Michigan Basic Property Insurance avoids paying sanctions for fire losses
The Acorn Investment Company suffered a fire and sought to collect limited damages from its insurer, MBPIA. "Michigan Basic" denied the claim, so Acorn sued. The Court granted Acorn summary disposition and the parties then agreed to submit the claim to statutory appraisal to determine the amount of the loss. In the interim, Michigan Basic rejected a case evaluation of $11,000.00. The appraisal came back at $20,000.00 and was enforced by the trial court.
Nevertheless, the court refused to grant Acorn case evaluation sanctions, which Acorn sought pursuant to the Court rule governing case evaluation. Even though the insurer did not improve on the case evaluation by ten percent--as required to avoid sanctions under the Court Rule--the court denied sanctions because the statutory appraisal is deemed not comparable to a "jury verdict," which is the precise language of the Rule.
So the insurer wrongfully denied a claim on the basis of a defense that was summarily rejected, then rejected an evaluation that was barely half of the actual loss, but will not be required to compensate the insured for the true legal cost of holding the insurer to its contractual obligations.