Senate Bill 245: Why a Bad Faith Insurance Law is Necessary
In Michigan, insurance companies have a nearly free pass to act in bad faith without any punishment. When an insurance company acts in bad faith by forcing long delays when processing claims, denying coverage without proper reasoning, or withholding some or all of the agreed upon coverage for a valid claim, for example, there is no existing means legally to hold insurance companies accountable. The harms that Michiganders continue to suffer as a result, such as a closure of businesses, mental anguish, and financial ruin, demonstrate the need for a law targeting insurance companies acting in bad faith. Fortunately, Senate Bill 245, if passed, would do just that.
First introduced by Senator Irwin in 2025, Senate Bill 245 aims to counter the common “delay, deny, defend” tactics of insurance companies, where they intentionally make it harder for policyholders to obtain valid claims for the sake of making a profit. Sen. Irwin stated during a hearing for the bill on December 10th, 2025 that the bill would make sure policyholders get not just what they were owed, but would allow them to recover additional damages instead of just the policy benefits, create ways for policyholders to recover their legal costs, and induce financial punishments for insurance companies that delay court dates. The hearing also included testimonials from Michiganders supporting the bill, who detailed their stories of harm caused by insurance companies. From denials of agreed-upon coverage for life-saving medical care and short-changed compensation for businesses destroyed by disasters, these stories are integral to why Senate Bill 245 must be passed. Without the bill, insurance companies have free reign to exploit Michigan’s Wild-West insurance law landscape to make a couple extra bucks.
An opinion piece in the Detroit News titled “Michigan must protect insurance policyholders” details why Senate Bill 245 is a long overdue law and should have been passed many years ago. The op-ed, written by Nick Andrews, the current President of the Michigan Association of Justice (one of Protect MI Families’ coalition partners) fleshes out Sen. Irwin’s sentiments while clarifying that the bill has no real downsides for the insurance industry, besides keeping them from breaking the law. Andrews clarifies that insurers who act in good faith have nothing to worry about with the bill, as it draws “a clear line between a legitimate coverage dispute and institutional bad faith.” The bill does not prevent insurers from investigating claims, mandating payments, or having legitimate disagreements when negotiating coverage. A common critique of the bill is that the bill will drive up costs for Michigan residents and push insurers out of Michigan, but Michigan is one of only 7 states without bad faith protections, and the outcomes promised by opponents of the bill have not occurred in other states with bad faith legislation. There is no reason for Michigan to be an exception.
The fact is, dealing with insurance companies is a requirement of life in Michigan. Owning a car, having a mortgage on your house, accessing medicine, and maintaining business protection are all tied to the insurance industry. The premiums we pay to insurance companies are to ensure they can protect us when life hits us hard, but these companies have long been able to make life even harder by breaking their promises. “Michigan policyholders keep their side of the bargain every day. The law should do more to ensure insurers keep theirs,” Nick Andrews states. If an insurance company decides to kick you while you are down, there is nothing you can do right now to fight back. Senate Bill 245 is necessary to give you a seat at the table, and hold insurance companies accountable for exploiting you. That is why Protect MI Families is laser-focused on passing the bill and giving you the fighting chance you deserve.
A bill like Senate Bill 245, which stands in opposition to the companies and lobbyists that influence the Michigan legislature, will not pass without the help of everyday Michiganders. We need your help to make sure this bill is passed, and you can be protected from insurance companies seeking to exploit you at your lowest points in life. If you would like to take action for Senate Bill 245 and support Protect MI Families in passing this critical piece of legislation, you can contact your legislator here. You can also contact your legislator through the Michigan Association of Justice here.
Read the full op-ed by Nick Andrews here.
Watch the livestreamed Senate Committee Meeting here.
