April 15, 2026
In Fosmore v Roth, an unpublished opinion, the Michigan Court of Appeals addressed the priority between two insurers. Plaintiff was injured in a motor vehicle accident while a passenger. She did not have no-fault insurance of her own, but had lived with her mother, husband and minor child since 2019. In 2023, Plaintiff’s mother applied for no-fault insurance with Progressive representing that she was the only household member of driving age. When Plaintiff tried to collect no-fault benefits from Progressive following the accident, Progressive rescinded its policy based upon its fraud or misrepresentation provision and proof that its insured’s premium would have increased had Progressive known about the resident relatives. Plaintiff filed a lawsuit against Progressive and Farmers, the assigned insurer, and both insurers filed motions for summary disposition. Applying the factors laid out in Pioneer State Mut Ins Co v Wright, 331 Mich App 396, 411 (2020), the Circuit Court found Progressive properly rescinded its policy. Farmers filed a motion for reconsideration, but the Circuit Court denied it.
On appeal, the Michigan Court of Appeals again analyzed the five-factor balancing test under Pioneer, as well as the analysis in Van Dyke Spinal Rehab Ctr, PLLC v USA Underwriters, ___ Mich App ___ (2024). Regarding the first factor, the extent to which the insurer’s ability to uncover the fraud before an accident occurs, the Court found Progressive was able to determine the number of resident relatives within only one month after the accident had occurred, indicating that its insured’s misrepresentation could have been discovered during the procurement process and before the accident took place. Regarding the second factor, the relationship between the fraudulent insured and the innocent third party, and if the third party had knowledge of the fraud, the Court noted that general knowledge of a no-fault policy and awareness that a resident relative obtained that coverage is not enough to conclude that the third party obtained knowledge that the insured made material misrepresentations or committed any fraud. These two factors, then, weighed against rescission contrary to the Circuit Court’s decision.
Regarding the third factor, the conduct of the innocent third party, the Court noted that Plaintiff was merely a passenger in the vehicle and had no control over the vehicle. Even if Plaintiff did engage in consumption of alcohol before willingly entering the vehicle – as was the case here – actively telling the driver to stop and having no means of safe exit weighed against rescission, but a factual question remained as to whether Plaintiff’s actions contributed to the accident. Regarding the fourth factor, an alternate avenue of recovery if no policy was enforced, the Court noted Plaintiff did have a potential avenue through Farmers but the fourth factor did not automatically favor rescission. The Court found the fifth factor was not applicable in this case.
The Court of Appeals found the Circuit Court’s analysis of factors one, two and three applied the improper standard or was contradicted by the evidence so the Court erred in ruling that Progressive was entitled to rescind its policy as to Plaintiff.