Michigan body shop laws: what insurers and shops must do

What it means in Michigan

The insurer, its agents and its adjusters can't unreasonably restrict an insured from using the shop they want. That is not an outright ban: the test is whether the restriction is unreasonable. By the time a claim is filed, the insurer must say whether it has agreements with any repair shops, and it must tell the insured they don't have to use a particular shop. This protects the insured under private passenger nonfleet policies.

The standard is "unreasonably restrict," not an outright ban, and it protects the insured under private passenger nonfleet policies.

The law's own words

“An automobile insurance policy and an automobile insurer and its employees, agents, and adjusters shall not unreasonably restrict an insured from using a particular person, place, shop, or entity for the providing of any automobile repair or automobile glass repair or replacement service or product covered by the policy.”

MCL 500.2110b, effective 7/8/2004

“An automobile insurer shall disclose, prior to or at the time a claim is filed with the insurer, whether the insurer has an agreement with any repair or replacement facility to provide a repair or replacement service or product to an insured”

MCL 500.2110b, effective 7/8/2004

“shall inform an insured that he or she is under no obligation to use a particular repair or replacement facility”

MCL 500.2110b, effective 7/8/2004

What it means in Michigan

The one insurer storage rule in our Michigan collection, which makes the insurer pay towing and storage from when the claim is reported until it's paid, covers only creditor-placed insurance. You can't charge storage while the repair bill is in dispute. If a parts delay holds up the job, you can charge storage only after telling the customer the expected delay and the daily rate and getting their OK. Unless agreed in writing, your lien can include no more than $10 a day for storage.

The insurer rule, MCL 500.1619, applies to creditor-placed insurance only. The lien storage limits apply unless otherwise agreed in writing.

The law's own words

Shop

From a list that begins: “shall not, directly or through an agent or employee, do any of the following:”

“Charge a customer storage charges if there is a dispute concerning repair charges.”

MCL 257.1307e, effective 4/4/2017

Shop

“If a delay in repairs is caused by a lack of parts, a facility may charge for storage after informing the customer of the approximate length of the anticipated delay and of the daily storage charge rate and obtaining the customer's consent to the delay and the storage charges.”

MCL 257.1307e, effective 4/4/2017

Shop

“Unless otherwise agreed to in writing, a garage keeper's lien under section 3 may include an amount of not more than $10.00 per day for the storage of the vehicle, for the storage of an accessory used in the operation of a vehicle, or for the storage of accessories and supplies furnished for the vehicle or an accessory used in the operation of the vehicle.”

MCL 570.304, effective 7/1/2002

Insurer

“The insurer shall be responsible for the payment of towing and storage charges for a covered loss occurrence from the time the claim is reported to the insurer in accordance with the terms of the policy to the time the claim is paid.”

MCL 500.1619, effective 3/23/2003

What it means in Michigan

You can keep the car up to 225 days after the last work. Within 105 days of the last work, apply to the Department of State for a certificate of foreclosure, then send certified letters to the owner, every lender and the Bureau of Automotive Regulation; the sale comes at least 75 days after the certificate date. An earlier lender can take the car by paying a capped amount: the lesser of 20% of the repaired car's value or $5,000, or $1,000 for a car worth $5,000 or less. In a dispute, release the car once your customer pays the written estimate plus approved extras.

The owner may redeem before the sale. A garage that does not comply with the Motor Vehicle Service and Repair Act cannot use the lien act. A prior lienholder can take the car by paying a capped amount.

The law's own words

Keep the car

“Except as otherwise provided in this act, a garage keeper who, in pursuance of a contract that is expressed, implied, written, or unwritten, furnishes labor, material, storage, diagnosis, an estimate of repairs, or supplies for a vehicle, shall have a lien upon the vehicle for the charges due for the storage, maintenance, keeping, diagnosis, estimate of repairs, and repair of the vehicle”

MCL 570.303, effective 7/1/2002

Keep the car

“The lien attaches to the vehicle on the day the garage keeper performs the last labor or furnishes the last supplies for which a lien is claimed against the vehicle. The garage keeper may keep a vehicle for not more than 225 days after performing the last labor or furnishing the last supplies for which a lien is claimed against the vehicle.”

MCL 570.303, effective 7/1/2002

Sell or title it

“To enforce a lien under section 3, a garage keeper or authorized agent shall, not more than 105 days after the date the lien attached as provided in section 3, apply to the department, in a format prescribed by the department, for a certificate of foreclosure of garage keeper's lien and bill of sale accompanied by a fee of $10.00 paid to the department.”

MCL 570.305, effective 7/1/2002

Sell or title it

“After complying with the requirements of subsection (3), the garage keeper shall notify the owner or owners, all lienholders, and the department of state, bureau of automotive regulation, Lansing, Michigan, of the proposed sale of the vehicle in order to satisfy the lien of the garage keeper by a notice sent by certified mail return receipt requested to the last known address of the owner or owners, the lienholders and the bureau.”

