Insurer can't enforce insurance exclusion that did not comply with statutory notice
MCL 500.3009(2) of the No Fault Act allows an insurer to eliminate coverage for particular named drivers, however, it sets forth very specific requirements that must be met. William Smith could no longer insure himself because of the points on his license, so he added a friend to the title of the vehicle and then she insured it with Progressive Michigan Insurance. Progressive listed Smith as a Named Excluded Driver. Proving the wisdom of Progressive's underwriting decision (and the lack of wisdom exercised by Smith and his friend, Sheri Harris) Smith proceeded to injure Scott Mihelsic and Andrea Mihelsic in a motor vehicle accident. When they sued, Progressive refused to pay.
On appeal, two of the more conservative judges of the Court of Appeals reversed the trial court and required Progressive to provide coverage for the accident. They noted that Progressive did not use the statutory warning/notice language, required to be printed on the policy. Progressive substituted the word "responsible" for "liable" in the following warning:
"Warning---when a named excluded person operates a vehicle all liability coverage is void--no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain personally liable."
The judges also concluded that providing the same notice on the Declaration Page of the policy was not adequate. Quite honestly, we think that complying with the spirit of the legislation and enforcing a reasonable notice constitutes a better judicial policy--regardless of whether the interpretation benefits a victim or an insurer.