Michigan Court of Appeals; Docket #251755; Unpublished
Judges Zahra, Murphy and Cavanagh; 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In this unanimous unpublished per curiam opinion, the Court of Appeals reversed denial of defendant Allstate’s motion for summary disposition on plaintiff’s claim for first-party no-fault benefits, holding the policy had been properly cancelled for non-payment of the policy premium even though the notice of cancellation was sent before the premium was actually due. When the plaintiff in this case failed to pay her February 2001 premium by its February 8, 2001, due date, defendant sent her a notice of cancellation. The notice, dated February 16, 2001, stated the policy would be cancelled if payment for both February and March were not received by the March 8, 2001 premium due date. Plaintiff submitted the February premium on February 21, 2001. Defendant then notified her the March balance was still owing and if it were not paid by the March 8 due date, the policy would be cancelled. Plaintiff missed the March 8 deadline and defendant cancelled her policy. Plaintiff’s insurance agent, Gillihan, sent her a letter dated March 16, 2001, stating that her policy had been cancelled for nonpayment of the premium. On March 19, plaintiff tendered payment to the agent. Meanwhile, plaintiff’s son was severely injured in an automobile accident on March 17, 2001. He was determined to be at fault. Defendant denied plaintiff’s request for first-party benefits and denied the request for subrogation from the other party’s no-fault carrier. The trial court found the cancellation was ineffective because when the February cancellation was sent, only the February payment was past due. The court concluded that defendant was obligated to give plaintiff 10 days notice of cancellation after the March payment was due. The Court of Appeals disagreed, finding that the February 16, 2001 notice of cancellation, which was sent on February 17, 2001, satisfied the requirements of MCL 500.3020(1)(b). In this regard, the court stated:
“Here,‘the notice was created on February 16, 2001, and sent on February 17, 2001. There is no dispute that plaintiff received the notice at least ten days before March 8, 2001. . . . Neither the policy nor any Michigan authority supports the trial court’s conclusion that Allstate had to wait until after the premium due date to send the ten-day notice. To the contrary, the statute clearly states that the policy may be cancelled at any time as long as proper notice is given. And notice is proper as long as it provides the insured with the potential to have the full ten days’ notice that the statute provides, i.e., ten days from when the notice is reasonably expected to arrive at the insured’s address. Nothing requires that the ten days only begin to run after the premium due date. There is no dispute that the outstanding balance of $241.06 had not been paid as of 12:01 a.m. on March 8, 2001. Thus, pursuant to the cancellation notices, the policy was no longer in force as of that time and date.” (Emphasis in original)
The court further held that even though Allstate had previously accepted late payments from plaintiff, that did not create a course and conduct requiring it to continue accepting late payments. In so finding, the court stated:
“There is no course of conduct of Allstate waiving or excusing the cancellation penalty. . . . Further, Mitchell could not have relied on Gillihan’s letter because it was not sent until after the policy was cancelled. . . . Moreover, the fact that Gillihan accepted Mitchell’s payment on March 19, 2001, did not waive the cancellation penalty. . . . [T]he payment did nothing to remedy the lapse in coverage for the dates that the payment was outstanding. . . . Accordingly, we conclude that the trial court erred in denying defendant summary disposition.”
