Michigan Coverage Decisions, Issue 28

Forest Hill, Barbara Hill, and Gregory S. Hill v Pioneer State Mutual Insurance Company

Unpublished. Decided October 26, 2001. Michigan Court of Appeals Docket No. 216155.

Plaintiffs initiated this action after Defendant automobile insurer attempted a rescission of their policy. Plaintiffs had initially applied for Insurance without disclosing that their son was residing with them and operating their vehicles. The son had a poor driving record. When Defendant insurer learned of the son and his driving record, a notice of cancellation of the policy was issued. Prior to the effective date of the cancellation, the son was involved in an accident. Following the accident, Defendant attempted to rescind the policy and return all premiums paid.

The Trial Court granted summary dispositions to Plaintiffs finding that Defendant insurer could not rescind after the accident because they chose cancellation and not rescission upon learning of the son and his driving record.

The Court of Appeals affirmed finding that prior Michigan precedent prevented a rescission after a loss where the insurer had prior knowledge of the misrepresentations in application for Insurance.

[su_box title=”Kallas & Henk Note”] Michigan law allows a rescission for misrepresentation in applications for Insurance. In this case, however, the carrier did not rescind upon learning of the misrepresentation. The Court held that this was dispositive and rejected the effort by the insurance carrier to continue coverage until the date of cancellation (and retain premium) if there was no accident during the coverage but attempt rescission if there was an accident. The Court relied on the case of Burton v Wolverine Mutual, 213 Mich App 514 (1995) which dealt with the exact same issue. [/su_box]


Mary Lee Tolbert a/k/a Marry Lee Tolbert v State Farm Insurance Company

Unpublished. Decided November 2, 2001. Michigan Court of Appeals Docket No. 225068.

Defendant issued Plaintiff a policy of no-fault automobile insurance, including coverage for accidental death or dismemberment. Plaintiff was involved in an accident in which her fiancé, who was driving, was killed. Plaintiff claimed she was entitled to accidental death benefits under the auto policy. Defendant argued that the policy provision required the death of the insured, not another party.

The Court agreed with Defendant and determined that the policy unambiguously required the accidental death or dismemberment of the insured. The Court based its decision on contract construction and interpretation law requiring giving effect to clear and unambiguous insurance policy language.

[su_box title=”Kallas & Henk Note”] The Court of Appeals relied on Michigan precedent requiring a reviewing Court to look at the policy as a whole to determine whether there is coverage. [/su_box]


Patricia Allen v Michigan Basic Property Insurance Company

Published. Decided October 26, 2001, approved for publication on December 28, 2001. Michigan Court of Appeals Docket No: 223009.

Plaintiff filed a breach of contract for failure to pay for fire damage to her residence. The insurer, during its investigation of the claim, notified the Plaintiff that it required her to submit to an examination under oath and provide documentation. Plaintiff failed to comply with these requirements and Defendant denied Plaintiff’s claim.

The insurer argued it was entitled to summary disposition on the basis that the Plaintiff willfully failed or refused to comply with the policy conditions prior to commencing a lawsuit. The Trial Court denied summary disposition. The Court of Appeals reversed the Trial Court. The Court determined that the Plaintiff could not refuse to comply with the policy requirements. Therefore, Plaintiff’s willful non-compliance with the policy required dismissal with prejudice.

[su_box title=”Kallas & Henk Note”] Michigan appellate decisions have consistently upheld the examination under oath and cooperation requirements of policies providing property coverage. This decision also stands for the proposition that a belated cooperation long after the incident is insufficient to recover under the policy. The Court in this case also held that while the insured has a right to invoke a Fifth Amendment privilege against self-incrimination, this does not eliminate the duties under the insurance policy and any such invocation is at the risk of losing coverage. [/su_box]


Allstate Insurance Company v Stacy Reinhardt and Carla S. LaRoche

Unpublished. Decided November 6, 2001, Michigan Court of Appeals Docket No. 224025.

The Trial Court granted summary disposition to Plaintiff, Allstate Insurance Company, in a declaratory judgment action filed against the policyholder. The policyholder, who was under the influence of liquor, pushed a third party, resulting in injury to that person. The Court determined that no coverage existed under the policy for an intentional act by the insured on the basis that the actions of the insured did not constitute an “occurrence” because there was no “accident”. The policyholder appealed the Trial Court’s decision.

The Court of Appeals upheld the Trial Court on the basis that the insured’s actions did not meet the definition of occurrence, which required an “accident.” The determination of whether accident occurred is viewed from the standpoint of the insured and lack of intent to cause the harm does not create an accident. The Court concluded that the actions were not accidental because it could not plausibly be construed as an undesigned contingency or something that happened by chance and the resulting harm should reasonably have been expected as the results of the forceful contact with the third party by the policyholder.

[su_box title=”Kallas & Henk Note”] This decision is consistent with a series of recent decisions from the Supreme Court which hold that unintentional consequences of an intentional act that is likely to cause harm is not an “occurrence”. Under these decisions, an assault and battery is unlikely to qualify as an “occurrence” because some harm, even if limited, is likely to result from the act. The lead case from the Supreme Court on this issue is Nabozny v Burkhardt, 461 Mich 471 (2000). [/su_box]

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