.2006; Claim No. [____________]

I. Insured / Complainant Information

II. Carrier and Policy Information

III. Claim Background

[Dated chronology. Identify exactly what was submitted as "satisfactory proof of loss" — this is the trigger for the § 500.2006 60-day clock. The term is undefined; document the insurer's written specification within 30 days under § 500.2006(2).]

[____________________________________________________________]
[____________________________________________________________]
[____________________________________________________________]
[____________________________________________________________]

IV. Specific Unfair Claims Practices Alleged

The conduct described above violates one or more provisions of MCL § 500.2026 and/or constitutes untimely payment under MCL § 500.2006:

☐ § 500.2026(1)(a) — Misrepresenting pertinent facts or policy provisions
☐ § 500.2026(1)(b) — Failure to acknowledge promptly or act reasonably and promptly upon communications
☐ § 500.2026(1)(c) — Failure to adopt and implement reasonable standards for prompt investigation
☐ § 500.2026(1)(d) — Refusing to pay claims without conducting a reasonable investigation
☐ § 500.2026(1)(e) — Failure to affirm or deny coverage within a reasonable time after proof of loss completed
☐ § 500.2026(1)(f) — Failure in good faith to effectuate prompt, fair, and equitable settlement where liability is reasonably clear
☐ § 500.2026(1)(g) — Compelling insured to litigate by offering substantially less than amounts due
☐ § 500.2026(1)(n) — Failure to promptly provide reasonable explanation of denial or compromise basis
☐ § 500.2006 — Failure to pay benefits within 60 days of receipt of satisfactory proof of loss (12% penalty interest accrues to insured)
☐ § 500.3142 — Failure to pay no-fault PIP benefits within 30 days (PIP penalty interest)
☐ § 500.3148 — Unreasonably refused or unreasonably delayed PIP benefits (entitling insured to attorney fees)
☐ Other: [____________________________________________________________]

V. Documents Enclosed

☐ Declarations page and complete policy
☐ Sworn proof of loss / "satisfactory proof of loss" submission
☐ Notice of loss / first report of claim
☐ Estimates, invoices, repair / valuation documentation
☐ Medical records and bills (if PIP/health)
☐ Application for No-Fault Benefits (if PIP)
☐ Wage-loss and household-services documentation (if PIP)
☐ Photos / video of damage
☐ All correspondence with insurer and adjuster
☐ Denial / reservation-of-rights letter(s)
☐ Authorization for DIFS to obtain claim file (signed)
☐ Authorized Designation Form (FIS 2365) (if filed on behalf of another)
☐ Other: [____________________________________________________________]

VI. Requested DIFS Action

The Insured respectfully requests that DIFS:

1. Forward this complaint to [INSURER] and require a written response;
2. Review the response for compliance with MCL § 500.2026, § 500.2006, § 500.3142–.3148 (if PIP), and applicable administrative rules;
3. Impose appropriate fines or sanctions if the company, adjuster, or agent has violated Michigan law; and
4. Refer the matter for market-conduct examination if a pattern is identified.

The Insured understands that DIFS cannot act as legal counsel, render coverage opinions, order payment of disputed amounts, or determine fault.

VII. Authorization

I, [INSURED NAME], authorize the Michigan Department of Insurance and Financial Services to obtain from [INSURER] the complete claim file, underwriting file, and all related correspondence concerning Claim No. [____________] under Policy No. [____________], and to share information with [INSURER] necessary to investigate this complaint.

VIII. Signature

Respectfully submitted,

_______________________________
[INSURED OR COUNSEL NAME]
Date: [__/__/____]

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PART B — BAD-FAITH / PENALTY-INTEREST DEMAND LETTER

Sender Letterhead

[ATTORNEY OR FIRM NAME]
[STREET ADDRESS]
[CITY], MI [ZIP]
Phone: [____________]
Email: [____________]
Michigan Bar No.: [____________]

Date and Recipient

Date: [__/__/____]

Sent Via:
☐ U.S. Certified Mail, Return Receipt Requested (Tracking No. [____________])
☐ FedEx / UPS Overnight (Tracking No. [____________])
☐ Email to [____________] (read-receipt requested)
☐ Hand delivery

To:
[INSURER LEGAL NAME]
Attn: General Counsel / Claims Director
[STREET ADDRESS]
[CITY], [STATE] [ZIP]

cc: [Claims Adjuster], [Adjuster Email]
cc: Resident Agent for Service in Michigan — [____________]

Re: Demand for Payment of Insurance Benefits and Notice of Statutory Penalty Interest (MCL § 500.2006 / § 500.3142)
Insured: [____________]
Policy No.: [____________]
Claim No.: [____________]
Date of Loss: [__/__/____]
Date of Satisfactory Proof of Loss: [__/__/____]

SETTLEMENT COMMUNICATION — Subject to MRE 408

I. Parties

The undersigned represents [INSURED LEGAL NAME] ("Insured") in connection with the above-captioned insurance claim against [INSURER LEGAL NAME] ("Insurer"), authorized to transact insurance in Michigan (NAIC No. [_____]).

