By Zach Gorchow
Gongwer News Service
Motorists who make material misrepresentations on their applications for auto insurance are subject to having those policies voided, the Michigan Supreme Court unanimously ruled Monday.
In Sherman v. Progressive Michigan Insurance Company (SC Docket No. 167826), Janice Sherman filed for personal injury protection benefits after one of her vehicles, in which she was a passenger, was rear-ended.
Progressive, however, discovered Sherman misled the company in her insurance application, claiming her vehicles were based in Clinton Township in Macomb County when they actually were kept in Detroit. Further, she claimed she was the sole resident and driver of the vehicles, which also was untrue. The company estimated Sherman’s premium would have been 83.2% more if she provided the facts. It denied her claim and rescinded the policy.
The Washtenaw Circuit Court, siding with Sherman, ordered the Sherman’s policy be reformed, not canceled, to reflect the premium it thought Sherman should have paid. The Court of Appeals reversed, holding the trial court had erred and abused its discretion ordering the policy to be reformed.
Justice Brian Zahra, writing for the Supreme Court, said the Court of Appeals correctly determined no genuine issue of material fact existed about Sherman’s misrepresentations. As a result, Progressive was justified in rescinding the policy. Further, Progressive made no mistake nor committed any wrongdoing in rescinding the policy, Zahra wrote.
“Given the one-sided nature of the equities in this case, there was no plausible basis for the trial court to find that a result favoring Sherman and disfavoring Progressive was warranted as a matter of equity. This inequitable result was an abuse of discretion,” Zahra wrote.
Justice Noah Hood did not participate in the case because he was on the Court of Appeals panel that issued the decision under review.
Gongwer News Service
Motorists who make material misrepresentations on their applications for auto insurance are subject to having those policies voided, the Michigan Supreme Court unanimously ruled Monday.
In Sherman v. Progressive Michigan Insurance Company (SC Docket No. 167826), Janice Sherman filed for personal injury protection benefits after one of her vehicles, in which she was a passenger, was rear-ended.
Progressive, however, discovered Sherman misled the company in her insurance application, claiming her vehicles were based in Clinton Township in Macomb County when they actually were kept in Detroit. Further, she claimed she was the sole resident and driver of the vehicles, which also was untrue. The company estimated Sherman’s premium would have been 83.2% more if she provided the facts. It denied her claim and rescinded the policy.
The Washtenaw Circuit Court, siding with Sherman, ordered the Sherman’s policy be reformed, not canceled, to reflect the premium it thought Sherman should have paid. The Court of Appeals reversed, holding the trial court had erred and abused its discretion ordering the policy to be reformed.
Justice Brian Zahra, writing for the Supreme Court, said the Court of Appeals correctly determined no genuine issue of material fact existed about Sherman’s misrepresentations. As a result, Progressive was justified in rescinding the policy. Further, Progressive made no mistake nor committed any wrongdoing in rescinding the policy, Zahra wrote.
“Given the one-sided nature of the equities in this case, there was no plausible basis for the trial court to find that a result favoring Sherman and disfavoring Progressive was warranted as a matter of equity. This inequitable result was an abuse of discretion,” Zahra wrote.
Justice Noah Hood did not participate in the case because he was on the Court of Appeals panel that issued the decision under review.
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