Michigan Compiled Laws

Mich. Comp. Laws § 500.2077 (2026)

Creditors; favoritism of insurer prohibited; construction of section, violation, penalty.

✓ current as of July 2026

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THE INSURANCE CODE OF 1956

Act 218 of 1956

500.2077 Creditors; favoritism of insurer prohibited; construction of section, violation, penalty.

Sec. 2077.

(1) No person shall require, as a condition precedent to the lending of money or extension of credit, or any renewal thereof, that the person, to whom such money or credit is extended or whose obligation the creditor is to acquire or finance, negotiate any policy or contract of insurance through a particular insurance agent or with a particular insurer. No person engaged in the business of financing real or personal property other than motor vehicles or of lending money or extending credit, shall directly or indirectly require that the borrower pay a consideration of any kind to substitute the insurance policy of 1 insurer for that of another.

(2) If an instrument requires that a purchaser, mortgagor or borrower furnish insurance of any kind on real property being conveyed or which is collateral security to a loan, the vendor, mortgagee or lender shall refrain from using or disclosing any such information to his own advantage or to the detriment of the purchaser, mortgagor, borrower, insurance company or agency complying with such requirement.

(3) This section shall not be construed as forbidding the vendor or creditor from exercising a reasonable right to approve or disapprove the insurance selected by the debtor for protection of the property securing the credit or lien, but the vendor or creditor shall not disapprove a policy which contains coverages in excess of the basic coverage required by the vendor or creditor.

(4) Nothing in this section shall forbid any insurer from requiring as a condition precedent for the lending of its own funds that the debtor insure his own life for a reasonable amount with such insurer.

(5) Each violation of this section shall be a misdemeanor, punishable by a fine of not more than $100.00.

History: 1956, Act 218, Eff. Jan. 1, 1957 ;-- Am. 1961, Act 153, Eff. Sept. 8, 1961 ;-- Am. 1962, Act 89, Eff. Mar. 28, 1963

PopularName Notes:

Act 218

Notes of Decisions

Cited in 4 cases, 1960–1994 · leading case: Thm, Ltd v. Comm'r of Ins., 440 N.W.2d 85 (Mich. Ct. App. 1989).

Sort: Relevance Newest Treatment

Thm, Ltd v. Comm'r of Ins., 440 N.W.2d 85 (Mich. Ct. App. 1989). · cites it 6× “In October, 1987, the circuit court affirmed the Insurance Commissioner's decision. Petitioner now appeals as of right. Petitioner first contends that the commissioner's finding that petitioner's plan to send mailings to its customers would probably give rise to violations of…”

Ludington Serv. v. Acting Comm'r of Ins., 511 N.W.2d 661 (Mich. 1994). · cites it 2× “11207(3), MCL 500.2077(2); MSA 24.12077(2), MCL 500.”

Kukla v. Perry, 105 N.W.2d 176 (Mich. 1960). “For current similar law, see CLS 1956, § 500.2077 (Stat Ann 1957 Rev § 24.12077).”

Ludington Serv. Corp. v. Comm'r of Ins., 486 N.W.2d 120 (Mich. Ct. App. 1992). · cites it 4× “11242(3), and MCL 500.2077(2); MSA 24.12077(2), respectively.”

— Mich. Comp. Laws § 500.2077(2) — 3 cases

Thm, Ltd v. Comm'r of Ins., 440 N.W.2d 85 (Mich. Ct. App. 1989). “In October, 1987, the circuit court affirmed the Insurance Commissioner's decision. Petitioner now appeals as of right. Petitioner first contends that the commissioner's finding that petitioner's plan to send mailings to its customers would probably give rise to violations of…”

Ludington Serv. v. Acting Comm'r of Ins., 511 N.W.2d 661 (Mich. 1994). “11207(3), MCL 500.2077(2); MSA 24.12077(2), MCL 500.”

Ludington Serv. Corp. v. Comm'r of Ins., 486 N.W.2d 120 (Mich. Ct. App. 1992). “11242(3), and MCL 500.2077(2); MSA 24.12077(2), respectively.”

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