II. Claim and Response History

[Narrative summary of carrier's handling.]

[____________________________________________________________]
[____________________________________________________________]
[____________________________________________________________]

III. Violations of the Uniform Trade Practices Act (MCL § 500.2026)

Insurer's conduct constitutes one or more unfair claims settlement practices under MCL § 500.2026(1):

• § 500.2026(1)(b) — failure to acknowledge promptly or act reasonably and promptly upon communications;
• § 500.2026(1)(c) — failure to adopt and implement reasonable standards for prompt investigation;
• § 500.2026(1)(d) — refusing to pay claims without a reasonable investigation;
• § 500.2026(1)(e) — failure to affirm or deny coverage within a reasonable time after proof of loss completed;
• § 500.2026(1)(f) — failure in good faith to effectuate prompt, fair, and equitable settlement where liability is reasonably clear;
• § 500.2026(1)(g) — compelling insureds to litigate by offering substantially less than the amounts due;
• § 500.2026(1)(n) — failure to promptly provide a reasonable explanation of the basis for denial or compromise.

While § 500.2026 itself has no private right of action, these practices establish dilatory conduct relevant to penalty interest under § 500.2006 and (in PIP) attorney-fee liability under § 500.3148.

IV. Statutory Penalty Interest Under MCL § 500.2006

Under MCL § 500.2006(4) and the Michigan Supreme Court's decision in Nickola v. MIC Gen. Ins. Co., 500 Mich. 115 (2017), Insured is entitled to 12% simple interest per annum on all unpaid benefits, computed from the date 60 days after Insurer's receipt of satisfactory proof of loss until payment.

The "reasonably in dispute" qualifier in § 500.2006(4) applies only to third-party tort claimants and does NOT shield Insurer from penalty interest owed to its own Insured. Nickola, 500 Mich. at 130–32.

Computation:

V. PIP-Specific Penalties (If No-Fault Auto Claim)

If this is a Michigan no-fault PIP claim:

• MCL § 500.3142 — PIP benefits are overdue if not paid within 30 days after Insurer receives reasonable proof of the fact and amount of loss; overdue benefits bear simple interest of 12% per annum.
• MCL § 500.3148(1) — An insurer that unreasonably refuses to pay or unreasonably delays in paying PIP benefits owes Insured's attorney a reasonable attorney fee, in addition to the benefits.

[If applicable] Insured asserts that Insurer's refusal/delay is unreasonable because [identify facts].

VI. Common-Law Limits (Kewin Rule)

Insured acknowledges that, under Kewin v. Massachusetts Mutual Life Ins. Co., 409 Mich. 401 (1980), Michigan does not recognize a free-standing tort of first-party insurance bad faith for purely commercial insurance contracts, and that consequential damages for mental distress are generally unavailable on contract claims. Insured's recovery is therefore limited to: (a) contract damages (full policy benefits); (b) 12% penalty interest under § 500.2006; (c) prejudgment / statutory interest; (d) attorney fees on overdue PIP under § 500.3148 (where applicable); and (e) any consequential damages that were within the contemplation of the parties at contracting.

VII. Demand for Payment

Insured demands payment of the following within THIRTY (30) DAYS of Insurer's receipt of this letter:

Response deadline: [__/__/____]

Payment must be by company check or wire to: [____________________________________________________________].

VIII. Consequences if Not Resolved

If Insurer does not tender full payment by the deadline, Insured will, without further notice:

1. File suit in [Circuit Court of ____________ County, Michigan / U.S. District Court for the ____________ District of Michigan];
2. Plead breach of contract and claim 12% statutory interest under MCL § 500.2006 (or § 500.3142 if PIP);
3. (If PIP) claim attorney fees under MCL § 500.3148 for unreasonable refusal or delay;
4. (If excess-judgment third-party scenario) plead bad-faith failure to settle under Commercial Union v. Liberty Mut.;
5. Submit a copy of this demand and Insurer's response to DIFS for market-conduct review.

IX. Litigation Hold

Insurer is hereby placed on formal litigation hold. Preserve all documents and ESI relating to this claim, including:

• Complete claim file and activity / diary notes (electronic and paper);
• All recorded statements, EUO transcripts, and SIU files;
• IME reports and underlying communications with examiners;
• Underwriting file and policy administration records;
• Reserve worksheets, indemnity / expense reserves history, and committee minutes;
• All communications (email, chat, voicemail, telephony metadata) with the Insured, counsel, experts, and reinsurers;
• Claims handling manuals, bulletins, scripts, and training materials in effect on the date of loss;
• All third-party vendor files (independent adjusters, engineers, contractors, appraisers, medical reviewers);
• (PIP) Mileage logs, replacement-services proofs, MCCA filings, and PIP-coordination-of-benefits records.