MCL 570.305, effective 7/1/2002

Get it back

From a list that begins: “A motor vehicle repair facility that is subject to this act, or a person that is an owner or operator of a motor vehicle repair facility that is subject to this act, shall not, directly or through an agent or employee, do any of the following:”

“(d) Fail to return a customer's vehicle if there is a dispute and the customer has paid the amount of the written estimate and any amount in excess of that amount that was agreed to either orally or in writing by the customer.”

MCL 257.1307d, effective 4/4/2017

What it means in Michigan

In Michigan, if the insurer asks for non-OEM aftermarket crash parts, you can install them only if the insured gets a written estimate identifying each one, with a 10-point bold notice that the warranty comes from the parts maker, distributor or insurer. Disclose used, rebuilt or reconditioned parts in writing before starting, and your final statement of repairs must say whether each part is new OEM, new, used, rebuilt, OEM surplus or reconditioned. No quality standard for aftermarket parts appears.

The aftermarket crash parts act covers the insured's own vehicle when the insurer requests non-OEM parts. No quality or equivalence standard for aftermarket parts appears in the captured Michigan law.

The law's own words

Shop

“If an insurer requests the use of non-OEM aftermarket crash parts in the repair of an insured's motor vehicle, a repair facility or installer may use non-OEM aftermarket crash parts to repair a vehicle only if the insured receives a written estimate of repairs that clearly identifies each non-OEM aftermarket crash part”

MCL 257.1363, effective 2/1/1992

Parts standard

“"This estimate has been prepared based on the use of aftermarket crash parts supplied by a source other than the manufacturer of your motor vehicle. Warranties that apply to these replacement parts are provided by the manufacturer, distributor, or insurer of these parts."”

MCL 257.1363, effective 2/1/1992

Shop

From a list that begins: “shall not, directly or through an agent or employee, do any of the following:”

“(f) Represent, either directly or indirectly, that a replacement part used in the repair of a vehicle is new or of a particular manufacture when in fact it is used, rebuilt, reconditioned, deteriorated, or of a different manufacture, or otherwise fail to disclose in writing, before beginning a repair, the use of used, rebuilt, or reconditioned parts.”

MCL 257.1307a, effective 4/4/2017

Shop

From a list that begins: “When returning a repaired vehicle to a customer, fail to give a written statement of repairs to the customer that discloses all of the following:”

“(vi) The repairs or services performed, including a detailed identification of all parts that were replaced and a specification of which parts are new OEM, new, used, rebuilt, OEM surplus, or reconditioned.”

MCL 257.1307, effective 4/4/2017

What it means in Michigan

Michigan has no law requiring or governing appraisal on auto claims. If the insurer pays your customer's own claim late, it owes 12% simple interest from 60 days after it got satisfactory proof of loss, but none if your customer turned down an offer and later recovers no more. Late payment is an unfair practice unless the claim is reasonably in dispute, and so is a pattern of lowballing that forces lawsuits. The Department's 2025 bulletin warns of fines or loss of authority.

A third party tort claimant gets the 12% interest only if liability is not reasonably in dispute and a court found the insurer refused payment in bad faith. 500.2026 reaches a course of conduct, not isolated incidents. The bulletin is Department guidance and says it does not establish that any insurer committed these practices.

The law's own words

Other dispute rules

“Failure to pay claims on a timely basis or to pay interest on claims as provided in subsection (4) is an unfair trade practice unless the claim is reasonably in dispute.”

MCL 500.2006, effective 12/20/2017

Other dispute rules

“(4) If benefits are not paid on a timely basis, the benefits paid bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum, if the claimant is the insured or a person directly entitled to benefits under the insured's insurance contract.”

MCL 500.2006, effective 12/20/2017

Other dispute rules

“If payment is offered by the insurer but is rejected by the claimant, and the claimant does not subsequently recover an amount in excess of the amount offered, interest is not due.”

MCL 500.2006, effective 12/20/2017

Other dispute rules

From a list that begins: “(1) 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. (g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts due the insureds.”

MCL 500.2026, effective 4/1/1977

Other dispute rules

From a list that begins: “Improper claims administration practices, particularly for automobile collision and comprehensive coverages, may include, but are not limited to, the following conduct:”

“• Denying claims or offering to pay substantially less than what is owed on claims when liability is reasonably clear, including by prolonging the claims administration process or making unreasonable proof-of-loss demands to improve the insurer’s bargaining position.”

