Michigan Court of Appeals; Docket No. 107286; Published
Judges Gribbs, Murphy, and Neff; Unanimous; Per Curiam
Official Michigan Reporter Citation: 179 Mich App 355; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Fraud/Misrepresentation
Reformation of Insurance Contracts
CASE SUMMARY:
This unanimous per curiam Opinion deals with a liability insurer's claim that it may limit its liability coverage to the statutory minimum of $20,000 where its policy is rescindable because of the misrepresentations of the policyholder. The court held that liability coverage, as to innocent third parties, may not be limited to the statutory minimum. In so holding, the court narrowly interpreted the Supreme Court's opinion in State Farm v Shelly, 394 Mich 448 (1975). Relying on Powers v DAIIE (Item No. 979), the Court of Appeals held:
"We believe that the Supreme Court has made it clear that the Shelly decision is narrow in scope and only applies to circumstances where an exclusionary clause violates the No-Fault Act and coverage under the policy is reinstated. Simply, there was no exclusionary clause in this case which violated public policy. Therefore, we conclude that basic public policy considerations require that once an innocent third party is injured in an accident in which coverage is in effect on the automobile, an insurer will be estopped from asserting rescission as a basis upon which it may limit its liability to the statutory minimum."
