After an accident with plaintiff and non-party Michael Ragland who struck the plaintiff when he was traveling through a pedestrian crossing on an electric scooter. The plaintiff got stuck under Ragland’s vehicle and he had to be transported by ambulance to hospital for a number of injuries. ICChristopher Carter v. Owners Insurance Company, doing business as Auto-Owners Insurance Companyno. 356556, Court of Appeals of Michigan (May 12, 2022) Carter sought benefits without fault due to the reason used by the insurer was not effective.
The plaintiff’s father, who lives in Ohio, had insurance with the defendant that was sold by an Ohio-based broker. Following the accident, the plaintiff informed the defendant of his injuries as a result of the accident.
The defendant sent a letter to the plaintiff stating that it was not liable for benefits to the plaintiff because “[plaintiff] is not a named insured on “his father’s insurance” nor is he one. . . domicile relative of our named insured ”, ie the plaintiff’s father. The letter informed the plaintiff that he could still be entitled to PIP benefits from Ragland’s insurance company, Farm Bureau Insurance Company, and the defendant instructed the plaintiff to inform it if the Farm Bureau rejected his claim for benefits.
According to the defendant, since the plaintiff’s damages did not arise from his use of a motor vehicle as a motor vehicle, he was not liable for the payment of his PIP benefits. By presenting this argument, the defendant acknowledged that the plaintiff, contrary to what was stated in his first letter of refusal, was a relative resident under his father’s policy, but claimed that it was still not responsible for the payment of the plaintiff’s PIP benefits – Farm Bureau was the.
At a hearing on the defendant’s claim, the district court agreed with the plaintiffs and rejected the defendant’s claim for disposition. The district court also rejected the motion because the plaintiff in a harmful manner relied on the defendant’s claim that the plaintiff was not a relative resident of the named insured.
The defendant first claims that the Court’s ruling in respect of MCL 500.3163 (1) was incorrect. Michigan’s no-fault act formulates the priority of insurance companies that are responsible for an injured party’s PIP benefits. The parties agree that the plaintiff was domiciled with his father in Ohio at the time of the accident, that his father had Ohio-based insurance with the defendant and that the plaintiff was a covered party under that insurance. In other words, the parties agree that the plaintiff was a non-resident insured by a non-state insurer, defendant.
Since the plaintiff’s damages did not arise from his “ownership, operation, maintenance or use of a motor vehicle as a motor vehicle”, the defendant was not obliged under MCL 500.3163 (1) to cover the plaintiff’s PIP costs, and the court erred in concluding otherwise.
Alternatively, the defendant contended that the trial court erroneously applied the do-it-yourself doctrine to hold the defendant liable for the plaintiffs’ claims. The Michigan Supreme Court declared the repair-the-hold doctrine as follows:
If a party gives a reason for his conduct and his decision concerning something involved in a dispute, he can not, after a legal dispute has begun, change his basis and put his behavior on another and another consideration. He is not allowed to fix his grip in this way. He is prevented from doing so by a firm principle of law. [CE Tackels, Inc v Fantin, 341 Mich. 119, 124; 67 N.W.2d 71 (1954) (quotation marks and citation omitted).]
The Mend-the-hold doctrine has also been applied in insurance contexts:
This court has many times ruled, and it must be accepted as the law of that State, that when an insurance claim has occurred and payment has been refused for stated reasons, it requires good faith that the company should fully inform the insured of all defenses. it intends to rely on, and its failure to do so, is, in legal effect, a waiver, and prevents it from maintaining any defense against an action on the policy other than those which it has thus announced. [Smith v Grange Mut Fire Ins Co of Mich, 234 Mich. 119, 122-123; 208 N.W. 145 (1926).]
Put another way, “when an insurance company has denied coverage to an insured and stated its defense, the company has refrained from or been prevented from developing new defenses.” South Macomb Disposal Auth v American Ins Co, 225 Mich.App. 635, 695; 572 NW2d 686 (1997).
Waiver and estoppel are not available if their application would lead to an increase in insurance coverage, so that it would cover a loss that it never covered by its terms and create a liability that is contrary to the express provisions of the agreement made by the parties.
The second class of cases that allow the limits of an insurance to be extended by estoppel or exemption involves cases where the injustice of forcing the insurer to pay on a risk for which it has never collected premiums is offset by the injustice that the insured suffers due to the insurance company’s actions. .
In this case, the plaintiff’s requested PIP benefits would not be available under the defendant’s out-of-state policy insuring the plaintiff and the requirements of MCL 500.3163 (1) – the law which states when a non-state insured may be required to pay Michigan no-fault benefits to a foreign insured – was not met. The plaintiff requests that the defendant be prevented from asserting a different ground of discharge than the reason stated in its first letter of refusal.
This would, in fact, broaden the coverage of the defendant’s policy, so that it would cover a loss that it never covered by its terms and create a liability that is contrary to the express provisions of the agreement made by the parties.
The decision not to name the Farm Bureau as the defendant was the plaintiff’s alone, and no action or omission by the defendant caused it. Based on the above, the court concluded that this case does not constitute a case where estoppel can be used to cover risks not covered by the insurance conditions as the defendant’s delayed argument related to MCL 500.3163 did not harm the plaintiff.
The plaintiff was injured but not by the defendant’s delayed argument under MCL 500.3163 but by his decision not to name Farm Bureau as defendant even though the defendant was informed that Farm Bureau was the insurer responsible for his claim.
Therefore, the trial court erred in law in applying the principles of waiver and estoppel to extend the defendant’s insurance cover under the insurance in question.
The district court was ordered to initiate a summary disposition in favor of the defendant.
Insurance is an agreement. It must always be executed as written. In this case, the insurer mistakenly rejected the claim for a reason that was not available but later found out a reason that was appropriate. Because the injured party sued the defendant and tried to change a policy by requesting a waiver, he lost both.
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Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
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