Insurance is a contract. When an insurer offers to renew an insurance for car insurance, there is no insurance until the offer is accepted by paying the premium required to renew the offer. In Michigan, as it should be in all states, failure to pay a renewal premium is when an offer to renew is due and there is no coverage.
Jeffrey Michael Allen v. Everest National Insurance Company [19459005348961StateOfMichiganCourtofAppeal(13augusti2020)vägradeförsäkringsgivarenattbetalaettfordraneftersommisslyckandetavJeffreyMichaelAllenattbetalapremienföredetdatumsomkrävsavetterbjudandeomförnyelseföranleddepolicynattlöpautochdetvarinteikraftvidtidpunktenförhansolycka
On January 1
It was undisputed that the complainant's premium for renewal insurance should be paid no later than 6 January 2018, which the plaintiff did not pay, and the accident occurred on 13 January 2018 around 13:15. It was also undisputed that the complainant submitted a payment to renew his insurance with due under cover on January 13, 2018, approximately 17:39 – after his car accident.
The Court of First Instance granted the defendant's proposal for a brief disposition after finding that the plaintiff's insurance policy was not in force at the time and time of the accident.
The summary disposition in Michigan is correct if there is no genuine question of material fact and the moving party is entitled to judgment as a matter of law. The correct interpretation of contracts and the legal effect of contractual provisions are legal issues.
The dispute concerned whether the complainant had car insurance at the time of the accident. The plaintiff sued and claimed that the defendant was obliged to pay him without benefits. The defendant moved for a brief disposition under MCR 2,116 (C) (10) and claimed that the plaintiff was uninsured at the time of the accident. In support of his proposal, the defendant submitted several documents, which included a copy of an offer of renewal, a certificate of insurance, insurance and a receipt of payment. The Court of First Instance agreed with the defendant because the premium was not paid when it fell due.
The plaintiff first claims that the defendant issued an insurance policy that gave him coverage from 11 January 2018 to 11 July 2018 because, according to the declaration page, the insurance policy entered into force on 11 January 2018, at 12:01, and the insurance certificate states that the defendant had issued an insurance policy to him.
The Michigan No-Fault Act provides that the owner or registrant of a motor vehicle required to register in this state shall maintain security for the payment of personal and property insurance benefits under this chapter, and residual liability insurance.
An insurance policy continues to apply until it expires or is terminated. A policy is no longer valid and a cancellation notice is not required after the coverage period has expired. In Michigan, the failure of the insured to pay the required extension premium means that the insured rejected the insurer's offer of renewal, and the insurance automatically terminated at the end of the insurance period.
The plaintiff failed to renew the insurance policy before it expired. The defendant sent the plaintiff a notice of renewal in December 2017, stating that the plaintiff was obliged to pay the premium by January 6, 2018, or the insurance would expire on January 11, 2018 at. 12:01. The insurance certificate states that "all coverage will be void regardless of the listed expiration date if the invoiced premiums are not paid or the insurance is canceled for valid reasons [.]" In addition, the insurance policy explicitly provided that the insurance policy automatically terminated at the end of the insurance period. Therefore, the plaintiff's insurance policy ended at the end of the insurance period on 11 January 2018.
The plaintiff also claimed that he was covered by the insurance policy issued by the defendant on 13 January 2018, as the offer on 12 January 2018- renewal of correspondence stated that it would be due in the coverage up to the date the payment was received. However, the plaintiff submitted his premium payment via the Arrowhead Exchange, an online payment system, on January 13, 2018, at approximately 05:39 EST. By submitting payment through the Arrowhead Exchange, the plaintiff agreed to be bound by certain conditions, which included that his overdue car insurance would not be reinstated until date and time for payment.
Arrowhead Exchange Terms and Conditions expressly state, "If your car or motorcycle policy is in expiration status, you acknowledge that your policy will not be reinstated until the date and time of payment has been posted through the Arrowhead Exchange Website."
The plaintiff accepted the additional terms and conditions by submitting his payment through the Arrowhead Exchange website. Therefore, the complainant's insurance was not reintroduced until the date and time he submitted his payment, which was after the motor vehicle accident.
The plaintiff did not pay the premium he owed at the time it was owed. According to the terms of the policy, if the offer to renew is not accepted by payment of the premium, the insurance expired. He did not pay the premium on time. In fact, the premium was not delivered to the insurer until after it had expired. Mr Allen took the chance that his late payment would not cause him a problem. Unfortunately, the accident occurred while the policy was in effect.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant focusing on insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney handling attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
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