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Judges allow insurers to refuse to honor policies on adult children

In a fairly recent development, the insurance-oriented Michigan judiciary has been allowing car insurance companies to refuse to honor policies that were purchased, but poorly written by agents.  The Court of Appeals, and Judge Henry Saad--an insurance company favorite--in particular, decided two more of these cases last month.

In both cases, the appeals panel reversed the lower court judge and granted summary disposition to an insurer who chose not to honor a purchased policy.  In Hoskins v. Home Owners Insurance Co., and Culbert, et al., v. Starr Indemnity and Farmers Insurance Company, the Court rejected the trial judges' analysis and denied any purchased benefits to the two insured families. 

Marisa Hoskins was an adult daughter who moved out of the home; her parents transferred title of her insured car to her, but the agent did not identify Marisa as a Named Insured.  She was identified as the "insured driver," however, and the premiums were paid up-to-date.  After Marisa was hurt by an uninsured driver, she sought to collect the benefits that her policy bought.  Judge Saad and his companions ruled that the policy was actually void as to her because once she left the home, she was no longer a "Named Insured."  The fine print changed her status when she moved out.  It didn't matter that she was explicitly "designated merely as [a] driver under the policy."  She wasn't insured.  Furthermore, she had no remedy based on mistake or "estoppel," because the judges held that the mistake wasn't mutual:  the insurer knew the contents of the policy and never "misled" Marisa's parents.

The Culbert case is similar.  Tearra Mosby was hurt when she was rear-ended at a stop sign.  After incurring substantial medical expenses, she sought coverage under a policy issued to her boyfriend.  He had listed her as the primary driver of one of the two insured vehicles, but the agent had not listed her as a "Named Insured." Since Mosby owned the vehicle, the court held that the insurance was voided because the named insured did not have an insurable interest in the car that he paid to insure.  And since his live-in girlfriend wasn't a "relative," the coverage was meaningless.  Incredibly, the judges quoted their earlier decision to the effect that "the person named in the policy" under Michigan law, is synonymous with the [policy term]  'named insured' and persons designated merely as drivers under a policy [even though they are NAMED IN THE POLICYare neither named insureds nor persons named in the policy."

Sadly, you have "amateur" insureds being issued (usually weeks later) written policies that contain fine print that wipes out the very coverage they are purchasing from professionals.  And yet the professionals aren't held accountable or even required to honor their plain-language commitment.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
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