What Is Insurance Bad Faith In Michigan And Can You Sue Your Insurer?
As Michigan personal injury attorneys, we often hear from clients who feel betrayed by their insurance companies. After an accident, you expect your insurer to be there, to honor the policy, pay valid claims, and communicate honestly. Unfortunately, that doesn’t always happen. When an insurance company refuses to pay a legitimate claim or treats you unfairly, you may be dealing with something called insurance bad faith.
Michigan law requires insurance companies to handle claims fairly, promptly, and honestly. When they fail to meet those obligations, it can cause significant financial and emotional stress, especially when you’re already recovering from a serious injury. While Michigan does not recognize a standalone claim for bad faith in all circumstances, certain types of misconduct by insurers may still allow you to sue for breach of contract, fraud, or violation of the Michigan Consumer Protection Act. Understanding how this process works is essential if you’re struggling to get your insurance claim paid.
Understanding Insurance Bad Faith In Michigan
Insurance bad faith occurs when an insurer refuses to fulfill its legal obligations to a policyholder without a reasonable basis. In many states, bad faith is a separate cause of action. In Michigan, however, courts generally limit recovery to breach of contract and allow additional damages only in specific cases involving fraud, malicious conduct, or statutory violations.
Under Michigan law, an insurer has a duty to act in good faith when handling your claim. That means they must investigate fairly, respond in a timely manner, and pay valid claims without undue delay. If they deny a claim without a reasonable investigation, ignore evidence, delay payments without justification, or try to underpay, they may be liable under contract law or other legal theories.
Legal Remedies For Insurance Misconduct
Although Michigan courts do not recognize a general tort of bad faith, policyholders may still sue for breach of contract if their insurer fails to honor policy terms. Under Michigan contract law, damages typically include the value of the denied claim plus interest.
In cases involving malicious or fraudulent conduct, additional remedies may be available. For example, if an insurer intentionally misleads a claimant or acts with the intent to cause harm, the plaintiff may bring a claim for fraud. If an insurer’s conduct violates the Michigan Consumer Protection Act (MCL 445.901 et seq.), you may also be entitled to actual damages, costs, and attorney fees.
When insurance issues arise after a birth injury or other medical malpractice case, the stakes are especially high. If your health insurer refuses to pay for necessary treatment or a liability insurer unreasonably denies coverage, the impact on your child’s future can be devastating. In those cases, we act quickly to protect your legal rights and force the insurer to meet its obligations.
How Insurance Issues Can Arise In Birth Injury Cases
In birth injury lawsuits, multiple types of insurance may be involved: health insurance, malpractice liability insurance, and sometimes auto insurance if the injury involved vehicle transportation. If any of these insurers fail to respond in good faith, it can delay care, block access to therapy, or undermine the settlement of a malpractice claim.
For example, if a malpractice insurer delays settlement negotiations despite clear liability, the injured child’s family may experience additional hardship. In some cases, insurers delay long enough to pressure families into accepting low settlements. We make sure that doesn’t happen. If an insurer acts unfairly or dishonestly, we aggressively pursue every available legal remedy.
Insurance Bad Faith Claim Frequently Asked Questions
Can I Sue My Insurance Company If They Refuse To Pay My Claim?
Yes. If your insurer wrongfully denies a valid claim or fails to uphold the terms of your policy, you can sue for breach of contract. Depending on the conduct involved, you may also have additional claims for fraud or violations of state law. We assess each case individually to determine all potential causes of action.
Does Michigan Allow Lawsuits For Insurance Bad Faith?
Michigan does not recognize a standalone tort for insurance bad faith in most cases. However, courts do allow breach of contract claims and may award additional damages if the insurer engaged in fraudulent or malicious behavior. We evaluate your insurer’s conduct carefully to determine whether more than a contract claim can be made.
What Should I Do If My Claim Is Being Delayed Or Denied?
Document everything, communications, claim submissions, policy language, and denial letters. Then, contact an attorney. We can review your policy, assess the reason for the denial, and demand that the insurer comply with the law. If necessary, we will file suit to protect your rights and force accountability.
Can Bad Faith Apply To Health Insurance In Birth Injury Cases?
Yes. If your child suffered a birth injury and your health insurer refuses to cover necessary medical treatment or therapy without a valid reason, we may be able to pursue legal action. Similarly, if a malpractice insurer fails to negotiate fairly or delays resolution, it may be acting in bad faith under Michigan law.
Are There Deadlines To Sue An Insurer In Michigan?
Yes. The statute of limitations for contract actions in Michigan is typically six years under MCL 600.5807. However, insurance policies may contain shorter contractual deadlines, so it’s critical to act quickly. Missing a deadline can permanently bar your claim. We always review timing carefully to preserve your rights.
How Can An Attorney Help With A Bad Faith Insurance Claim?
We hold insurers accountable when they try to deny valid claims or use unfair tactics. We gather evidence, negotiate aggressively, and file suit when needed. Whether you’re facing delays, denials, or lowball offers, we ensure your insurer lives up to its legal responsibilities.
Call Ravid & Associates, P.C. If You’re Facing Insurance Misconduct In Michigan
If your insurer has denied, delayed, or underpaid your claim unfairly, we’re ready to fight for the compensation you’re owed. Insurance companies are not above the law, and we make sure they know it.
Contact our Detroit insurance bad faith attorneys at Ravid & Associates, P.C. today by calling (248) 948-9696 to receive your free consultation and learn how we can help protect your rights against bad faith insurance practices. We represent clients in Detroit and throughout the entire state of Michigan from our Southfield office.
