Mich. Comp. Laws » Michigan Compiled Laws / Chapter 500 / Act 218 of 1956
Michigan Compiled Laws

Mich. Comp. Laws § 500.3006 (2026)

Liability insurance policies; insolvency or bankruptcy of insured.

✓ current as of July 2026
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THE INSURANCE CODE OF 1956


Act 218 of 1956


500.3006 Liability insurance policies; insolvency or bankruptcy of insured.

Sec. 3006.

    In such liability insurance policies there shall be a provision that the insolvency or bankruptcy of the person insured shall not release the insurer from the payment of damages for injury sustained or loss occasioned during the life of such policy, and stating that in case execution against the insured is returned unsatisfied in an action brought by the injured person, or his or her personal representative in case death results from the accident, because of such insolvency or bankruptcy, then an action in the nature of a writ of garnishment may be maintained by the injured person, or his or her personal representative, against such insurer under the terms of the policy for the amount of the judgment in the said action not exceeding the amount of the policy.

History: 1956, Act 218, Eff. Jan. 1, 1957

PopularName Notes:

Act 218
Notes of Decisions
Cited in 11 cases (1 in the last 5 years), 1963–2024 · leading case: In Re Dow Corning Corp., 198 B.R. 214 (Bankr. E.D. Mich. 1996).
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In Re Dow Corning Corp., 198 B.R. 214 (Bankr. E.D. Mich. 1996). · cites it 20× “Mich.Comp.Laws § 500.3006; Mich.Stat.Ann.”
Williams v. Grossman, 293 N.W.2d 315 (Mich. 1980). · cites it 2× “[23] MCL 500.3006; MSA 24.13006. [24] In the instant case it is asserted in the supplemental brief of the appellee that the "decedent in this case had no automobile liability insurance in effect at the time of the subject accident".”
Gulf Underwriters Ins. v. McClain Indus., Inc., 765 N.W.2d 16 (Mich. 2009). · cites it 10× “MCL 500.3006. However, Gulf Underwriters has not indicated that contractual bankruptcy provisions similar to its own are included with any regularity in surplus lines contracts generally.”
McTaggart v. United Wisconsin Ins., 625 F. Supp. 2d 480 (E.D. Mich. 2007). · cites it 4× “” In support of his argument that Michigan law prohibits insurers from having discretion, plaintiff relies on MCL 500.3006(3), which provides that an insurer shall timely pay claims when furnished with satisfactory proof of a disability.”
Davis v. Great Am. Ins., 357 N.W.2d 761 (Mich. Ct. App. 1984). “Garnishment as a means of obtaining satisfaction of a judgment is not an exclusive remedy.”
Cloud v. Vance, 296 N.W.2d 68 (Mich. Ct. App. 1980). “Such interest is not limited to situations where the insured is bankrupt or insolvent, as indicated in MCL 500.3006; MSA 24.13006. Of course, garnishee-defendant argues that if plaintiff is placed in the shoes of the insured, then, under strict logic, his claim is subject to all…”
Auto Owners Ins. v. Zeller, 122 N.W.2d 728 (Mich. 1963). “The question, whether the coverage extended to the 1949 Plymouth as an “additional automobile,” arose upon issuance of garnishment under the statute (CLS 1956, § 500.3006 [Stat Ann 1957 Rev § 24.13006]).”
Thomas Tibble v. Am. Physicians Capital Inc (Mich. Ct. App. 2014). · cites it 10× “G of the insurance policy was required by MCL 500.3006. Under the Insurance Code of 1956, MCL 500.”
Vhs of Michigan Inc v. State Farm Mut. Auto Ins. Co (Mich. Ct. App. 2017). · cites it 2× “DMC and Zamorano further assert that their no-fault claims remain valid under the policy’s bankruptcy or insolvency clause because this result is mandated by MCL 500.3006. We again disagree. MCL 500.”
Vhs of Michigan Inc v. State Farm Mut. Auto Ins. Co (Mich. Ct. App. 2017). · cites it 2× “DMC and Zamorano further assert that their no-fault claims remain valid under the policy’s bankruptcy or insolvency clause because this result is mandated by MCL 500.3006. We again disagree. MCL 500.”
Covington Specialty Ins. Co. v. Sweet Soul, Inc. (6th Cir. 2024). “Covington also satisfies the other factors emphasized by the Maryland Casualty Court: first, Michigan law allows the Estate to proceed against Covington to satisfy any unpaid judgment against Sweet Soul, Mich. Comp. Laws § 500.3006 ; second, there is no sign that the policy will…”
— Mich. Comp. Laws § 500.3006(3) — 1 case
McTaggart v. United Wisconsin Ins., 625 F. Supp. 2d 480 (E.D. Mich. 2007). “” In support of his argument that Michigan law prohibits insurers from having discretion, plaintiff relies on MCL 500.3006(3), which provides that an insurer shall timely pay claims when furnished with satisfactory proof of a disability.”
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