State RegulationsMI specificDifficulty 1/5
A Michigan insurer has not paid a death benefit more than one month after receiving satisfactory proof of loss. Under the Michigan Insurance Code, when does interest on unpaid insurance proceeds begin and at what rate?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.2006 requires Michigan insurers to pay benefits within a reasonable time or to pay 12% annual interest on amounts unpaid, with the interest clock beginning 60 days after satisfactory proof of loss is filed. The same section gives the insurer 30 days after a claim is received to specify what constitutes proof, so interest runs from the proof — not from a lawsuit or a good-faith denial.
Why the other options are wrong
- B) The 30-day period in M.C.L. 500.2006 is the time to specify what constitutes proof of loss, not the start of the 12% interest clock.
- C) Interest does not wait for litigation; it accrues by statute 60 days after satisfactory proof of loss is filed.
- D) A good-faith denial does not stop the statutory interest from accruing on benefits left unpaid past the 60-day point.
Memory hook
60 days of silence, then 12% runs on every unpaid dollar.