INSURER MUST KNOW, OR HAVE REASON TO KNOW, AN INSURED IS A MICHIGAN RESIDENT AT THE TIME A POLICY IS ISSUED

Jacqueline W. August

In the published opinion, Doris Kennard v Liberty Mutual Insurance Company, ___ Mich App ____; ___ NW2d ___ (2022) (Docket No. 355462), the Michigan Court of Appeals held that if an insurer knew or should have known that it was issuing a policy to a Michigan resident, the policy must be construed to comply with the provisions of the No-Fault Act under MCL 500.3012.

Before the subject November 2017 motor vehicle accident, which occurred in Ohio, Plaintiff obtained an automobile insurance policy from Defendant. The policy reflected that Plaintiff’s mailing address was in Maryland and Plaintiff had a Maryland driver’s license. Plaintiff stated that she moved to Michigan on or about October 2, 2017, and informed Defendant around that time of her move. Plaintiff provided Defendant with her mother’s Michigan address.

Following the November 2017 motor vehicle accident, Plaintiff filed a claim for benefits. Defendant paid Plaintiff the policy limit applicable to the accident. Plaintiff sued Defendant seeking personal injury protection (PIP) benefits under the policy and pursuant to the No-Fault Act. Defendant moved for summary disposition arguing the Maryland insurance policy did not provide benefits beyond the policy limit, and Defendant was not required to comply with the No-Fault Act or provide PIP benefits since Plaintiff was not a Michigan resident. The trial court granted Defendant’s motion for summary disposition concluding that Plaintiff had a Maryland policy at the time of the accident. Plaintiff appealed.

Plaintiff argued the information she provided to Defendant converted her out-of-state policy to a Michigan policy and she was entitled to have the Maryland policy reformed to comply with the No-Fault Act under MCL 500.3012. MCL 500.3012 governs the issuance of a noncomplying insurance policy and provides that a noncomplying insurance policy issued in violation of MCL 500.3004 through MCL 500.3012 of the No-Fault Act shall be held valid and be deemed to include the provisions required by such sections.

In Farm Bureau Ins Co v Allstate Ins Co, 233 Mich App 38, 41; 592 NW2d 395 (1998), the Court held that the purpose of MCL 500.3012 is to treat an insurance policy that an insurer issues purporting to be a Michigan policy that complies with Michigan law as such, even if the terms of the policy are inconsistent with Michigan law. However, an out-of-state insurer is not required to provide Michigan no-fault coverage if the policy is issued to a person who does not provide indication of being a Michigan resident. If the out-of-state insurer does not know or have reason to know that the person is a Michigan resident, the policy will not be construed to contain the missing provisions of the No-Fault Act.

The Kennard Court held there is no evidence supporting Defendant in this case knew or should have known that it was issuing a policy to a Michigan resident. Although Plaintiff claimed she informed Defendant that she was moving to Michigan a month before the subject accident, there was no evidence that Defendant issued another policy that purported to be a Michigan policy. Therefore, Defendant properly issued a Maryland policy to Plaintiff, who was a Maryland resident when the policy was issued. Notably, Plaintiff provided her Maryland insurance policy to law enforcement following the subject accident. As such, neither MCL 500.3012 nor the Court’s opinion in Farm Bureau supported Plaintiff’s claim for relief.