Court allows Auto-Owners to void policy and reject fire claim after collecting 15 years of premiums

Elizabeth Null's Cassopolis home was destroyed by fire in 2009.  She and her husband had moved into the home with her brother in 1998, after he developed problems relating to alcoholism. They executed a land contract to buy the home from the brother in 1997 and recorded it at the Register of Deeds.  The brother gradually stopped living in the home by 2004 and Elizabeth took over the mortgage and insurance payments by 1998, forwarding them through an escrow account.  Another relative was given the brother's power of attorney and the insurer was notified of a change of address to send mailings to the attorney in Indiana in 2002 or 2003. 

The insurer continued the policy with mailings to the Indiana relative and paid two small claims arising out of a roof leak in 2001 and 2006.  Nevertheless, when the home burned down after collecting 11 years of premiums from Elizabeth, the insurer refused to honor its obligations, citing a clause in the policy that required the original named insured (in this case the brother who originally bought the policy in 1994) to be a resident of the home.

Two judges of the Court of Appeals wrote an opinion that allowed Auto-Owners to deny its obligations.  Judge Shapiro wrote a stinging dissent, pointing out that the equities operated in favor of holding the insurer to its contract obligations, given the fact that it collected 15 years of premiums and had ample notice of the original insured's change of address.