Michigan Court of Appeals; Docket No. 67996; Published
Judges Walsh, Maher, and Roumell; Unanimous; Opinion by Judge Roumell
Official Michigan Reporter Citation: 138 Mich App 38; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
Cancellation of Auto Liability Policies (MCL 500.3204, et seq.)
Fraud/Misrepresentation
CASE SUMMARY:
In this unanimous Opinion by Judge Roumell, the Court of Appeals made the following holdings with respect to the right of an insurance company to rescind an insurance policy binder ab initio because of an insured's intentional misrepresentation of material facts on his insurance application:
1. The cancellation provisions of the Michigan Insurance Code (MCLA 500.3201, et seq) do not preclude, by the failure to specifically mention it, the rescission of an insurance policy ab initio. Rescission is insufficiently similar to cancellation to support the conclusion that the legislature's enactment of a statute controlling cancellation of an auto policy without mentioning rescission demonstrates the legislature's intent to preclude rescission.
2. An insurance company is not prohibited from rescinding an insurance policy ab initio because of the material misrepresentation of the insurance applicant where the person applying for the insurance benefits or coverage is the person who committed the misrepresentation. However, public policy considerations are entirely different and may suggest a contrary result where the insurer is attempting to rescind a policy and thus avoid liability to innocent third-party claimants. The Court stated, "Michigan's comprehensive scheme of compulsory no-fault automobile insurance arguably requires as a matter of policy that the insurer rather than innocent third parties bear the risk of intentional material misrepresentations by the insured. However, we see no reason in law or policy for the burden of such a risk to be placed on the insurer in preference to the insured who made the intentional material misrepresentations."
