Legislative Proposal to Change Auto Insurance Rules in Michigan
A new legislative proposal in Michigan could alter how auto insurers handle policy cancellations and claim denials related to undisclosed household members.
Introduced on September 9, 2026, Senate Bill 1153 aims to modify the insurance landscape in Michigan by adding section 2116c to the state’s insurance code. The bill, currently under the scrutiny of the Committee on Finance, Insurance, and Consumer Protection, would prevent insurers from taking adverse actions such as canceling policies or denying claims solely due to non-disclosure of a household member who joins during an active policy term. Instead, insurers would only be able to request details about resident relatives during application and renewal stages.
Potential Impacts on Insurers
If enacted, this bill would necessitate significant operational changes for insurers. They would need to redesign application processes to align with the new requirements, ensuring that "resident relatives" are clearly defined and that policyholders are explicitly informed during renewal periods about the need to disclose all household members. These changes are particularly important if minors or non-drivers are involved.
Regulatory and Procedural Adjustments
Underwriting and claims departments would face considerable adjustments to comply with this legislation. Underwriting processes would need to accommodate mid-term policy changes while adhering to the bill's stipulations. Claims departments, meanwhile, would need to eliminate the use of undisclosed resident defenses as a basis for denial, which aligns with the intent of the bill to protect consumers from abrupt policy cancellations or denials.
| Stage | Insurer Requirements |
|---|---|
| Application | Define "resident relatives"; Request information |
| Renewal | Notify policyholders; Request disclosures |
The bill's outcome is still pending as deliberations continue within the Committee on Finance, Insurance, and Consumer Protection. Insurance professionals should closely monitor its progress, as its passage could reshape standard practices within the industry and impact both compliance efforts and consumer relationships in Michigan.