Material Misrepresentation in Michigan Car Accident Cases
A recent trend our law firm has seen this year is a number of Michigan car insurance carriers are denying otherwise valid no-fault PIP claims by alleging there was a material misrepresentation by the claimant or the policyholder. These insurance companies, from Progressive to National General, argue that the material misrepresentation constitutes fraud, and based on this “fraud” they do not have to pay any outstanding no-fault benefits, including wage loss and medical expenses.
The denial by the insurance carriers follows a typical pattern. A person gets in a bad car accident and sustains injuries necessitating medical treatment. A no-fault claim for PIP benefits is made to the car insurance company. The carrier takes a statement from the injured person, a family member of the injured person, or the policyholder for the insurance company responsible for paying the claim. Using the information provided, the insurance carrier then denies the entire claim, alleging the policyholder misrepresented something when originally applying for insurance or misrepresented something involving any of the one of the vehicles listed in the policy.
Rescinding Your Insurance Policy
Our office has seen a number of examples of this recently. For example, on a recent case a client of ours was injured in a Detroit car accident. His family had insurance through Progressive. After initially accepting responsibility to pay the claim, Progressive denied the claim, arguing that because the policyholder (client’s father) did not disclose all household residents that were of driving range, a material misrepresentation was made. This despite the fact the missing person did not operate any of the policyholder’s vehicles and had his own car.
Based on this material misrepresentation, Progressive rescinded the entire insurance policy. Rescinding an insurance policy is the same as if the insurance contract never existed in the first place. Therefore, Progressive said it didn’t have to pay the no-fault claim.
Unfortunately, Michigan insurance companies have been successful in getting out of paying claims using his material misrepresentation fraud defense. In doing this, the insurance carrier will rely on the insurance policy itself. Insurance policies are nothing more than contracts. And Michigan courts are obligated to follow the clear language of the contract.
Even more frustrating, insurance carriers can attempt to rescind a policy or get out of paying a Michigan car accident claim even if the misrepresentation was unintentional. So even if a policyholder innocently forgot to include some basic information when applying for car insurance, and the insurance company could have easily ascertained the alleged misrepresentation, the auto insurance company can still get out of paying.
How to Combat Your Insurance Company
So what do you do if you are involved in a situation like this, where the car insurance is alleging “fraud” and doesn’t want to pay the car insurance claim?
- You should contact an attorney so we can get a background on where the confusion is coming from and what the car insurance company is alleging.
- Save all letters and correspondence you receive from the insurance company so an attorney can better understand why the denial occurred.
- Get a copy of your car insurance application from your car insurance carrier. Ask for all documentation, including the insurance binder itself as well as the declaration page. If you applied for insurance online, contact the agent or company you worked with to ensure you get all of your insurance paperwork.
Being called a fraud by an insurance company is not an easy thing to deal with. If this happens to you or a loved one, please call 1-800-LEE-FREE. We can answer any questions you have and will review your case for free. There is never a fee unless we win and we are experts in handling Michigan car accident injury cases.