Policy cancellation notice by mail; MCL 500.3020; Causin v Auto Club Ins Ass’n

The court held that because defendant-insurer (State Farm) did not notify plaintiff-Pellot of “cancellation by mailing a written notice to the address last known to defendant, as required by MCL 500.3020,” the cancellation was ineffective under Michigan case law. Pellot was injured in an accident and sought no-fault benefits from his one-time insurer, State Farm. He argued “that the cancellation that defendant issued was ineffective because it did not comply with MCL 500.3020.” The court agreed. The issue was controlled by Causin. “There, the plaintiff fell behind on premium payments.” On 7/8/88, “the insurer’s Dearborn office generated a cancellation notice, but that same day the plaintiff submitted a change of-address form to the insurer’s Flint office. The Dearborn office mailed the cancellation notice to the plaintiff’s former address on [7/11]. Although the plaintiff later obtained actual notice of the cancellation, this Court held that the mailing was defective and the cancellation ineffective.” It explained that “‘[t]he statute plainly indicates that the insurer is obliged to mail the notice of cancellation to the most current address known to either the insurer or its authorized agent’ and that ‘defects in mailing are not cured by the insured’s receipt of the cancellation notice.’” The same reasoning applied here. “Defendant’s records reflected plaintiff’s new address when the cancellation notice was mailed. The fact that it may have taken several weeks for corporate processing is immaterial; Causin held that once the insurer or its agent has knowledge of a new address, subsequent mailings to the former address do not satisfy the statute.” The facts here were “even less favorable to defendant than in Causin, where the insurer’s error could be attributed to pre-Internet mail delays.” Further, it did not “matter whether plaintiff received actual notice of cancellation or ‘should have’ realized that nonpayment would result in termination. Under Causin, a defective mailing renders the cancellation ineffective per se, regardless of receipt or foreseeability.” Defendant contended “that the parties mutually agreed to electronic communications, including text-message notices, and that nothing in MCL 500.3020 expressly prohibits such an arrangement.” The court disagreed. “The statute provides that a policy ‘shall not be issued or delivered in this state’ unless it contains the mailing provision. If the parties could later contract around this requirement, they would, in effect, create a new insurance policy that omits a term the Legislature has deemed mandatory. Because ‘it is to be presumed that the parties contracted with the intention of executing a policy satisfying the statutory requirements,’ the policy is read ‘as though the statutes were a part of the contract.’” Thus, the mailing requirement is “an unalterable term of the insurance policy.” The court reversed summary disposition for State Farm and remanded.