Volume XXIX, No. 5
April 20, 2017

 

MICHIGAN COURT OF APPEALS DETERMINES INSURANCE AGENT AND AGENCY DID NOT HAVE A DUTY TO ADVISE OR COUNSEL AS TO THE ADEQUACY OF COVERAGE WHEN PLAINTIFF FAILED TO DISCLOSE ADDITIONAL DRIVER

 By Kyle C. Kamidoi

In LaRocca v. Jill Bleeda, Morris Insurance Group, Inc., and Pioneer State Mutual Insurance Company, (Unpub, COA No. 329504, 4/13/17), the Plaintiffs, Frank LaRocca and his mother Grace LaRocca, brought suit against insurance agent, Jill Bleeda, and Morris Insurance Group, claiming negligence, breach of contract and fraudulent misrepresentation after Pioneer State Mutual Insurance Company denied benefits for Frank LaRocca following a motor vehicle accident in which he sustained bodily injury. The Michigan Court of Appeals affirmed the trial court’s determination that the insurance agent and agency had no duty to advise or counsel an individual of the adequacy of their insurance coverage when the purchaser fails to disclose additional drivers.

In Larocca, Grace LaRocca had purchased a Pioneer No-Fault Automobile Policy through her insurance agent, Jill Bleeda, and Morris Insurance Group. Frank LaRocca, Grace’s son, was a co-lessee of the vehicle for which Grace LaRocca purchased the policy of insurance, however, Grace failed to name Frank as an insured under the policy. At the time of purchase, Grace made no mention of Frank as an additional driver, nor made any inquiry into whether her policy would cover Frank if he drove the vehicle. Subsequent to the purchase of this insurance, Frank was struck by an uninsured driver while he was travelling to his ill Father’s home to provide care. Pioneer denied benefits on the grounds that Frank LaRocca was not a named insured on the policy of insurance, nor a resident relative of Grace LaRocca, despite the fact he was listed as a co-lessee of the vehicle.

Following Pioneer’s denial of benefits, the LaRocca’s brought suit against insurance agent Jill Bleeda and Morris Insurance Group claiming they had a duty to advise Grace as to the adequacy of her policy. The Plaintiffs further argued that the Defendants, Bleeda and Morris Insurance, were aware that Frank was a co-lessee on the vehicle, and therefore, implied through silence that Frank was insured under the policy. Lastly, Plaintiff, Grace LaRocca, argued that Morris Insurance and Bleeda failed to provide her with necessary advice thereby breaching the contract and causing her emotional distress.

The Michigan Court of Appeals ruled that in accordance with the Court’s prior ruling in Mate v Wolverine Mut Ins Co, 233 Mich App 14, 22-23; 592 NW2d 379 (1998), generally an insurance agent “does not have an affirmative duty to advise a client regarding the adequacy of a policy’s coverage.” It is the duty of the insured to read the policy and raise questions about coverage in a reasonable time, unless there is a showing of misrepresentations, ambiguities, inaccuracies, or breach of expressed promise. SeeHarts v Farmers Ins Exch, 461 Mich 1, 10-11; 597 NW2d 47 (1999). In this case, Grace LaRocca, did not provide any facts to indicate that she wanted coverage for her son, Frank, nor did she make any inquiries into the extent of her coverage to undisclosed operators. As a result, The Michigan Court of Appeals ruled that Bleeda and Morris Insurance did not have a duty to advise Grace of the adequacy of her coverage, and Grace did not subsequently ask any questions about the adequacy of her coverage. Given the lack of duty, there was no breach of contract causing emotional distress and no fraudulent misrepresentations. The mere presence of a co-lessee is not among those circumstances that trigger a duty to advise about the adequacy of coverage.

It should be noted that the Court of Appeals reversed the dismissal of Pioneer due to the fact that Pioneer’s Motion for Summary Disposition was added to Bleeda and Morris Insurance’s hearing date without giving Plaintiffs the opportunity to respond. The Court ruled that under MCR 2.116(I), an opposing party must be given the opportunity to respond to a dispositive motion, and that Pioneer may still be liable for payment of PIP benefits to Frank even if Frank is not an insured under Grace’s policy.  MCL 500.3114(4)(a).

Kyle is an Associate in our Port Huron Office.He can be reached at
810-985-4400 or kkamidoi@garanlucow.com

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May 18, 2017


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This complimentary Deposition Boot Camp would be presented to a group of 10 or more in your office, as a half-day session.

This is an ideal presentation for new claim representatives. Based upon decades of experience, each Boot Camp addresses the Plaintiff’s reasons and motivations for deposing claims professionals, what needs to be done to prepare for the deposition, how to conduct oneself during a deposition, and practical “do’s and don’t’s” for claims professionals before and during the deposition. Practical demonstrations and participation in role-play scenarios complement and complete the presentation.

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