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American States Insurance Company v Auto Club Insurance Association; Progressive Insurance Company v American States Insurance Company, et al; (COA-UNP, 12/19/1991; RB #1522)


Michigan Court of Appeals; Docket Nos. 119829,119830,11983,119832; Unpublished  
Judges McDonald, MacKenzie, and Wahls; Unanimous; Per Curiam  
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt  

Not Applicable

Cancellation and Rescission of Insurance Policies  
Cancellation of Auto Liability Policies (MCL 500.3204, et seq.)   

In this unanimous per curiam Opinion, the Court of Appeals affirmed the trial court grant of Auto Club's motion for summary disposition holding that Auto Club had canceled the no-fault automobile insurance policy it had issued to its insured, Diana Figel, prior to the accident. The Court of Appeals held that Auto Club had properly canceled this insurance and had complied with the provisions of the insurance code regarding cancellation.  

The vehicle involved in the accident was a 1987 Pontiac 6000 owned by a leasing company and leased to Barry Figel. Figel's spouse, Diana Figel, was driving the vehicle when she struck a minor pedestrian. Action was brought against Diana Figel, and her insurance company, Auto Club, refused to defend or indemnify. The action was defended by American States under an "executive umbrella policy," and the leasing company was defended by Progressive Insurance Company. American States and Progressive sued Auto Club seeking reimbursement for sums that they expended in defending the Figels.  

The issue of coverage turned on the question of proper cancellation notices sent by Auto Club to the Figels. The Figels had obtained insurance from Auto Club for a 1986 Buick and a 1987 Pontiac Grand Am on September 26,1986. Auto Club later learned that Diana Figel's driving record precluded issuance of the standard policy. On October 31,1986, Auto Club sent two cancellation notices, one for each of the two vehicles. These notices were sent by certified mail and stated that the coverage would be canceled effective December 1,1986. The mailings were returned unclaimed. Copies of the notices were then sent to the Figels by first class mail. Thereafter on November 14,1986, the Figels substituted the accident vehicle (the Pontiac 6000) for the Grand Am under the policy's coverage. On January 14,1987, the leasing company received a letter from Auto Club informing it that the Figels policy had been canceled. The accident involving the Pontiac 6000 later occurred on February 5,1987.  

In determining the issue of cancellation, the Court of Appeals first held that the provisions of MCLA 500.3020 governed the cancellation of automobile no-fault policies rather than the provisions of MCLA 500.3224. The cancellation provisions of §3020 state that a policy may be canceled at any time by the insurer by mailing to the first known address of the insured a 10-day written notice of cancellation. The statute also provides that mailing of notice shall be prima facie proof of notice.  

The Court of Appeals held that under the authority of Citizens Insurance v Crenshaw, 160 Mich App 34 (1987), §3020 of the insurance code applies to cancellation of no-fault automobile insurance coverage. The Court of Appeals held that §3020 applies to all policies of casualty insurance, including all classes of motor vehicle coverage. Consequently, the court held that section 3020 was the applicable provision for cancellation of insurance coverage.  

The court next addressed whether or not the notice of cancellation met the requirements of §3020. Progressive and American States contended that the notices did not satisfy the provisions of §3020(4), which those insurance companies contended requires a specific reference to the specific vehicle for which insurance is being canceled. The Court of Appeals agreed with Auto Club's contention that notices of cancellation apply to cancellation of insurance, not automobiles. The court also rejected the argument that notice was required to have been sent after substitution of the Pontiac 6000 for the predecessor Pontiac Grand Am.  

Finally, the court rejected the contention of American States and Progressive that the insureds did not receive "actual-notice of cancellation" as required by case law. The court held that there is a presumption of notice upon mailing of that notice by the insurance company pursuant to the provisions of §3020(3). The court also noted that the deposition testimony of the Figels was ambivalent and did not overcome the presumption as to receipt of the notice. Therefore, the court upheld the trial court's grant of summary disposition in favor of Auto Club.

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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