{"id":900089,"date":"2022-06-28T16:19:13","date_gmt":"2022-06-28T22:19:13","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=900089"},"modified":"2022-06-28T16:19:30","modified_gmt":"2022-06-28T22:19:30","slug":"proof-of-loss-importance-michigan","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/proof-of-loss-importance-michigan\/","title":{"rendered":"Recent Michigan Court Ruling Reinforces Importance of Providing Prompt \u201cProof of Loss\u201d"},"content":{"rendered":"\n<p>Aaron F. Jaroff and Stephen G. Foresta | <a href=\"https:\/\/www.propolicyholder.com\/2022\/06\/michigan-court-ruling-proof-of-loss\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">McGuireWoods<\/a><\/p>\n\n\n\n<p>In several states, an insured that prevails in a coverage dispute against its insurer is entitled to statutory \u201cpenalty interest\u201d added to the amount owed by the insurer.\u00a0 A June 8, 2022 decision from the United States District Court for the Western District of Michigan illustrates the importance of meeting the \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/can-misrepresentations-in-a-proof-of-loss-void-coverage\/\" target=\"_blank\" rel=\"noreferrer noopener\">proof of loss<\/a>\u201d requirements of such statutes.<\/p>\n\n\n\n<p>In\u00a0<em>Alticor Global Holdings, Inc. v. American International Specialty Lines Insurance Co.<\/em>, an insured filed an action against its insurer after the insurer refused to reimburse the costs of defending and ultimately settling copyright infringement claims asserted against the insured.\u00a0 The District Court found that the insured was entitled to coverage under an Internet and Network Security Insurance Policy for $24 million in costs incurred in the underlying lawsuit and then considered the amount of interest that should be paid by the insurer on top of the breach of contract damages awarded to the insured.<\/p>\n\n\n\n<p>Under Michigan Compiled Laws \u00a7 500.2006, an insurer that does not pay a claim on a timely basis is subject to a penalty of 12% interest that begins to run from the date that the insured provides \u201csatisfactory proof of loss.\u201d If the insurer fails to specify what constitutes satisfactory proof of loss within 30 days after receipt of the claim, this requirement is excused.&nbsp; Penalty interest is distinct from prejudgment interest, which, under Michigan law, begins to run from the date of the filing of a complaint against an insurer that wrongfully denies coverage and accrues at a much lower annual interest rate than the penalty interest. &nbsp;The accrual of both penalty interest, if available, and prejudgment interest ends when judgment is entered, at which time the prevailing insured is entitled to post-judgment interest.<\/p>\n\n\n\n<p>In&nbsp;<em>Alticor Global<\/em>, the court determined that for the amount paid to settle the underlying claims, the insured met the \u201csatisfactory proof of loss\u201d requirement by providing the settlement agreement to the insurer shortly after the agreement was executed.&nbsp; With respect to the defense costs that were owed under the policy, the court found that the insured provided satisfactory proof of loss when it gave the insurer a spreadsheet listing its claimed legal fees and costs.&nbsp; The court rejected the insurer\u2019s argument that actual invoices were necessary, as it had accepted the spreadsheet without further inquiry and because \u201cmaterials only need to detail the costs incurred and meet the insurer\u2019s written demand\u201d for a detailed description of defense costs to be satisfactory proof of loss.&nbsp; The court held that in addition to penalty interest, the insured was entitled to mandatory prejudgment interest, but because the insured provided \u201csatisfactory proof of loss\u201d prior to filing the complaint, the award of prejudgment interest was subsumed in the larger penalty interest award, which also prevented a duplicative interest recovery.&nbsp; In total, the award of penalty interest and prejudgment interest was more than $13 million.<\/p>\n\n\n\n<p>Michigan is not alone in awarding penalty interest.\u00a0 Other states, including Arizona, Colorado, Maine, New Mexico, Tennessee, Texas, Washington, and Wisconsin have statutes that in certain circumstances permit penalty interest or similar recovery for delay or unreasonable denial of claims.\u00a0 Insureds should be sure to familiarize themselves with the relevant state\u2019s insurance statutory framework and, insureds asserting claims governed by state law that permits penalty interest should be sure to not only provide prompt notice of their claims, but also to substantiate their losses as soon as possible, in order to maximize any interest recovery.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Aaron F. Jaroff and Stephen G. Foresta | McGuireWoods In several states, an insured that prevails in a coverage dispute against its insurer is entitled to statutory \u201cpenalty interest\u201d added to the amount owed by the insurer.\u00a0 A June 8, 2022 decision from the United States District Court for the Western District of Michigan illustrates&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/proof-of-loss-importance-michigan\/\">Continue reading <span class=\"screen-reader-text\">Recent Michigan Court Ruling Reinforces Importance of Providing Prompt \u201cProof of Loss\u201d<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10721],"tags":[9895,11710,194],"class_list":["post-900089","post","type-post","status-publish","format-standard","hentry","category-insurance","tag-advise-consult","tag-insurance-cover","tag-proof-of-loss","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Recent Michigan Court Ruling Reinforces Importance of Providing Prompt \u201cProof of Loss\u201d - Advise &amp; 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