DEPARTMENT OF LABOR AND ECONOMIC GROWTH  
OFFICE OF FINANCIAL AND INSURANCE SERVICES  
CREDIT INSURANCE POLICY FORMS - DISCRETIONARY CLAUSES  
(By authority conferred on the commissioner of the Office of Financial and Insurance  
Services by section 22 of the credit insurance act, 1958 PA 173, 1969 PA 306, E.R.O. No  
2000-2, and E.R.O. No 2003-1; MCL 550.622, MCL 24.231 to MCL 24.233, MCL 445.2003,  
and MCL 445.2011)  
R 550.301 Definitions.  
Rule 1. As used in these rules:  
(a) "Appeal" means an appeal by a policyholder or other claimant of a claim denial by  
an insurer. It includes appeals to administrative agencies, arbitrators, courts, and mediators.  
(b) "Commissioner" means the commissioner of the office of financial and insurance  
services.  
(c) "Discretionary clause" is a provision in a form that purports to bind the claimant to or  
grant deference in subsequent proceedings to the credit insurer's decision, denial, or  
interpretation on terms, coverage, or eligibility for benefits including, but not limited to, a  
form provision that does any of the following:  
(i) Provides that a policyholder or other claimant may not appeal a denial of a claim.  
(ii) Provides that the insurer's decision to deny policy coverage is binding upon a  
policyholder or other claimant.  
(iii) Provides that on appeal the insurer's decision-making power as to policy coverage is  
binding.  
(iv) Provides that the insurer's interpretation of the terms of a form is binding upon a  
policyholder or other claimant.  
(v) Provides that on appeal the insurer's interpretation of the terms of a form is binding.  
(vi) Provides that or gives rise to a standard of review on appeal that gives deference to  
the original claim decision.  
(vii) Provides that or gives rise to a standard of review on appeal other than a de novo  
review.  
(d) "Form" means a form identified in section 13 of the credit insurance act, 1958 PA 173,  
MCL 550.613.  
(e) Terms defined in the credit insurance act, 1958 PA 173, as amended, MCL 550.601 to  
MCL 550.624, and R 550.201 to R 550.216 have the same meanings when used in these rules.  
History: 2007 AACS.  
R 550.302 Discretionary clauses prohibited.  
Rule 2. (a) A discretionary clause is unjust, unfair, inequitable, misleading, deceptive,  
and encourages misrepresentation of a policy within the meaning of section 13 of the credit  
insurance act.  
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(b) On and after the first day of the first month following the effective date of these rules,  
an insurer shall not issue, advertise, or deliver to any person in this state a policy, contract, rider,  
indorsement, certificate, or similar contract document that contains a discretionary clause. This  
does not apply to a contract document in use before that date, but does apply to any such  
document revised in any respect on or after that date.  
(c) On and after the first day of the first month following the effective date of these rules, a  
discretionary clause issued or delivered to any person in this state in a policy, contract, rider,  
indorsement, certificate, or similar contract document is void and of no effect. This does not  
apply to contract documents in use before that date, but does apply to any such document  
revised in any respect on or after that date.  
(d) Nothing in this rule limits the commissioner's authority under sections 13 and 15 of the  
credit insurance act, 1958 PA 173, MCL 550.613 and MCL 550.615, to disapprove or  
withdraw approval of any form that contains a discretionary clause.  
(e) By the first day of the second month following the effective date of these rules, each  
insurer transacting insurance in this state shall submit to the commissioner a list of all forms in  
effect in Michigan that contain discretionary clauses and shall submit a certification that the  
list is complete and accurate. If an insurer has no such forms in effect, it shall submit a letter to  
the commissioner reporting and certifying that fact.  
History: 2007 AACS.  
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