Fraud, Misrepresentation and Michigan Car Accident Law

Insurance in Michigan and Michigan car accident law is complicated. There are a lot of different things to think about, including what types of coverages to buy, the information you must tell the insurance company, and which auto insurance company you can trust.

But as any good Detroit or Michigan car accident lawyer will tell you, no matter what, you must tell the truth and not hide information when buying car insurance. Michigan has very stringent rules regarding the application process for auto insurance. And the repercussions for breaking these rules can be severe.

Why Is My Car Insurance Claim Denied?

A car insurance company can deny a claim and rescind the entire insurance policy right after an accident – right when you need it most – if it believes there was fraud or a material misrepresentation when the car insurance was taken out.

The fallout from a car insurance company claiming a material misrepresentation or fraud is enormous. This can prevent you from getting your medical bills paid, having lost wages reimbursed, obtaining prescription coverage, and receiving medical treatment for your injuries.

In addition, if you are driving an uninsured car that you own at the time of the crash, you cannot obtain pain and suffering for your injuries. This is true even if the other driver was at fault for the accident.

So if you fail to tell the truth when applying for car insurance, you are essentially paying for car insurance for no reason. If something bad happens, they will deny the claim and tell you they are not responsible for paying you any benefits.

What Should I Do When I Apply for Car Insurance?

Here are some key points to consider when applying for and purchasing car insurance in Michigan. Keep these things in mind so you don’t find yourself in a situation in the future where Progressive, Geico, or Cure Insurance claims you committed fraud when getting car insurance.

Disclose All Cars In The Household

When you purchase auto insurance, the auto insurance company is insuring against risk. And under Michigan law, car insurance carriers are entitled to know the exact amount of risk they are insuring.

Risk is determined in various ways. Driving record and age are two such factors. Another risk factor is the number of cars in the household. The more vehicles that are garaged at a home, the higher the risk. The higher the risk, the more money a car insurance company can charge for insuring that risk. As a result, car insurance companies are entitled to know how many cars an applicant has at the residence where the policy is purchased.

This means you must disclose all the cars located at the home when applying for insurance. Don’t get cute about this. If a vehicle stays at the house overnight, then you must disclose it. If the car is owned by another person who doesn’t live at the home, but the vehicle is driven by you or someone else who does live with the applicant, then that car MUST be disclosed.

If a vehicle is already at the home and is insured with another car insurance company, disclose it.
The failure to disclose all automobiles to the car insurance company can be devastating. Following a severe car crash, the car insurance company can use the failure to disclose the vehicle as a reason to rescind an insurance policy. 

Disclose All Residents In The Household

Another important thing to remember when applying for car insurance is to disclose all individuals living in the household. Don’t lie about the boyfriend who is living with you but has a bad driving record. Don’t forget to disclose your two nephews who are staying in the household and are of driving age. It is important to disclose everybody.

Again, the ramifications for failing to do so are dramatic. If you are injured while operating one of the covered vehicles, the insurance carrier can rescind the car insurance policy if you failed to disclose individuals who were also staying in the same household.

As I mentioned earlier, car insurance carriers are insuring a risk. And the more individuals that live in a household, the greater the risk. And if the car insurance company discovers that a policyholder was not being truthful about who was living in the home or apartment complex where the policy was issued, it can use this wrongful conduct to cancel the policy and avoid paying benefits.

Don’t Hide or Lie About Who Actually Owns the Vehicle

Many people attempt to purchase insurance without disclosing to the car insurance company that the vehicle is actually owned by someone else. The car insurance company – whether it's Farm Bureau or State Farm – has no duty to investigate fraud in an insurance application. In other words, they don’t have to investigate to see if the car was actually owned by a different person.

Suppose a horrible car crash occurs, and someone is injured. In that case, that person can make a claim for Michigan no-fault benefits and pain and suffering. However, the car insurance company may seek to rescind or void the policy if it discovers that the vehicle was actually owned by a person it was unaware of.

Again, car insurance companies insure against risk. If the owner and driver of a vehicle are someone they did not know about, they did not have the opportunity to properly assess that risk. Under Michigan law, that is sufficient reason for the auto carrier to rescind the policy.

Tell the Car Insurance Company About New Addresses

This is a big one. And it’s so easy to forget, but it’s very important. If you are moving to a new house or apartment, even if it’s for only a short period of time, you must tell your car insurance company your new address. This is so they know where the car will be garaged.

For example, if you live in Detroit and plan to move to Sterling Heights, you must tell your car insurance company about the move. You must give them the new address. This is because the car insurance will evaluate the risk of insuring the vehicles based in part upon where the cars will be staying. When vehicles remain at a different location, the risk changes.

I have seen it so many times. A client fails to disclose to the car insurance company they have moved. The car is still being insured at one location, even though the person who holds the insurance policy is now residing at an entirely different address. The auto insurance carrier will then rescind the policy and refuse to pay benefits.

Can I Sue An Insurance Company For Denying My Claim?

Yes. If the insurance company claims you committed fraud or that there was a “material misrepresentation” when the policy was purchased, you can file a lawsuit against the car insurance company. The lawsuit will fight to get the benefits you are entitled to.

Insurance companies don’t like paying out benefits. They definitely don’t pay benefits when they think fraud is involved. That is why you need an aggressive Detroit car accident lawyer on your side who will stand up for you and win your case.

If you were involved in a Detroit car accident, or an accident anywhere in Michigan, and the insurance company is alleging fraud, call our law firm. Our experienced and dedicated team of Detroit auto accident lawyers will evaluate your situation and answer your questions.

The telephone call is free. We never charge anything until we win your case. That is our guarantee. Call us at 1-800-LEE-FREE (1-800-533-3733).