MI HB6416

Increases the maximum withholding amount for residential property fire damage settlements from $12,000.00 to $20,000.00 effective January 1, 2023, adjusted annually for inflation using the Consumer Price Index.

Allows cities, villages, and townships to use retained insurance proceeds after 120 days to repair, demolish, or clear damaged properties if the property owner fails to provide proof of repair work, with unused proceeds returned to the insured.

Permits insurers to withhold the largest of three amounts: agreed demolition/debris removal costs, 25% of actual cash value, or 25% of final settlement (capped at $20,000.00 for residential property as of January 1, 2023).

Grants property owners the right to file a civil action within 3 years to recover policy proceeds withheld by local governments, with the deadline running from either the insurer's notice date or the bill's effective date, whichever is later.

Changes statutory language from "shall" to "must" throughout the section for consistency and clarifies that notice procedures apply to both settlements and court judgments involving withheld amounts.