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

Mich. Comp. Laws § 500.7925 (2026)

“Covered claims” defined; definitions.

✓ current as of July 2026
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THE INSURANCE CODE OF 1956


Act 218 of 1956


500.7925 “Covered claims” defined; definitions.

Sec. 7925.

    (1) "Covered claims" means obligations of an insolvent insurer that meet all of the following requirements:

    (a) Arise out of the insurance policy contracts of the insolvent insurer issued to residents of this state or are payable to residents of this state on behalf of insureds of the insolvent insurer.

    (b) Were unpaid by the insolvent insurer.

    (c) Are presented as a claim to the receiver in this state or the association on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

    (d) Were incurred or existed before, at the time of, or within 30 days after the date the receiver was appointed.

    (e) Arise out of policy contracts of the insolvent insurer issued for all kinds of insurance except life and disability insurance.

    (f) Arise out of insurance policy contracts issued on or before the last date on which the insolvent insurer was a member insurer.

    (2) Covered claims shall not include any of the following:

    (a) Obligations to refund unearned premiums above the first $500.00 of unearned premiums from each person from any 1 insolvent insurer. The maximum amount of unearned premiums which shall constitute a covered claim shall be adjusted annually to reflect changes in the cost of living under rules prescribed by the commissioner. A refund in an amount less than $50.00 shall not be made for unearned premiums.

    (b) Obligations incurred after the expiration date of the insurance policy, after the insurance policy has been replaced by the insured, or after the insurance policy has been canceled by the association as provided in this chapter.

    (c) Obligations arising out of sections 2001 to 2050, or similar provisions of law in another jurisdiction.

    (3) Covered claims shall not include any amount due any reinsurer, insurer, insurance pool, underwriting association, health maintenance organization, or health care corporation as subrogation recoveries, contribution, indemnification, or other obligation. A claim for any amount due any reinsurer, insurer, insurance pool, underwriting association, health maintenance organization, or health care corporation shall not be brought against an insured or claimant under a policy issued by the insolvent insurer unless the claim exceeds the association's obligation limitations under subsection (6).

    (4) Covered claims shall not include obligations for any first party or third party claim by or against an insured whose net worth exceeds $25,000,000.00 on December 31, or on the last date of the insured's fiscal period if that is other than December 31, of the year immediately preceding the date the insurer becomes an insolvent insurer. In determining net worth on this date, an insured's net worth shall include the aggregate net worth of the insured and all of its subsidiaries and affiliates as calculated on a consolidated basis. The $25,000,000.00 net worth limit shall be adjusted annually to reflect the aggregate annual percentage change in the consumer price index since the previous adjustment, rounded to the nearest $10,000.00. The effective date of the adjustment shall be January 1 of each year. This subsection applies to an insolvency that occurs on or after the effective date of the amendatory act that added this subsection.

    (5) Covered claims shall not include any portion of a claim that is in excess of an applicable limit provided in the insurance policy.

    (6) Covered claims shall not include that portion of a claim, other than a worker's compensation claim or a claim for personal protection insurance benefits under section 3107, that is in excess of $5,000,000.00. The $5,000,000.00 claim cap shall be adjusted annually to reflect the aggregate annual percentage change in the consumer price index since the previous adjustment, rounded to the nearest $10,000.00. The effective date of the adjustment shall be January 1 of each year and shall apply to claims made on or after that date. The claim cap in effect at the time of payment of a claim shall apply.

    (7) Covered claims shall not include adjustment fees and expenses, attorneys' fees and expenses, court costs, interest, or bond premiums if the fees, expenses, costs, interest, or premiums were incurred by the insolvent insurer before the receiver was appointed.

    (8) As used in this section:

    (a) "Consumer price index" means the consumer price index for all urban consumers in the U.S. city average, as most recently reported by the United States department of labor, bureau of labor statistics, and as certified by the commissioner.

    (b) "Control" means that term as defined in section 115(b)(i).

    (c) "Health care corporation" means that term as defined in section 105 of the nonprofit health care corporation reform act, 1980 PA 350, MCL 550.1105.

History: Add. 1969, Act 277, Imd. Eff. Aug. 11, 1969 ;-- Am. 1972, Act 207, Imd. Eff. June 30, 1972 ;-- Am. 1980, Act 41, Imd. Eff. Mar. 17, 1980 ;-- Am. 2006, Act 362, Imd. Eff. Sept. 18, 2006

PopularName Notes:

Act 218

AdminRule Notes:

    R 500.351 of the Michigan Administrative Code.

