Michigan Court of Appeals; Docket # 326295; Unpublished
Judges Sawyer, Murphy, and Ronayne Krause; 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In this unanimous unpublished per curiam Opinion, the Court of Appeals held that plaintiff's no-fault policy was in effect at the time of her accident, because the insurer's mailing of a "cancellation notice" that was embedded within a premium payment notice did not adequately serve as the required 10-day notice under the terms of plaintiff's policy.
Plaintiff purchased a no-fault policy from defendant Titan Insurance on January 20, 2012. After plaintiff paid one premium installment, Titan mailed plaintiff a premium payment notice (PPN) on February 7, 2012, informing her the minimum payment was due by February 22. The PPN indicated that a timely payment would "continue ... coverage in force without lapse" and to "see the other side" for information about late payment cancellation provisions. The PPN's reverse side was marked "IMPORTANT NOTICE" and said: "If the premium payment is not postmarked or received before the due date shown, your insurance will be cancelled for nonpayment of premium. A check which is not honored for any reason will not constitute payment and will not extend coverage." The PPN listed a cancellation date of February 25 if the premium was not paid by February 22. Regarding the policy itself, the termination clause said: "Cancellation – This policy may be canceled during the policy period as follows: ... 2. We may cancel by mailing you at the address last known by us or our agent: a. At least ten (10) days notice by first class mail, if cancellation is for nonpayment of premium." When plaintiff failed to make a timely premium payment, Titan informed her in a February 27, 2012, "Confirmation of Cancellation" notice that her policy had been cancelled on February 25. On March 5, 2012, plaintiff was seriously injured in an auto accident. Titan denied her claim for PIP benefits, asserting the policy was not in effect at the time of the accident.
Plaintiff filed a breach of contract claim against Titan, asserting it had violated the 10-day cancellation notice provision in MCL 500.3020. Titan argued, however, that it had complied with the statute by mailing a notice of cancellation that was embedded in the PPN it had mailed to plaintiff on February 7. But plaintiff asserted the 10-day notice period did not start running when Titan purportedly mailed the PPN containing the cancellation language, given that there was no reason to cancel for nonpayment at the time the PPN was sent. Rather, plaintiff argued that Titan was required to await plaintiff's default for nonpayment, which occurred on February 22, before it mailed a notice of cancellation and started the clock on the 10-day notice period. The trial court granted summary disposition to plaintiff. The parties then stipulated to damages of $25,000, subject to Titan's appeal of the cancellation issue.
The Court of Appeals affirmed the trial court's ruling, finding that plaintiff's policy was in effect at the time of the accident. In so holding, the Court said the decision in this case was ultimately controlled by the cancellation-notice provision in the policy regarding nonpayment of a premium, and that compliance with MCL 500.3020 would be presumed.
The Court of Appeals continued by noting that, as for premium payments, plaintiff was not in default or breach at the time the PPN was sent to her. As a result, the Court said it was impossible for Titan to comply with the 10-day notice provision by mailing a cancellation notice for nonpayment of a premium before the occurrence of that contingency. In this regard, the Court stated:
"Instead, the notice mailed to plaintiff merely concerned the future possibility of nonpayment. It was not until plaintiff actually missed the due date for making the premium payment that it became feasible for Titan to send a true notice of cancellation for 'nonpayment of premium.' Titan's February 27, 2012 so-called 'Confirmation of Cancellation' actually served as the proper cancellation notice for purposes of the 10-day notice requirement contained in the insurance policy."
Based on the foregoing, the Court of Appeals concluded that plaintiff was covered by the policy when she was injured in the accident.
