Michigan Coverage Decisions, Issue 141

Sims v. Progressive Michigan Ins. Co.

Unpublished. Decided May 18, 2010 Michigan Court of Appeals Docket No. 290684.

Defendant alleged that it was entitled to summary disposition because the plaintiff violated the terms of the policy by failing to timely name and serve the alleged uninsured driver. The “Our Rights to Recover Payment” provision in the policy provided, in part, that the insured must “do nothing after an accident to prejudice our rights.” The trial court granted summary disposition to defendant.

The Court of Appeals reversed, finding that plaintiff did nothing to prejudice defendant’s rights. The Court noted that the defendant would have the Court interpret the directive to “do nothing to prejudice” defendant’s rights as a directive to “do everything to preserve” them. The Court noted that it may not expand the plain meaning of an insurance policy beyond the stated language when that language is unambiguous. The Court found that when plaintiff made a claim for uninsured motorist benefits, defendant could have protected its rights by paying the claim and filing a claim for subrogation against the driver.

[su_box title=”Kallas & Henk Note”] This type of additional insured endorsement gives rise to many disputes over its application. [/su_box]


Arevalo v. Auto Club Ins. Assn

Unpublished. Decided May 18, 2010 Michigan Court of Appeals Docket No. 289863.

Plaintiff’s Escalade was stolen from in front of her house. Defendant, the insurer of the vehicle, rescinded the policy, asserting that plaintiff falsely represented that she was the principal driver. Defendant alleged that plaintiff’s son, Garcia, was the principal driver. The trial court granted summary disposition to defendant.

The Court of Appeals reversed and remanded for Trial. The Court noted that regardless of whether plaintiff was a principal or a regular driver, defendant assumed the risk of paying for a theft, a risk that is principally based upon the place where the car is garaged. Defendant was not being asked to pay on a risk it did not assume. The Court found that there was a question of fact regarding who was the principal driver. The Court held that if the trier of fact finds that Garcia was the principal driver, that plaintiff misrepresented that she was the principal driver, and that this was intentional, the unambiguous language in the policy would allow defendant to void it.

[su_box title=”Kallas & Henk Note”] This decision was not based on an ambiguity in the insurance policy language, but a genuine dispute as to the facts which had to be resolved by a jury. [/su_box]


Estate of Phelps v. Allstate Property & Cas. Ins. Co.

Unpublished. Decided June 10, 2010 Michigan Court of Appeals Docket No. 289537.

Phelps was in a vehicle driven by Grubelich, owned by Grubelich’s mother, and insured by defendant. Goodwin, who was uninsured, collided with Grubelich’s vehicle, killing Phelps. The policy issued by defendant included personal injury and uninsured motorist benefits, both of which were capped at $100,000 per person. Plaintiff filed a wrongful death action and also filed a separate lawsuit against defendant to obtain UM benefits. Plaintiff accepted defendant’s offer of over $100,000 from the bodily injury provisions of the policy in settlement of the wrongful death lawsuit. Defendant sought a declaratory judgment asking the trial court to enforce a setoff provision in the UM section of the policy which defendant contended would allow it to reduce any UM benefits it paid by the value of the benefits remitted under the bodily injury provisions of the policy. The trial court granted defendant’s motion for declaratory judgment.

The Court of Appeals affirmed. The setoff provision in the UM section of the policy provided in pertinent part that the limits of liability will be reduced by “all amounts paid by or on behalf of the owner or operator of the uninsured auto or anyone else legally responsible . . . .This includes all sums paid under the Bodily Injury Liability coverage of this or any other auto insurance policy.” The Court found that the trial court properly interpreted the plain language of the policy because there was no question that the over $100,000 settlement came from the bodily injury liability provisions of the policy and that the sum was paid on behalf of the Grubelich’s, consistent with the definition of “anyone else legally responsible”. Application for leave to appeal was denied on December 3, 2010.

[su_box title=”Kallas & Henk Note”] This Court properly applied the concept that uninsured and underinsured coverages are generally designed to be coverages of last resort. [/su_box]

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