Michigan Senate Bill 245: Why It Matters to Injured Policyholders—and Why I Support It

A Longstanding Gap in Michigan Auto Insurance Law

I’ve been practicing personal injury law in Michigan for years, and one thing hits me hard every time: too many injured people get squeezed by insurance companies that drag their feet or lowball claims without much fear of real pushback. As a personal injury attorney, I see firsthand how insurance delays and denials affect real people—people who are already injured, missing work, and trying to get medical care. Before joining a plaintiffs’ firm, I worked on the insurance defense side. That experience gives me a unique perspective on how claims are handled behind the scenes—and why this bill matters.

Michigan stands out as one of the few states that DOES NOT give policyholders a solid, direct way to sue for insurance bad faith. When insurers unreasonably delay, deny, or underpay valid claims, the options for recourse are usually just basic contract damages plus some statutory interest—often nowhere near enough to cover the real damage done.

Michigan’s lack of bad-faith protection leaves policyholders without real accountability when insurers act unreasonably. Michigan Senate Bill 245 represents a potential turning point, and could finally start to shift things by holding insurers accountable when they act unreasonably.

SB 245 is not abstract policy. It would fundamentally rebalance power between insurers and injured Michigan residents by creating real consequences for bad-faith conduct.

The Current Landscape: How Michigan Law Treats Bad-Faith Conduct Today

Right now, there’s no standalone tort claim for bad faith insurance practices in most cases. Remedies are limited—mostly to what the policy pays out, plus 12% penalty interest under the Uniform Trade Practices Act if payments are unreasonably delayed (after proof of loss). But that interest only kicks in under specific conditions, and it doesn’t touch things like emotional distress or punitive damages for egregious behavior.  

While claims for Uniform Trade Practices Act are currently plead infrequently.  I personally have represented an Insurance Company as a Defendant in a Trial involving the current Uniform Trade Practices Act, which were plead in addition the Uninsured Motorist Claims,  and in my view, the practical reality as well is, these uniform trade practice claims (the only current recourse) are commonly treated as a non threat by insurers. 12 percent penalty interest does not hold the same weight as a standalone tort claim.  

In practice, this lets some insurers play games: slow-walking investigations, offering insultingly low settlements, or denying claims with weak excuses. The burden falls on the injured person—who’s already dealing with recovery—while the insurer holds most of the cards on timing and information. As a plaintiff’s attorney, I see this gap all the time. Bad handling is obvious and hurts people, but it’s rarely actionable in a way that truly deters it.

The bottom line is simple: Michigan law currently lacks teeth when insurers act unreasonably.

What Senate Bill 245 Proposes to Change

Introduced in 2025, Senate Bill 245 seeks to amend the Insurance Code to add real teeth against unfair claims handling. It would create clearer rules and consequences, bringing Michigan closer to how most other states handle this.

Key changes include:

• A direct path to claim bad faith for unfair practices during claims handling.
• Specific examples of bad faith, like unreasonable delays, baseless denials, unjustified underpayments, or not clearly spelling out what proof is needed.
• Stricter timelines: Insurers would have to tell claimants in writing within 30 days what documents make up satisfactory proof of loss, and pay supported claims within 60 days of getting that proof.
• Stronger penalties: 12% interest on delayed payments (potentially even beyond policy limits in some bad-faith scenarios), plus options for extra damages—including emotional distress and punitive damages in serious cases. There’s also a rebuttable presumption of bad faith if certain statutory violations occur.

The bill focuses on first-party and third-party claims, emphasizing good-faith settlement when liability is reasonably clear. It doesn’t force automatic payouts or punish honest investigations—just unreasonable conduct.

Why SB 245 Matters for Our Injured Clients

This isn’t some abstract debate for me—it’s about the people we represent every day. When insurers face meaningful accountability early on, claims often get handled faster and fairer. That means my clients might not have to delay treatment, rack up debt, or take bad deals just to survive. I have seen situations where even when the insurance company has been provided with seemingly undisputed proofs, and in situations where coverage is seemingly clearly owed, they will still attempt to low ball, or delay payment. 

It levels an uneven field. Insurance companies deal with claims constantly and have huge resources. Most injured folks are going through this once, in the middle of a tough time. Giving them better tools to push back promotes quicker resolutions and less need for drawn-out lawsuits.

In litigation, if this passes, we’d see more focus on the insurer’s internal decisions—discovery into adjuster notes, procedures, and reasons for delays. That encourages better documentation and prompt handling of solid claims, which could cut down on prolonged fights that wear people out.

How SB 245 Would Change Litigation Strategy

Legally, SB 245 would make claims-handling conduct central, not incidental. Discovery would expand to include:

• Internal claims-handling procedures
• Adjuster communications
• Justifications for delays or denials

Insurers would need to document good-faith decision-making and resolve close cases more promptly. In many situations, that means cases resolve earlier—reducing the emotional toll prolonged litigation takes on injured clients. Importantly, SB 245 does not punish legitimate investigation. It penalizes unreasonable conduct.

Addressing the Opposition’s Concerns

The insurance industry has raised some valid-sounding concerns: higher premiums, more frivolous suits, or pressuring quick payments without scrutiny. They’ve pointed to analyses (like one from Milliman) suggesting big cost jumps—potentially 11-21% premium increases if similar laws are in place.

But accountability doesn’t mean “pay everything immediately.” The bill keeps requirements for proof, court oversight, and a finding of unreasonableness before extra damages apply. Plenty of states with bad-faith laws have stable insurance markets without chaos. The real hidden cost today is borne by injured residents who suffer from delays and denials.

Why Personal Injury Attorneys Support SB 245

I’m not pushing for more lawsuits—I’m pushing for better behavior upfront. When insurers know unreasonable tactics carry real risk, most will handle claims more transparently and promptly. That helps everyone: fewer cases escalate, and those that do resolve faster.

What’s at Stake

As of early 2026, SB 245 has had hearings (including testimony from attorneys and injured people in late 2025), but it’s still in committee and not yet law. If it passes, Michigan could join the majority of states in offering stronger protections—giving injured policyholders more leverage for fair, timely outcomes.

If it stalls, the current imbalance continues: limited accountability for insurers, and continued hardship for people who are already hurting. This is about basic fairness in the system. When someone pays premiums for protection, they deserve reasonable handling when disaster strikes—not games that make recovery harder. 

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