Buying auto insurance is not easy. It’s expensive and confusing. But what insurance companies and insurance agents don’t tell you, and what experienced Michigan car accident lawyers know, is that providing incorrect information on the application can cause a lot of trouble and heart ache if something happens.
Over the past few years, insurance companies have become extremely aggressive in trying to get out of paying a claim. They do this by claiming fraud and thus allowing them to void or rescind the insurance policy. That’s why its so important to tell the insurance company the truth and to include as much information in writing as possible when applying for car insurance.
Here is a list of things every person should include in their application for auto insurance in Michigan.
Make Sure You Tell Them Where the Car is Garaged Overnight:
This is vital. The insurance company is entitled to know where the vehicle is garaged, or staying overnight. They need to know the exact address. For example, if a car is insured in Sterling Heights, but it’s actually staying Detroit, that’s a major problem. If a car accident occurs, the insurance carrier can rescind or void the policy and decline to pay for the vehicle damage as well as Michigan no-fault benefits.
It’s important to be honest about this. Trying to conceal the location of a vehicle will only result in you or someone else paying for car insurance that can never be used in case something happens. Why flush money down the drain.
Is the Vehicle Used for Commercial Purposes?
If the vehicle is going to be used for a commercial purpose, of if any of the vehicles in the policy are going to be used for a commercial purpose, make sure you tell them this! I can’t stress enough. Almost every auto insurance company has a specific exclusion in the insurance policy that takes away all coverage for vehicles being used for a commercial purpose.
So if you are using the vehicle for Uber, Lyft, Door Dash or something similar, let the auto insurance company know this. Otherwise, if something awful happens and a Michigan crash occurs, the auto insurance company can refuse to pay for anything.
Michigan car accident lawyers who handle injury claims know all about this and can explain the process. Typically, a separate car insurance policy must be purchased through Uber, Lyft or the company you are driving for. This policy is for when the driver is using the vehicle for a commercial purpose.
Identify Everyone in the Household Who is 14 Years-Old or Older
This is a big one. When you are asked, make sure to disclose all individuals living in the household, especially those who are 14 years-old or older. It doesn’t matter if they are too young to drive. It doesn’t matter if there is an adult living in the household who doesn’t have a driver’s license and will never operate any of the vehicles listed in the policy. These specific individuals must be disclosed.
Again, car insurance companies in Michigan can allege fraud in the procurement of the policy and rescind the entire auto insurance policy following a car accident if even one individual is not disclosed. It may not be fair and frankly this author thinks this type of excuse is ridiculous, but courts have allowed insurance companies to get out of paying benefits for this very reason.
Disclose All Vehicles in Household
Just like you have to disclose all individuals living in the household who are 14 years-old or older, you must also disclose all vehicles that will be garaged in the household during the policy period. This includes vehicles that are not even working and are just sitting at home. This includes vehicles that are uninsured. Don’t hold back on this, make sure to disclose every single vehicle that will be staying at the residence.
If You Move Homes, Tell Them
This is another important detail. If you move to a new home or apartment, tell your insurance company. Again, carriers like State Farm, Allstate or Progressive are insuring a risk – namely the vehicles listed on the policy. That level of risk is based partly upon where the vehicles are garaged or staying. If a vehicle is transferred to a new address, then that risk changes. Insurance carriers are entitled to know about changes in risk. If they are not told, they can rescind or void the entire insurance policy following a crash.
This situation happens all too often. A person living in Bay City moves to Saginaw or nearby Kawkawlin. They own a Ford Explorer that is insured with Allstate. They fail to tell Allstate about the move to the new address. A horrible crash occurs. Allstate can void the policy and deny coverage because it was never told about the move.
Make Sure the Car Registration Matches the Insurance
This happens all too often. A car is registered to one person, but the insurance is an entirely different person’s name. The two people do not live together. The actual owner of the vehicle is the person who operates and drives the vehicle, but is not a named insured under the policy or even a named driver. The insurance company is not told a different person is operating the vehicle or that the vehicle is registered to a different person.
This is another recipe for disaster. The insurance company can rescind the policy in these situations as well.
A case that just came down from the Michigan Court of Appeals illustrates the harsh realities of lying about important information when applying for auto insurance.
In Webb v. Progressive, [docket no. 351048, published on 1/28/2021] a man was injured in a car accident in Wayne County. At the time of the accident, he was driving a 2013 Dodge Challenger that was registered to his mother and insured in her name. Mr. Webb, the injured man, was not listed as a driver or member of his mother’s household on the policy, even though he lived with her. Mr. Webb spent two weeks in the hospital following the crash and he turned to Progressive for the payment of his no-fault benefits.
Progressive denied coverage, arguing his mother failed to disclose on her application that her son Mr. Webb lived with her. According to Progressive, the premium on the policy would have been 32% higher had Mr. Webb’s identify been disclosed. During the application process, Mr. Webb spoke to an insurance agent selling Progressive Insurance and told the agent he was a “friend”, not the applicant’s son. In addition, his mother failed to list her son as a resident relative on the application.
Progressive filed a motion with the trial court in Wayne County asking to void or rescind the policy. This means Progressive was attempting to get out of paying any of Mr. Webb’s no-fault benefits, including his medical bills because his mother committed fraud when submitting the insurance application. The trial judge denied the motion and Progressive appealed.
The Court of Appeals reversed the trial court’s decision, and found Mr. Webb’s mother had committed fraud when purchasing the policy. Based on the evidence presented, the Court found there was a fraudulent misrepresentation in the procurement of the policy. Progressive does not have to pay any of the medical bills and Mr. Webb is stuck with thousands of dollars of medical expenses.
Because Mr. Webb’s mother did not disclose his true identity or the fact he actually resided with her when applying the policy, the Court found Progressive could rescind the policy. As the court stated, “Rescission is justified in cases of innocent misrepresentation if a party relies upon the misstatement, because otherwise the party responsible for the misstatement would be unjustly enriched if he were not held accountable for his misrepresentation.” Lash v. Allstate Ins Co., 210 Mich App 98, 103; 532 NW2d 869 (1995). By permitting Progressive to rescind its policy, it allowed the company to cease paying any no-fault benefits to Mr. Webb.
In effect, it was like Mr. Webb was driving his mother’s vehicle without any insurance.
Please call the Lee Steinberg Law Firm, P.C. if you have any questions following a Michigan car accident. Our team of knowledgeable and aggressive car accident attorneys can assist you every step of the way.
Our toll-free number is 1-800-LEE-FREE (1-800-533-3733) and we never charge a cent until we win your case.