Citizens is not allowed to rescind four-year old policy, based on parent's or agent's mis-statements
Julie Jackimowicz was seriously injured in 2007 when another car crossed the centerline and struck her Ford Escape head-on. After learning of the seriousness of her injuries, Citizens denied her PIP benefits and claimed that it was rescinding her four year old insurance policy. Citizens argued that Jackimowicz had committed fraud by not disclosing that her previous vehicle was "garaged" in Lansing, by failing to disclose a drunk driving conviction in her past and by failing to disclose that she was living with a boyfriend who occasionally drove her car. Jackimowicz objected, pointing out that she had never provided any of this information, correct or incorrect, to Citizens or its agent: rather, she had called her folks' independent insurance agent in Marquette, seeking insurance. The agent, knowing that Jackimowicz was attending graduate school in Lansing, told the woman that she would arrange coverage and thereafter only dealt with Jackimowicz's mother. Jackimowicz pointed out that the application filled out by the local agent wsa not even provided to Citizens to underwrite the policy and claimed that any lack of information or error was simply sloppy practice by Citizens and the local agent.Jackimowicz was forced to file suit. The trial judge ruled that her mother was her "agent" in applying for insurance, and that even if Jackimowicz was entirely innocent and uninvolved in the application, she was bound by her mother's misrepresentations. The trial judge allowed Citizens to rescind the policy and deny benefits.
On appeal, the Court of Appeals unanimously reversed and reinstated coverage. It pointed out that numerous previous cases have made it clear that only the party committing fraud or a misrepresentation will be denied coverage by an insurer: innocent injured persons, even family members, will retain coverage, particularly if the misrepresentation is one which the insurer could easily have discovered.
In this case, there was no evidence of any involvement by the insured in the alleged misrepresentations, some of which were not even documented in the application process. In addition, it is well-established that a student's residency may remain with the parents during attendance at a university. Ultimately, the only clear misrepresentation in the application was the insured's failure to identify the drunk driving conviction, and there was no evidence to dispute the insured's claim that she had nothing to do with the application or this omission.
While an insurer may rescind a policy where there has been a material misrepresentation, even where, as here, the misrepresentation is not causally related to the claim at issue, rescission must be connected to the insured claimant. Given the lack of evidence attributing the error to the insured, and the fact that Jackimowicz's presence in Lansing was known to the independent agent and readily known to Citizens, the Court of Appeals unanimously ruled that Citizens was obligated to provide coverage.