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Progressive sells illegal policy and then avoids PIP responsibility because written notice was not received

In a bizarre decision signed by Henry Saad and Peter O'Connell, the Court of Appeals upheld the dismissal of a PIP claim brought by Amerisure Insurance Company against Progressive Michigan Insurance Company.  Progressive sold an auto policy that did not comply with Michigan law because it did not contain Personal Injury Protection benefits.  Under Michigan law, it remained liable for those benefits provided by statute.  Amerisure paid the PIP benefits owing to the injury victim and then sought reimbursement from Progressive. Progressive's adjuster denied any obligation, citing the policy's [illegal] exclusion of PIP coverage.  The policy also did not contain the standard Michigan language requiring that an insurer receive written notice of PIP claims within one year.

Inexplicably, the Court of Appeals majority held that Progressive owed no duty to pay PIP benefits and that it's policy provision apparently eschewing written notice within one year would not be enforced.  Even though Progressive's adjusters cited the [illegal] lack of PIP benefits in the policy in denying benefits, the two judges allowed it to enforce Michigan's one-year written notice rule to eliminate PIP benefits.  Judge Michael Kelly filed a thoughtful dissent pointing out that under Michigan law, Progressive should have been "equitably estopped" from enforcing the written notice rule since it:  sold an illegal policy; had actual notice of the PIP claim within one year; and relied upon an illegal PIP exclusion to deny benefits.

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