Michigan Court of Appeals; Docket #242847; Published
Judges Borrello, White, and Smolenski; unanimous; per curiam
Official Michigan Reporter Citation: 262 Mich. App. 679, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Uninsured Motorist Benefits: Notice and Statute of Limitations for Uninsured Motorist Coverage
CASE SUMMARY:
In this unanimous published per curiam opinion, the Court of Appeals held that a contractual provision in defendant’s uninsured motorist endorsement providing that, “Claim or suit must be brought within 1 year of the date of the accident” is “unreasonable” and, therefore, does not bar claims which are made or suits brought after the expiration of the one year limitation. This same contractual provision was the subject of the appeal in Williams v Continental [Item No. 2293], which enforced the one year limitation. However, that opinion was unpublished and apparently this panel of the Court of Appeals did not feel itself bound by that decision.
In reaching its conclusion that the one year limitation period for uninsured motorist benefits was unreasonable, the court noted that “the issue is solely one of reasonableness. Questions of ambiguity and public policy are not at issue.” The court went on to say, “The terms of an insurance contract will be enforced as written when no ambiguity is present. However, where a contract provision shortens the otherwise applicable statute of limitations, the shortened period must be reasonable.” The court then cited non-no-fault case law in support of this proposition. In concluding that the one year limitation period was unreasonable, the court stated:
"We conclude that the one-year contractual limitations period is not reasonable. . . . Uninsured motorist coverage pays compensatory damages a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. . . . The owner or operator of the uninsured vehicle is only subject to tort liability for non-economic loss if the injured (covered) person has suffered death, serious impairment of a body function, or permanent serious disfigurement. . . . MCL 500.3135 defines ‘serious impairment’ as ‘an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life.’ An insured may not have sufficient time to ascertain whether an impairment will affect his or her ability to lead a normal life within one year of an accident. Indeed, three factors that are to be considered in determining whether a serious impairment exists are the duration of the disability, the extent of residual impairment and the prognosis for eventual recovery. . . . Further, unless the police report indicates otherwise, the insured will not know that the other driver is uninsured until suit is filed, and the driver fails to tender the defense to an insurance company. The insured, thus, must file suit well before the one-year period in order to assure that the information is known in time to make a claim or file suit against the insurance company within one year of the accident. Applying the standard set forth in [citations omitted] we conclude that the limitation here is not reasonable because, in most instances, the insured (1) does not have ‘sufficient opportunity to investigate and file an action,’ where the insured may not have sufficient information about his or her own physical condition to warrant filing a claim, and will likely not know if the other driver is insured until legal process is commenced, (2) under these circumstances, the time will often be ‘so short as to work a practical abrogation of the right of action,’ and (3) the action may be barred before the loss can be ascertained."
The court also noted that the limitations period contained in uninsured motorist endorsements is not subject to bargaining between the contracting parties, and therefore, “the policy should receive close judicial scrutiny.”
