Michigan Court of Appeals; Docket #251232; Unpublished
Judges Talbot, Whitbeck and Jansen; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
CASE SUMMARY:
In this unanimous unpublished per curiam opinion decided without oral argument, the Court of Appeals reversed summary disposition for defendant Farm Bureau, finding that plaintiff had no-fault coverage where defendant failed to provide ten days notice of cancellation as required by MCL 500.3020(1)(b) of the No-Fault Act. In this case, plaintiff submitted an application for no-fault insurance on March 24, 2000. The check that accompanied the application was returned for non-sufficient funds (NSF). In April, defendant sent plaintiff a notice which stated the policy was cancelled effective March 24, 2000. In May, plaintiff was involved in an automobile accident. Plaintiff claimed defendant had a duty to provide coverage because the cancellation was ineffective. In reversing the trial court’s decision denying plaintiff coverage, the Court of Appeals found that defendant failed to provide “not less than 10 days’ written notice of cancellation” where the cancellation was effective the day plaintiff applied for coverage. In this regard, the court stated:
“As a general rule, a cancellation provision requires strict compliance to be effective. . . . We reject defendant’s claim that a rule of substantial compliance, rather than strict compliance, governs this case. . . . Nonetheless, even if we were to recognize a rule of substantial compliance, the undisputed facts in this case do not establish that defendant substantially complied with the notice requirement. . . . To apply the cancellation provision in the policy, plaintiff necessarily would have to be charged with notice that she was entitled to at least ten days of coverage under the policy. . . . Defendant’s mistake does not support that it substantially complied with the cancellation provision in the policy. . . . Hence, as a matter of law, defendant’s attempted cancellation of the insurance policy was ineffective. . . . Summary disposition should have been granted in favor of plaintiff, rather than defendant, with regard to the effectiveness of defendant’s cancellation.”
The court also rejected defendant’s argument that plaintiff’s tender of the NSF check automatically terminated the policy. The court noted that although MCL 500.3020 does not preclude parties from agreeing to automatic termination clauses, the policy at issue does not provide for automatic termination based on tender of an NFS check toward payment of the initial premium. Instead, the court said, a policy amendment merely provides for automatic termination upon receipt of an NFS check as payment for a policy renewal. Accordingly, the court reversed and remanded the case for further proceedings.
