M.C.L. § 500.2026 and Common Law:
Michigan law states, pursuant to M.C.L. § 500.2026, unfair methods of competition and unfair or deceptive acts or practices in the business of insurance, other than isolated incidents, are a course of conduct indicating a persistent tendency to engage in that type of conduct and include: . . . (f)failing to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
An insurer “is liable to the insured for an excess of judgment over the face of the policy when the insurer, having exclusive control of settlement, fraudulently or in bad faith refuses to compromise a claim for an amount within the policy limit.” The insurer is liable to its insured for a judgment exceeding the policy limits when the insurer, who has exclusive control of defending and settling the suit, refuses to settle within policy limits in ‘bad faith.’” Bad faith is defined as “arbitrary, reckless, indifferent, or intentional disregard to the interests of the person owed a duty” and not simply an error in judgment or negligence. Factors that Michigan Courts use to determine bad faith include:
In Michigan, “the primary carrier does not owe a direct duty to the excess carrier to act in good faith to defend and settle a claim within the former’s policy limits. The excess carrier has the right to bring a subrogation action against the primary insurer for bad faith failure to settle. The excess carrier has “no less or greater rights than those held by the insured.”
 M.C.L. § 500.2026(1)(f).
 City of Wakefield v. Globe Indem. Co., 246 Mich. 645, 648 (1929).
 Commercial Union Ins. Co. v. Medical Protective Co., 426 Mich. 109, 116 (1986).
 Tibblev. Am. Phys. Capital Inc., 2014 Mich. App. LEXIS 2088 at *25-26 (Ct. App.2014).
 Commercial Union Ins. Co. v. Liberty Mut. Ins. Co., 426 Mich. 127, 138 (1986).
 Commercial Union Ins. Co. v. Med. Protective Co., 393 N.W.2d 479, 486 (Mich. 1986).
Chartwell Law represents the interests of insurers and employers, as such, we continue to continue to monitor the legal landscape. If you have any questions about issues associated with right of action for bad faith claims, our attorneys are available to help. Please contact your Chartwell Law attorney.