Notes of Decisions
Cited in 23 cases (2 in the last 5 years), 1977–2024 · leading case: Oakland Cnty. Bd. v. Michigan Prop. & Cas. Guar. Ass'n, 575 N.W.2d 751 (Mich. 1998).
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Oakland Cnty. Bd. v. Michigan Prop. & Cas. Guar. Ass'n, 575 N.W.2d 751 (Mich. 1998). · cites it 3× “See MCL 500.7925(3); MSA 24.17925(3). To understand the facts as they developed below, an examination of the pertinent statutory language is necessary.”
Borman's, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 717 F. Supp. 468 (E.D. Mich. 1989). · cites it 22× “§ 500.7925(1). The amount of a covered claim is limited to the amount of coverage afforded under the policy and the maximum claim limit described in the Act.”
Satellite Bowl, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 419 N.W.2d 460 (Mich. Ct. App. 1988). · cites it 3× “MCL 500.7925(l)(c); MSA 24.17925(l)(c) provides that, to constitute a covered claim, a claim must be presented by an insured to the association "on or before the last date fixed for the filing of claims” at the insurer’s insolvency proceedings in its domiciliary state.”
Yetzke v. Fausak, 488 N.W.2d 222 (Mich. Ct. App. 1992). · cites it 6× “The act accomplishes this purpose by imposing a statutory duty on the mpcga to pay the obligations of insolvent insurers that constitute "covered claims” as defined by MCL 500.7925; MSA 24.17925. Felsner v McDonald Rent-A-Car, Inc, 173 Mich App 518, 521 ; 434 NW2d 178 (1988);…”
Borman's, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 925 F.2d 160 (6th Cir. 1991). · cites it 2× “This appeal presents the question of whether the district court erred in finding that Mich. Comp. Laws § 500.7925 (3), which excludes from coverage certain insureds whose net worth exceeds a statutorily-calculated maximum under the Michigan Property & Casualty Guaranty Act, is…”
Attorney Gen. Ex Rel. Dep't of Nat. Resources v. Michigan Prop. & Cas. Guar. Ass'n, 553 N.W.2d 700 (Mich. Ct. App. 1996). · cites it 12× “§ 500.7925; M.S.A. § 24.17925. The controversy in this appeal centers on whether M.”
Mississippi Ins. Guar. Ass'n v. Byars, 614 So. 2d 959 (Miss. 1993). “See Mich. Comp. Laws § 500.7925 (3). At the time of the claim, A.”
Metry, Metry, Sanom & Ashare v. Michigan Prop. & Cas. Guar. Ass'n, 267 N.W.2d 695 (Mich. 1978). “MCLA 500.7925; MSA 24.17925 provides in part: "(1) 'Covered claims’ means obligations of an insolvent insurer which: (i) arise out of the insurance policy contracts of the insolvent insurer issued to residents of this state or are payable to residents of this state on behalf of…”
Oakland Cnty. Bd. of Cnty. Road Commissioners v. Michigan Prop. & Cas. Guar. Ass'n, 550 N.W.2d 856 (Mich. Ct. App. 1996). · cites it 2× “[MCL 500.7925(1) and (3); MSA 24.17925(1) and (3).”
Felsner v. Mcdonald Rent-a-car, Inc, 434 N.W.2d 178 (Mich. Ct. App. 1988). “7931(2); MSA 24.17931(2) provides in pertinent part: The association shall be a party in interest in all proceedings involving a covered claim and shall have the same rights as the insolvent insurer would have had if not in receivership, including the right to appear, defend,…”
Michigan Prop. & Cas. Guar. Ass'n v. Checker Cab Co., 360 N.W.2d 168 (Mich. Ct. App. 1984). “See MCL 500.7925; MSA 24.17925, and MCL 500.7931; MSA 24.”
Monical Mach. Co. v. Michigan Prop. & Cas. Guar. Ass'n, 473 N.W.2d 808 (Mich. Ct. App. 1991). “; MCL 500.7925(l)(c); MSA 24.17925(l)(c). We agree with the trial court that a "blanket claim” may not be considered as a claim for purposes of the act.”
Show all 23 citing cases →
— Mich. Comp. Laws § 500.7925(1) — 6 cases
