PIP benefits; payment due; interest penalty
If a no-fault insurance company withholds payment of benefits for more than 30 days after receiving “reasonable proof” of a submitted and incurred claim for no-fault benefits, a penalty interest begins to apply on the amount owed. This interest penalty rate grows at a rate of 1 percent per month until the insurance company pays the overdue and outstanding no-fault benefits to the claimant.
The purpose of penalty interest is to punish an insurance company for not paying no-fault benefits after they have received proof of a claim. It should be noted, however, that penalty interest does not apply when property protection insurance (PPI) benefits are withheld.
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