Court Affirms Ruling That No-Fault Benefits are Unavailable to Plaintiff who Allowed Policy to be Canceled on Same Day as Accident
The Michigan Court of Appeals recently sent a message to no-fault insureds that cancellation of policies will be strictly enforced in the event of non-payment of premium.
In Micou v Progressive Ins Co, Docket No. 311937 (March 13, 2014), the plaintiff filed suit because his insurance policy was canceled the same day he was involved in a motor vehicle accident.
On Sept. 13, 2010, the plaintiff received a notice of cancellation mandating payment of $221.73 in outstanding premium by Sept. 26, 2010 in order to avoid cancellation of the policy. In a recorded phone conversation, the plaintiff called the defendant insurer, and they agreed to extend the policy until Sept. 27, 2010 when plaintiff indicated he would be able to obtain a check through his church and submit payment through a local agency the same day.
The plaintiff’s church was closed on Sept. 27, and he did not call the insurer to advise of the delay. He was involved in a motor vehicle accident later that night. The plaintiff attempted to pay the overdue premium the following day but was informed that his policy was cancelled.
The appellate court affirmed the trial court's ruling and rejected the plaintiff’s arguments that he had an agreement for coverage through the date of the accident and similarly rejected the plaintiff’s attempt to raise equitable estoppel and mutual mistake. The court found that the plaintiff could not have reasonably believed he was covered on the date of the accident and that even if the insurance agent with whom he spoke had the authority to extend the policy, such an extension was clearly conditioned upon the payment of the premium on the day of the accident, and it was not delivered.
Although mandated by statute, policies of no-fault insurance are still basic contracts for which the most fundamental requirements must be met, including consideration for coverage in the form of timely premium payments. Michigan requires insurers to offer perhaps the most extensive no-fault coverage in the country made possible only by consistent payment of premiums. In order to prevent any lapse in coverage, insureds must take care to diligently address any insurer notice of cancellation for overdue payment.
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