The Court of Appeals reversed, holding that the policy was legally rescinded and that the rescission was accepted by the insured.
Following a May 2015 motor vehicle accident, the plaintiffs – an Everest National Insurance Company policyholder and her passenger – along with three intervening medical providers, filed suit against Everest for payment of PIP benefits. Deposition testimony revealed that the insured was living with her boyfriend and 15-year-old daughter at the time she purchased her Everest insurance policy, but failed to disclose these individuals on the policy application.
Had the plaintiff listed her teenage daughter on the application, as required, the premium would have increased substantially. As a result of the insured’s misrepresentations, Everest refunded the policy premium via a check that the plaintiff cashed.
The plaintiff’s misrepresentations laid the groundwork for Everest’s motion for summary disposition, which asserted that the policy had been rescinded, precluding the plaintiffs and their medical providers from recovering benefits. The trial court denied Everest’s motion, finding that there was a genuine issue of material fact for trial.
On appeal, the Michigan Court of Appeals issued an opinion reversing the trial court’s decision. The court reasoned that the insured plaintiff’s cashing of the premium refund check constituted an acceptance of the rescission such that no insurance coverage existed at the time of the accident. The court’s opinion notes that the language of the Everest policy application – making it “unacceptable” for an applicant to select “no” in response to the application query regarding whether all household members over the age of 14 had been identified – constituted a warning to applicants that listing all potential drivers was a prerequisite to coverage.
The court also held that the return of the policy premium to the insured plaintiff restored the status quo and confirmed that the policy was legally rescinded. The court’s opinion also confirms that the rescission of the policy eliminated the claims of the plaintiff passenger and intervening medical providers.