DIFS Bulletin 2025-25-INS, issued 10/24/2025

What it means in Michigan

Michigan has no labor rate or survey law. The insurer can't unreasonably restrict the insured from using your shop. The law also tells the state insurance office to inform consumers that the insurer needn't pay more than a reasonable amount for repairs and parts. As a persistent practice, the insurer can't fail to try in good faith to settle fairly or lowball insureds into suing. Whether a rate is reasonable is a question for the Department of Insurance and Financial Services or a lawyer.

Section 2110b covers automobile insurers and protects insureds; its consumer-information part is a duty on the state insurance office (named in the statute as the office of financial and insurance services), not a payment rule for insurers. Section 2026 practices count only as a course of conduct showing a persistent tendency, not isolated incidents.

The law's own words

Related claim rule

“An automobile insurance policy and an automobile insurer and its employees, agents, and adjusters shall not unreasonably restrict an insured from using a particular person, place, shop, or entity for the providing of any automobile repair or automobile glass repair or replacement service or product covered by the policy.”

MCL 500.2110b, effective 7/8/2004

Related claim rule

“The office of financial and insurance services shall develop a plan whereby the office informs consumers of their rights regarding insurance coverage of automobile repairs, that the insurer is not required to pay more than a reasonable amount for repairs and parts”

MCL 500.2110b, effective 7/8/2004

Related claim rule

From a list that begins: “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:”

“Failing to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”

MCL 500.2026, effective 4/1/1977

What the insurer pays

“Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts due the insureds.”

MCL 500.2026, effective 4/1/1977

What it means in Michigan

Michigan has no rule on paint and materials caps. As a pattern, failing to try in good faith to settle once liability is clear, or offering insureds substantially less than they are owed so they must sue, is an unfair practice. If an insured's claim is paid late, the benefits earn 12% simple interest from 60 days after the insurer gets a satisfactory proof of loss. Whether a materials cut qualifies is a question for the Department of Insurance or a lawyer.

For a third-party claimant, the 12% interest runs only if liability isn't reasonably in dispute, the insurer refused payment in bad faith, and a court found the bad faith. 500.2026 excludes isolated incidents.

The law's own words

Related claim rule

“If benefits are not paid on a timely basis, the benefits paid bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum, if the claimant is the insured or a person directly entitled to benefits under the insured's insurance contract.”

MCL 500.2006, effective 12/20/2017

Related claim rule

“Failure to pay claims on a timely basis or to pay interest on claims as provided in subsection (4) is an unfair trade practice unless the claim is reasonably in dispute.”

MCL 500.2006, effective 12/20/2017

Related claim rule

From a list that begins: “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.”

MCL 500.2026, effective 4/1/1977

Related claim rule

From a list that begins: “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:”

“(g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts due the insureds.”

MCL 500.2026, effective 4/1/1977

What it means in Michigan

Within 30 days of a claim, the insurer must say in writing what proof of loss it needs, and payment is on time if made within 60 days of getting that proof. Late payments to the insured carry 12% yearly simple interest from day 60. A third-party claimant gets that interest only if a court finds the insurer refused payment in bad faith on a claim not reasonably in dispute. The Department's 2025 bulletin lists failing to pay that interest among improper auto claim practices.

Failing to pay on time or to pay the interest is an unfair trade practice unless the claim is reasonably in dispute. No interest is due if the claimant rejects an offer and later recovers no more than it, and the 12% runs on the policy limits when the loss exceeds them. Michigan's statute requires prompt acknowledgment and reasonable investigation but sets no day count for either. The DIFS bulletin is agency guidance, issued October 24, 2025, superseding Bulletin 2025-19-INS.

The law's own words

Respond

“An insurer shall specify in writing the materials that constitute a satisfactory proof of loss not later than 30 days after receipt of a claim unless the claim is settled within the 30 days.”

MCL 500.2006, effective 12/20/2017

Pay

“If proof of loss is not supplied as to the entire claim, the amount supported by proof of loss is considered paid on a timely basis if paid within 60 days after receipt of proof of loss by the insurer.”

MCL 500.2006, effective 12/20/2017

If late

“If benefits are not paid on a timely basis, the benefits paid bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum, if the claimant is the insured or a person directly entitled to benefits under the insured's insurance contract.”

MCL 500.2006, effective 12/20/2017

If late

“If the claimant is a third party tort claimant, the benefits paid bear interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum if the liability of the insurer for the claim is not reasonably in dispute, the insurer has refused payment in bad faith, and the bad faith was determined by a court of law.”

MCL 500.2006, effective 12/20/2017

If late

From a list that begins: “Improper claims administration practices, particularly for automobile collision and comprehensive coverages, may include, but are not limited to, the following conduct:”

“• Failing to make timely payment on claims that are not reasonably in dispute; • Failing to pay the statutorily required interest for untimely paid claims;”

DIFS Bulletin 2025-25-INS, issued 10/24/2025