Michigan’s regulation for automotive insurance coverage cancellation for non-payment offers necessary safety for drivers who could also be vulnerable to being denied No-Fault insurance coverage protection attributable to nonpayment.
Particularly, below Michigan regulation relating to automotive insurance coverage cancellation for non-payment, if an insurer doesn’t present the legally required 10-day discover of cancellation after the nonpayment has occurred, then it can not lawfully cancel an individual’s coverage and protection will proceed both till the particular person pays his or her premium or till the insurer points a correct discover.
This safety is invaluable for a driver who’ve been injured in a automotive accident and his or her insurer is attempting to keep away from paying No-Fault advantages by claiming that it doesn’t have to offer protection as a result of the motive force’s coverage had been cancelled attributable to nonpayment of premiums.
What is Michigan’s automotive insurance coverage cancellation for non-payment regulation?
A Michigan No-Fault auto insurance coverage firm can cancel an insured’s coverage for No-Fault protection attributable to non-payment of premiums, however provided that the coverage incorporates – and the insurer complies with – the next cancellation necessities:
“[T]he coverage could also be canceled at any time by the insurer by mailing to the insured on the insured’s deal with final recognized to the insurer or a certified agent of the insurer, with postage absolutely pay as you go, a not lower than 10 days’ written discover of cancellation . . .” (MCL 500.3020(1)(b))
Considerably, the Michigan Insurance coverage Code additionally offers additional clarification on the regulation relating to automotive insurance coverage cancellation for non-payment stating that cancellation attributable to nonpayment of premiums “is with out prejudice to any declare originating earlier than the cancellation.” (MCL 500.3020(5))
How is Michigan’s regulation on automotive insurance coverage cancellation for non-payment utilized when an individual hasn’t paid her insurance coverage invoice?
Michigan courts are very specific in regards to the regulation relating to automotive insurance coverage cancellation for non-payment, particularly as to how and when auto insurers can use the “discover of cancellation” provision to keep away from paying No-Fault advantages to a automotive accident sufferer who might have inadvertently missed paying an insurance coverage premium on time.
In Yang v. Everest Nationwide Insurance coverage Firm, the Michigan Supreme Court docket slammed the brakes on Everest’s try to make use of this tactic to economize by avoiding paying out No-Fault advantages it owed.
On October 9, 2017, Everest despatched Wesley Yang a discover of cancellation for his Michigan automotive insurance coverage for non-payment, informing Yang that if he didn’t pay his premium by October 26, 2017, then his coverage and protection could be cancelled the subsequent day.
Yang didn’t make the cost and “Everest terminated the coverage for nonpayment of the premium on October 27, 2017.”
Subsequently, Yang and his spouse have been struck by a automotive whereas strolling down the road on November 15, 2017, for which they filed a declare for No-Fault advantages with Everest.
Everest denied the declare, insisting “it was not liable for PIP advantages as a result of Yang didn’t have a sound no-fault insurance coverage coverage when the accident occurred” as a result of “Yang’s coverage had been cancelled earlier than the crash . . .”
The Michigan Supreme Court docket disagreed, concluding that Everest’s October 9th letter asserting that it could cancel Yang’s insurance coverage for non-payment after October 26th “was not a sound cancellation discover as a result of it didn’t fulfill MCL 500.3020(1)(b).”
In a unanimous opinion, the justices dominated that MCL 500.3020(1)(b) of the Insurance coverage Code doesn’t permit an auto insurance coverage firm to cancel a driver’s Michigan automotive insurance coverage coverage for non-payment of premiums by mailing “its buyer a letter purporting to be a discover of cancellation for nonpayment of insurance coverage premiums earlier than any nonpayment truly occurred.”
The justices acknowledged: “We maintain that below MCL 500.3020(1)(b), a cancellation discover is efficient solely whether it is peremptory, specific, and unconditional. On this case, as a result of Everest’s letter supplied that cancellation was conditioned on Yang’s failure to pay his insurance coverage premiums, the letter was ineffective as a discover of cancellation.”
What’s the takeaway lesson?
Everybody must do not forget that on the subject of automotive insurance coverage cancellation for non-payment in Michigan, an auto insurer should observe the regulation.
This implies ready till non-payment has truly occurred earlier than sending a “discover of cancellation” in an effort to cancel a coverage and, thus, go away an individual with out protection within the occasion of a crash.
This additionally implies that a threatened cancellation for non-payment is just not legitimate except the particular person has obtained a written discover of “not lower than 10 days.”
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