Oakland Cnty. Bd. of Cnty. Road Commissioners v. Michigan Prop. & Cas. Guar. Ass'n, 550 N.W.2d 856 (Mich. Ct. App. 1996). “[MCL 500.7925(1) and (3); MSA 24.17925(1) and (3).”
Borman's, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 717 F. Supp. 468 (E.D. Mich. 1989). “§ 500.7925(1). The amount of a covered claim is limited to the amount of coverage afforded under the policy and the maximum claim limit described in the Act.”
Smith v. Parkland inn/Cas. Reciprocal Exch., 760 N.W.2d 554 (Mich. Ct. App. 2008).
Nexhmedin Qafleshi v. Lincoln Gen. Ins. Co. (Mich. Ct. App. 2018).
Nexhmedin Qafleshi v. Lincoln Gen. Ins. Co. (Mich. Ct. App. 2018).
— Mich. Comp. Laws § 500.7925(1)(c) — 4 cases
Stanley Jackson v. Suburban Mobility Auth. for Reg'l Trans (Mich. Ct. App. 2017).
Stanley Jackson v. Suburban Mobility Auth. for Reg'l Trans (Mich. Ct. App. 2017).
Est. of Bassam Hassan v. Mi Prop. & Cas. Guar. Assn (Mich. Ct. App. 2017).
Sensing v. Union Indem. Ins., 468 N.W.2d 525 (Mich. Ct. App. 1990).
— Mich. Comp. Laws § 500.7925(1)(e) — 1 case
Justin Childers v. Progressive Marathon Ins Co (Mich. 2024).
— Mich. Comp. Laws § 500.7925(3) — 5 cases
Oakland Cnty. Bd. v. Michigan Prop. & Cas. Guar. Ass'n, 575 N.W.2d 751 (Mich. 1998). “See MCL 500.7925(3); MSA 24.17925(3). To understand the facts as they developed below, an examination of the pertinent statutory language is necessary.”
Borman's, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 717 F. Supp. 468 (E.D. Mich. 1989). “§ 500.7925(1). The amount of a covered claim is limited to the amount of coverage afforded under the policy and the maximum claim limit described in the Act.”
Attorney Gen. Ex Rel. Dep't of Nat. Resources v. Michigan Prop. & Cas. Guar. Ass'n, 553 N.W.2d 700 (Mich. Ct. App. 1996). “§ 500.7925; M.S.A. § 24.17925. The controversy in this appeal centers on whether M.”
Oakland Cnty. Bd. of Cnty. Road Commissioners v. Michigan Prop. & Cas. Guar. Ass'n, 550 N.W.2d 856 (Mich. Ct. App. 1996). “[MCL 500.7925(1) and (3); MSA 24.17925(1) and (3).”
Justin Childers v. Progressive Marathon Ins Co (Mich. 2024).
— Mich. Comp. Laws § 500.7925(4) — 1 case
Yetzke v. Fausak, 488 N.W.2d 222 (Mich. Ct. App. 1992). “The act accomplishes this purpose by imposing a statutory duty on the mpcga to pay the obligations of insolvent insurers that constitute "covered claims” as defined by MCL 500.7925; MSA 24.17925. Felsner v McDonald Rent-A-Car, Inc, 173 Mich App 518, 521 ; 434 NW2d 178 (1988);…”
— Mich. Comp. Laws § 500.7925(4)(5) — 1 case
Borman's, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 717 F. Supp. 468 (E.D. Mich. 1989). “§ 500.7925(1). The amount of a covered claim is limited to the amount of coverage afforded under the policy and the maximum claim limit described in the Act.”
— Mich. Comp. Laws § 500.7925(l)(c) — 3 cases
Satellite Bowl, Inc. v. Michigan Prop. & Cas. Guar. Ass'n, 419 N.W.2d 460 (Mich. Ct. App. 1988). “MCL 500.7925(l)(c); MSA 24.17925(l)(c) provides that, to constitute a covered claim, a claim must be presented by an insured to the association "on or before the last date fixed for the filing of claims” at the insurer’s insolvency proceedings in its domiciliary state.”
Monical Mach. Co. v. Michigan Prop. & Cas. Guar. Ass'n, 473 N.W.2d 808 (Mich. Ct. App. 1991). “; MCL 500.7925(l)(c); MSA 24.17925(l)(c). We agree with the trial court that a "blanket claim” may not be considered as a claim for purposes of the act.”
Sensing v. Union Indem. Ins., 468 N.W.2d 525 (Mich. Ct. App. 1990).
— Mich. Comp. Laws § 500.7925(l)(iv) — 1 case
Attorney Gen. ex rel. Ins. Comm'r v. Michigan Prop. & Cas. Guar. Ass'n, 263 N.W.2d 918 (Mich. Ct. App. 1978).
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