Supreme Court's Republican majority summarily rejects "reasonable expectation" of insured standard
In a one-page summary opinion signed by the Michigan Supreme Court's four Republican Justices, the insurer-oriented majority re-stated its rejection of the idea that an insurance policy should be interpreted in accordance with the reasonable expectation of the insured. In most states, and in Michigan prior to the "Republican ascendency," insurance policies are or were interpreted with this standard in mind.
Since insureds buy their coverage without even seeing the policy language (in most cases the policy is delivered in the mail a few weeks later); since the language is simply dictated by the insurer and not negotiated; and since most insureds cannot and do not read and fully understand the policy language when it does arrive; Courts have attempted to harmonize the "fine print" in insurance policies with reasonable expectations of the consumer. This approach began with a 1970s-era decision by the California Supreme Court that acknowledged that the meaning of a policy under consideration was ambiguous even to the Court's experienced jurists.In the instant case, Foremost Insurance Company sold its insured a policy that purported to include both uninsured (UM) and underinsured (UIM) motorist coverage with maximum limits of $20,000.00 per injury. Since Michigan requires all motorists to carry $20,000.00 of liability coverage, and since the UIM limits only raise the at-fault's liability coverage to the UIM limit, the Foremost policy did not actually provide any UIM coverage at all: it provided only UM coverage.
On the latter basis, the Court of Appeals held in Ile v. Foremost Insurance Company that the policy language was ambiguous and that it provided illusory UIM coverage. It held that the insureds could collect $20,000.00 in UIM coverage for their serious injuries, as that would be the reasonable expectation of an insured reading the policy. The Supreme Court overturned this decision, with the Republican majority emphasizing that it has "expressly rejected the notion that the perceived expectations of a party may override the clear language..."