PIP action is reinstated to assess the impact of insured's failure to identify family member-driver in application two years earlier
Pansy Reid was hurt in a car accident. She was driving a car owned by her son-in-law, with whom she lived. He had insured the car with an insurer that was now defunct, and whose contracts had been taken over by Michigan Property & Casualty Company two years earlier. The insurer argued that Reid's son-in-law's failure to list her as a potential resident driver on the original application was a material misrepresentation that would allow it to void the coverage that he had purchased. The trial judge agreed and granted summary disposition.
The Court of Appeals reversed and reinstated the case, noting that dismissal was premature. The appellate judges pointed out that the insurer had not demonstrated that the alleged miscommunication was of such a nature that it substantially increased the risk of loss, bringing about a probability that the insurer would not have accepted the risk--or would have increased the premium. The "materiality" of the omitted information remained a question of fact under the proofs presented to-date.