Michigan Supreme Court: UTPA Penalty Interest Proper for Untimely UIM Benefit Payments
Insured injured in a car accident claimed underinsured motorist (UIM) benefits because the adverse driver was insufficiently insured. The insured asked the court to assess penalty interest under the Uniform Trade Practices Act (UTPA) for payments made far beyond the statutory deadline. The trial court and Court of Appeals refused finding that penalty interest did not apply because the claim essentially placed the insured in the shoes of a third-party claimant. Because the claim was “reasonably in dispute” for purposes of MCL 500.2006(4), no penalty interest was owed. The Supreme Court of Michigan held that an insured making a first party claim cannot be considered a “third party tort claimant” under the Act. The Court reversed and remanded for further proceedings.