When you pay insurance premiums, you expect to be covered
when something goes wrong, right? Not in Michigan.
It’s common practice here for insurance companies to
wrongfully deny or unreasonably delay legitimate claims in order to increase their
profits at the expense of consumers. Current Michigan law allows insurance
companies to engage in “wrongful denial” of a legitimate consumer claim as a
way of postponing payment to the consumer. If a homeowner and insurance holder’s
house burns down, that homeowner will immediately file a claim with his or her
insurance company in order to begin the process of rebuilding or repairing.
Ideally under this scenario, the insurance company would
quickly assess the claim and pay the requisite amount to the homeowner in order
to minimize the financial strain on the family or individual.
Not so in Michigan. Due to our lack of consumer protections in
our state, insurance companies will often immediately deny claims and tell
consumers they will investigate the circumstances. This “investigation” process
can take months or years, and consumers may be forced to engage in drawn-out
legal battles just to collect insurance money for a legitimate claim. While the
consumer is facing bankruptcy, foreclosure, or worse, the insurer is often able
to invest the money to increase their profits.
State Rep. Barb Byrum (D-Onondaga), who chairs the House
Insurance Committee, and other House Democrats have set out to change that
practice. The House Democrats’ plan fixes Michigan’s inadequate consumer
protections in two ways:
No. 1: It creates powerful deterrents for insurance
companies that wrongfully delay and deny legitimate claims and break their
promise. No longer will Michigan reward insurance companies that wrongfully
deny legitimate claims. The plan will create a $1 million fine for insurance
companies that repeatedly delay and deny legitimate claims.
No. 2: It holds insurance companies accountable when they
participate in wrongful denial practices.
Under the plan, corporate leaders who foster or encourage wrongful
denial of claims will face four years in prison plus a $50,000 penalty. When a
regular citizen commits fraud against an insurance company, they can be
sentenced to years in prison and thousands of dollars in fines. Under the House
Democrats’ plan, corporate CEOs will be held to the same standard as you and
me.
For more information, visit: http://housedems.com/wrongful-denial.
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