Court wrestles with uninsured motorist coverage where at-fault never gave notice to his own insurer and was defaulted

 Coze Long was hurt in a car wreck caused by Vincent Berry II.  Berry had no insurance, but he was driving his mother's insured car.  Berry never responded to Long's attorney's correspondence and originally told the attorney in response to the lawsuit that he was "uninsured."  Long then joined her own uninsured motorist insurer, Bristol West, in the lawsuit.  Subsequently, it was determined that Integon National Insurance actually provided coverage for the Berry vehicle through the driver's mother, but Integon argued that the failure to provide it with notice of suit prejudiced it and wiped out the coverage.

Long and Bristol West argued that Integon actually suffered no prejudice by the lack of notice and that in any event, under Michigan law, it remained obligated to pay the statutory minimum liability coverage of $20,000.00.  On appeal, the Court held that because Berry was defaulted denying Integon the opportunity to appear, discover and defend, it was within its rights to deny coverage.  The Court also distinguished this case from the line of cases requiring an insurer to provide the legal minimum coverage where the rights of an innocent third-party have become involved in an insurer/prejudice claim.  The Court concluded that those cases apply only to insured non-cooperation and not to lack of notice.

Finally, the Court rejected Bristol West's argument that Long's refusal to set aside the default against Integon's insured invalidated Bristol West's uninsured motorist coverage.  Bristol West argued that Long's refusal had denied it an opportunity to seek subrogation.  The Court held that at the time the default set aside issue came up, Bristol West had not paid the underlying benefits to Long, and therefore its right to subrogation did not yet exist.