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SB 944

Insurance: other; processing fees; allow premium finance companies to collect. Amends sec. 1510 of 1956 PA 218 (MCL 500.1510).

2025-2026 Regular Session Introduced by Joe Bellino

Limits delinquency charges 1-5% up to $5 on late installments; allows pass-through fees for electronic payments with disclosure, opt-out, and nonrefundable rules.

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION
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Bill Summary · SB 944

Summary of Bill SB 944 (Session 2025-2026) – Michigan

Purpose and intent

  • The bill amends Section 1510 of the Michigan Insurance Code (1956 PA 218) to modify how premium finance agreements handle delinquency charges, credit/debit/electronic payment costs, and related protections for insured individuals.
  • Overall aim: establish clarified limits and notice requirements for delinquency charges and electronic payment fees imposed by premium finance companies, while allowing certain costs to be passed through to the insured.

Key provisions and changes

  1. Delinquency charges on late installments

    • An insurance premium finance agreement may impose a delinquency charge of:
      • A minimum of $1.00, up to a maximum of 5% of the delinquent installment payment, on any installment that is in default for 10 days or more.
    • Exemptions/limits:
      • The delinquency charge must not exceed $5.00 for installments in default for 10 days or more in these cases:
      • (a) Agreements financing an insurance contract primarily for personal, family, or household purposes.
      • (b) Agreements with annual premium not exceeding $10,000, issued to nonprofit organizations exempt from federal income tax under 501(c)(3).
    • If default leads to cancellation of an insurance contract, the agreement may require a cancellation charge equal to the difference between the delinquency charge already imposed and $5.00.

  2. Fees for electronic payments (credit card, debit card, EFT, electronic check, etc.)

    • Premium finance companies may impose or pass through a fee to offset actual costs of processing electronic payments, subject to:
      • (a) Fees cannot exceed actual third-party costs incurred. Alternatively, they may set a fee that averages the actual costs across the various electronic payment types, so long as it does not exceed that average.
      • (b) Insureds must be notified of the fee amount before completing the transaction, and must be given an option to cancel without incurring the fee. They must also be offered an option to pay by check, cash, or money order directly to the premium finance company without any card/electronic payment fee.
      • (c) If the insured uses an electronic payment method and the fee is charged, the fee is non-refundable.
      • (d) The fee can be charged in addition to other interest and fees permitted by law.
      • (e) No fee may be charged on debit or prepaid card transactions if the card network prohibits such a fee by contract, rule, or policy.

  3. Definition of “actual costs”

    • “Actual costs” means the actual third-party costs incurred or charged for processing electronic payments.
    • If the premium finance company is affiliated with a payment processor, the affiliated processor is treated as a third party for purposes of calculating actual costs.

Who/what is affected

  • Premium finance companies: Banks, finance entities, or affiliates that provide premium financing for insurance contracts.
  • Insureds: Individuals or entities purchasing insurance whose premiums are financed through these agreements.
  • Nonprofit organizations and personal/personal-family-household insureds: The bill creates explicit retention of limits for those within the specified exemption categories.

Procedural and timeline aspects

  • Bill status: Introduced May 7, 2026; referred to the Senate Committee on Finance, Insurance, and Consumer Protection.
  • Effective date: The text provided does not specify an effective date; typical enactments may include a specified effective date or apply upon passage and signature. If enacted, the provisions would govern subsequent premium finance agreements and existing agreements upon renewal or amendment, subject to the bill’s effective date.

Practical implications

  • Insureds may see capped delinquency charges on late installments, with stronger protections for smaller or nonprofit-related premium finance agreements.
  • Premium finance companies can recover certain processing costs for electronic payments, but must adhere to transparency, opt-out options, and comparability rules to avoid discriminatory or excessive charges.
  • The bill seeks a balance between allowing cost recovery for electronic payment processing and protecting consumers from disproportionately high or hidden fees.

If you’d like, I can tailor this summary for a legislative briefing, a public-facing docket, or a policy analysis memo with potential fiscal impacts and compliance considerations.

Compiled from official sources — confirm details with the bill’s official record.

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