2026-09-12 · Michigan · Legislation

What happened. Michigan doubled the amount of a residential property insurance settlement that a municipality may hold in escrow pending repairs. 2024 PA 82, from House Bill 4331, was signed and given immediate effect on 23 July 2024, amending MCL 500.2227.¹

How the mechanism works

On a claim for fire, explosion, vandalism, malicious mischief, wind, hail, riot or civil commotion, the insurer withholds 25% of actual cash value or 25% of the settlement, whichever is less. Notice goes to the municipal treasurer, to the insured, and to any named mortgagee. The municipality then has 15 days to demand that the money be escrowed, or it is released.

The purpose is to stop an owner collecting on a fire and walking away from a damaged building.

The number that changed

For residential property the cap on the withheld amount was $12,000. The amended provision reads: “Beginning July 1, 2024… the 25% settlement or judgment withheld must not exceed $24,000.00, adjusted July 1 of each year in accordance with the Consumer Price Index.”

So the cap doubled, and it now rises annually without further legislation.

1. 2024 PA 82 (House Bill 4331) — enrolled act text amending MCL 500.2227 ↩
2. MCL 500.2227 — current text of the fire-loss escrow provision ↩