Insurer is reminded that auto-deletion policies must be suspended for the duration of this dispute.

X. Response Deadline

Please direct your written response to the undersigned no later than [__/__/____].

Nothing in this letter waives, modifies, or releases any right, claim, defense, or remedy of the Insured, all of which are expressly reserved. In particular, Insured does not waive the running of 12% statutory interest, which continues to accrue daily.

XI. Signature

Respectfully,

_______________________________
[ATTORNEY NAME]
[FIRM NAME]
Michigan Bar No. [____________]
Counsel for [INSURED]

Enclosures: Declarations page; sworn proof of loss; correspondence file; valuation evidence; itemization of damages with interest computation

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PART C — Pre-Filing Checklist

A. Coverage and Policy

☐ Full certified copy of the policy in effect on date of loss obtained
☐ All endorsements / exclusions reviewed (including Michigan-specific endorsements)
☐ Premium-paid status confirmed
☐ Named insureds, additional insureds, loss payees identified
☐ Other potentially applicable policies (umbrella, excess, employer no-fault) identified
☐ MCCA / Assigned Claims Plan analysis (if PIP and applicable)

B. Claim Process and Conditions Precedent

☐ Notice of loss documented (date, method, recipient)
☐ "Satisfactory proof of loss" submission documented — 60-day § 500.2006 trigger
☐ Insurer's written specification of "satisfactory proof of loss" under § 500.2006(2) obtained or absence noted
☐ Cooperation clause compliance (recorded statements, EUO, document production)
☐ IME / EUO transcripts obtained
☐ Contractual SOL / suit-limitation clause calendared (1-year fire policy clause; PIP 1-year-back rule § 500.3145)
☐ Appraisal clause analyzed

C. Damages Documentation

☐ Itemized scope of loss / estimate from qualified expert
☐ Comparable replacement-cost evidence
☐ Medical records and bills (if PIP/health)
☐ Wage-loss / household-services documentation (if PIP)
☐ Photographs / video of loss
☐ 12% interest computation prepared and updated to demand date

D. Carrier Conduct — UTPA / Penalty-Interest Evidence

☐ Timeline of all communications memorialized
☐ Adjuster diary / claim notes requested
☐ Reservation-of-rights and denial letters preserved
☐ Comparison of insurer's offer(s) vs. ultimate valuation prepared
☐ Nickola analysis confirms claimant is "insured" (not third-party tort claimant)
☐ § 500.2026 violations specifically identified
☐ (PIP) § 500.3148 "unreasonably refused / unreasonably delayed" analysis prepared

E. Kewin / Bad-Faith Limits

☐ Confirmed that first-party tort bad-faith / emotional-distress recovery is unavailable under Kewin (commercial policies)
☐ If third-party excess-judgment scenario: Commercial Union 12-factor analysis prepared
☐ Consequential damages analyzed for "within the contemplation of the parties" test

F. Regulatory and Procedural

☐ DIFS complaint filed (Part A) or strategic decision documented not to file
☐ Authorized Designation Form (FIS 2365) filed if representing another
☐ Authorization for DIFS to access claim file signed
☐ Venue, jurisdiction, removal analysis complete
☐ Statute of limitations and contractual shorter periods calendared
☐ Litigation hold sent to insurer (Part B § IX)
☐ Pre-suit MRE 408 designation on all demand correspondence

Sources and References

• Michigan DIFS — Filing a Complaint: https://www.michigan.gov/difs/consumers/complaint
• DIFS Online Complaint Form: https://difs.state.mi.us/Complaints/FileComplaint.aspx
• DIFS Contact Information: https://www.michigan.gov/difs/about/contact-info
• MCL § 500.2006 (Penalty interest): https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-2006
• MCL § 500.2026 (Unfair acts defined): https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-500-2026
• MCL § 500.3142 (PIP overdue benefits / 12% interest)
• MCL § 500.3148 (Attorney fees on overdue PIP)
• MCL § 500.3145 (PIP statute of limitations / 1-year-back rule)
• MCL § 600.5807(9) (6-year SOL on written contract)
• Kewin v. Massachusetts Mut. Life Ins. Co., 409 Mich. 401 (1980)
• Nickola v. MIC Gen. Ins. Co., 500 Mich. 115 (2017)
• Commercial Union Ins. Co. v. Liberty Mut. Ins. Co., 426 Mich. 127 (1986)
• Frankenmuth Mut. Ins. Co. v. Keeley, 433 Mich. 525 (1989) (bad-faith failure to settle, dissent later adopted by maj. in Commercial Union)
• NAIC Consumer Insurance Search: https://content.naic.org/cis_consumer_information.htm