Michigan Court of Appeals; Docket No. 168780; Unpublished
Judges Hood, Marilyn Kelly, and Saad; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Fraud/Misrepresentation
Equitable Estoppel
CASE SUMMARY:
In this unanimous per curiam unpublished Opinion, the Court of Appeals reversed the trial court and held that summary disposition should not have been granted to Auto Owners based upon the affirmative defense that the insured had made a material misrepresentation on her insurance application, thereby entitling Auto Owners Insurance Company to deny coverage.
The material misrepresentation at issue in this case concerned the fact that the insured's son was a driver in her household and had a suspended license. Auto Owners claimed that the insurance application requested information regarding other drivers in the household and requested information as to whether such drivers had a suspended license. Plaintiffs son resided with her at the time of the application for insurance, and there was no dispute that his license had been suspended three times during the three years previous, and in fact, was suspended when the application was completed. It was also established that had Auto Owners learned of this, coverage would have been denied. Auto Owners claimed that based upon this material misrepresentation, the insurance policy was void ab initio, and therefore, Auto Owners did not owe benefits to plaintiff as a result of her son being killed when struck by a vehicle when he was a pedestrian.
In reversing the trial court grant of summary disposition on the material misrepresentation affirmative defense, the Court of Appeals held that the application form was ambiguous as to whether it requested information as to all drivers in the household or only as to household members that would drive the insured vehicle. Plaintiff claimed that the form was ambiguous in that the agent who filled out the form asked her only for information regarding any other persons who would drive her vehicle. Plaintiff told the agent that she was the only person that would be driving her vehicle. The agent claimed that she asked all of the questions on the form, which included questions requesting the identity of any other drivers in her household, and whether any driver had a license suspension.
The Court of Appeals held that the form was ambiguous because it could be read so as to lead an applicant to understand that it requests information only as to household members that will drive the insured vehicle. The form asks for information as to whether a household member is either a principal or occasional driver. Further, the form includes questions pertaining to "drivers," such as whether a driver has had a license suspended. Ambiguities in insurance contracts must be construed in favor of the insured, and therefore, there was a question of fact as to whether Cook had made intentional misrepresentations on the application. Therefore, summary disposition was improperly granted by the trial court.
The Court of Appeals further held that public policy requires that once there is a claim that involves an innocent third party, the insurer is estopped from asserting the right to rescind the policy. Therefore, under Kolinsky vAuto Club Insurance Association; 201 Mich App 167 (1993), Auto Owners would be estopped from asserting the right to rescind based upon any misrepresentations made by Cook.
