Michigan Court of Appeals; Docket #247375 and #251003; Unpublished
Judges Fort Hood, Donofrio, and Borrello; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Underinsured Motorist Coverage: Notice and Statute of Limitations for Underinsured Motorist Coverage
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals addressed the issue of whether MCL 500.2254 (a provision in the Insurance Code) prohibits insurers from including provisions in their policies limiting the time the insureds may file suit to collect benefits that had been denied to less than the time provided in the applicable statute of limitations.
The insurance policies at issue in this case involved a homeowner’s policy, as well as a policy for underinsured motorist coverage. With regard to this issue, the court held:
“MCL 500.2254 does not prohibit insurers from including provisions in their policies that limit the time insureds may file suit to collect benefits that have been denied to less than the time provided in the applicable statute of limitations. However, these limitation periods must be tolled from the time the insured gives notice of his claim until the insurer formally denies liability for the claim. A counteroffer is not a formal denial of liability. . . . And, the limitation period is tolled until the claim is formally denied, not at the conclusion of correspondence between the parties.”
The underinsured motorist provision at issue in this case contained a proviso stating, “no claimant may bring a legal action against the company more than one year after the date of the accident.” In this case, plaintiff’s claim for underinsured motorist benefits was not filed until well after the expiration of this one year period. In concluding that MCL 500.2254 did not invalidate the one year provision in Farm Bureau’s contract, the court stated:
“Our plain reading of the statute does not support plaintiffs’ interpretation because the statute merely states that insurance companies may not adopt policy provisions prohibiting the commencement or maintenance of a suit, and that any such prohibition will not be a bar to any suit. It does not prevent the insertion of provisions that only place a condition on filing suit without providing an outright bar to their commencement.” However, the court held that any such limitations periods are subject to the rule of judicial tolling which provides that the time limitation is suspended until the insurer formally denies liability. In the case at bar, the court found that it was ongoing negotiations between plaintiff and Farm Bureau regarding plaintiff’s claim for underinsured motorist benefits. The fact that Farm Bureau rejected plaintiff’s initial settlement demand and presented plaintiff with a counteroffer did not mean that there had been a formal denial of liability. In this regard, the court stated, “In this context, defendant’s counteroffer was just that, a counteroffer, and not a formal denial of liability. . . . Based on these facts, we . . . conclude that because there has been no formal denial of the claim, formal denial to pay, or patent negotiation to impasse, judicial tolling did not expire. We affirm the trial court’s denial of defendant’s motion for summary disposition.”
Accordingly, plaintiff’s claim for underinsured motorist benefits against defendant Farm Bureau was not time barred.
