Bulletin from DIFS director says car insurance policies are ‘not enforceable’ if ‘fraud’ provisions allow termination of coverage without notice
Ironically, today is Wayne County motion call and almost certainly there will be judges deciding Bahri motions. For those of you who are unfamiliar, Michigan judges are grossly misusing the Michigan Court of Appeals’s poorly-reasoned (yet published) decision in Bahri v. IDS Property Casualty Insurance Company to deny No Fault benefits to auto accident victims whom the insurers have accused of having committed “fraud.”
Wayne County judges in particular have been at the forefront of dropping the ball and completely misunderstanding the law.
And of course the No Fault insurance companies have been aggressively pushing to expand this erroneous interpretation, because it relieves them of providing No Fault insurance benefits to anyone they allege — according to them (notice the glaring conflict of interest) — is committing fraud, even when that alleged fraud is very much open to interpretation as it was in the original Bahri case.
Important tip: Print this bulletin!
Any lawyer appearing at motion call today needs to print this bulletin off, hand it to the judge, and remind those Wayne County judges what the actual law is, as the insurance commissioner has been forced to remind us with this bulletin.
Plaintiffs lawyers are discussing this bulletin as if it were just released. I wrote about the bulletin and its positive implications in my August 5, 2015 blog post, “No notice = No cancelling auto insurance policy for alleged fraud.”
In Bahri, an auto insurance company successfully denied No Fault benefits to an auto accident victim, on the basis that mistakes in her replacement services statements were really “fraudulent representations.”
But DIFS director Patrick McPharlin’s bulletin is putting the brakes on insurers’ attempts to deny benefits on the basis of “fraud.” The bulletin says auto insurance policies are ‘not enforceable’ if ‘fraud’ provisions allow coverage to be ‘terminated’ ‘without notice’. In particular, McPharlin reminds Michigan auto insurance companies that policies cannot be rescinded or terminated without the notice required by the Insurance Code.
