Michigan Coverage Decisions, Issue 182

Bahri v. IDS Property Casualty Ins. Co.

Decided October 9, 2014, Published December 9, 2014 Michigan Court of Appeals Docket No. 316869, Leave Denied September 16, 2015 Supreme Court Docket No. 150486.

On October 20, 2011, Plaintiff was involved in an auto accident and claimed first-party and uninsured motorist benefits from IDS under a personal auto policy. Plaintiff filed suit seeking recovery. Intervening Plaintiffs filed a claim seeking payment for first-party services rendered to Plaintiff. IDS moved for summary disposition based on the policy’s physical contact requirement with a hit-and-run vehicle and Plaintiff’s fraudulent representations.

The trial court granted summary disposition to IDS on the basis of Plaintiff’s fraud and the definition of uninsured vehicle that requires some sort of physical contact with the insured. The Court of Appeals affirmed on the basis that Plaintiff had admitted no direct contact with the hit-and-run vehicle during the accident and its determination that the uninsured motorist provision did not apply. The Court further found that based on Plaintiff’s fraudulent misrepresentations, no coverage applied.

[su_box title=”Kallas & Henk Note”] This case was published subsequent to the issuance of the decision and the Supreme Court declined to review the issues. This case follows the line of prior Michigan decisions which require proof of “physical contact” between a hit-and-run vehicle and the insured to allow payment of benefits under this coverage and re-enforces this requirement. [/su_box]


Michigan Ins. Co. v. Channel Road Construction, Inc.

Unpublished. Decided October 21, 2014 Michigan Court of Appeals Docket No. 315837 and 315859, Leave Denied July 28, 2015 Supreme Court Docket No. 150565.

Plaintiff insured the defendant contractor who had built a home in 2006. Five years later, the homeowners discovered water intrusion had damaged the house and sued to recover the repair costs. The homeowners’ experts determined that improper construction allowed the water damage to the house. MIC filed a declaratory action to address the question of coverage for the defective workmanship.

The trial court found the damage was caused by the work of the contractor and was not caused by an accident. The appeal followed on the argument that defective workmanship causing property damage was an accident and “occurrence” because the damage was to “property of others”. The Court of Appeals rejected this argument, finding that the damage was confined to the contractor’s work product, therefore, not an “accident” or “occurrence” within the meaning of the policy and did not trigger coverage.

[su_box title=”Kallas & Henk Note”] The decision is supported by well-established,  long-standing coverage principles and several prior Michigan decisions, and is based on the premise that, because the damage was confined to the insured’s own work, coverage is not available.  [/su_box]


Joy Management v. Michigan Basic Property Insurance Assoc.

Unpublished. Decided October 28, 2014 Michigan Court of Appeals Docket No. 317414.

This is a declaratory action arising out of a fire that damaged the rental property on November 20, 2011. Prior to the fire, an application was electronically submitted, but without premium. The application contained an explicit requirement for premium for the policy to be effective at 12:01 am the day after receipt of the application and premium. On the date of the fire, the premium was mailed to the insurance carrier. The carrier denied the application for non-payment of premium and issued a refund. The carrier denied the claim on the basis that no policy was in effect on the date of the loss and the policyholder filed this action seeking a declaration that coverage was in effect on the date of loss.

The trial court granted summary disposition in favor of the carrier finding that there was no policy in effect between the parties on the loss date. The Court of Appeals affirmed the trial court’s decision finding that under the ordinary and plain meaning of the application, no policy was in force on the date of loss because Plaintiff did not comply with the application requirements to put a policy into effect, and even if the insurance carrier had received the premium on the same day, the policy would not have been effective until the next day after the loss.

[su_box title=”Kallas & Henk Note”] The Court of Appeals properly applied the plain language of the application in determining the requirements to effectuate a policy and that these requirements were not followed. [/su_box]


Home-Owners Ins. Co. v. Mary Griffith et. al.

Unpublished. Decided October 28, 2014 Michigan Court of Appeals Docket No. 312707.

The policyholder filed a claim after a fire loss to the insured home. The carrier filed this action seeking a declaration that neither the policyholder nor her daughter, who was residing or staying with the policy holder, were entitled to recover under the homeowners policy.

The trial court granted partial summary disposition to the insurer on the basis that the policyholder breached a condition precedent by failing to cooperate with the investigation and failing to submit a timely sworn statement of proof of loss and declared the policy void. The Court of Appeals affirmed the decision, with the modification to clarify that the insurer was not obligated to indemnify the policyholder’s daughter for any claims she may submit under the policy.

[su_box title=”Kallas & Henk Note”] The Court strictly enforced the policy conditions.  Under Michigan law, an insurer need not show prejudice from failure to comply with conditions of property coverage. [/su_box]

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