Mich. Supreme Court Backs Dead Man’s Insurer in Hit-and-Run Case

In a May 30 decision, the Michigan Supreme Court ruled that State Farm does not have to pay the insurance claim made by the estate of a policyholder who later died of injuries from a hit-and-run collision because he did not file the claim within the time period required under the terms of his policy.

The court justices sided with the auto insurance company in a 4-3 decision.

Policyholder William DeFrain sustained severe head injuries after a hit-and-run driver struck him on May 31, 2008. DeFrain’s uninsured motorist (UM) policy required notification about hit-and-runs within 30 days, but State Farm did not receive notice until Aug. 25 of that year.

While the policy required the driver to report incidents to State Farm “as soon as reasonably possible” after injuries are first treated or examined, there was a special provision for hit-and-run accidents saying that they be reported to State Farm within 30 days.

DeFrain sought damages in court for crash-related medical expenses under his Michigan car insurance policy on Oct. 8, but he died a little more than a month later, on Nov. 11. An executor of his estate carried on the lawsuit through an amended complaint in March 2009.

The latest ruling, filed at the end of May 2012, overturns decisions from the state Court of Appeals and the initial trial court, which both supported claims from the DeFrains that the UM policy’s notice provision “was ambiguous regarding when and from whom notice was required.”

But in its majority opinion, the justices wrote that State Farm did not have to compensate DeFrain because the UM policy “unambiguously required DeFrain or someone acting on his behalf to notify State Farm about the hit-and-run accident within 30 days of its occurrence,” according to Justice Brian K. Zahra.

Zahra, writing for the majority, contended that because UM coverage is optional, “the policy language alone controls the circumstances entitling a claimant to an award of benefits.”

Writing for the dissenting opinion, Justice Michael F. Cavanagh argued that, although he generally agreed that “clear and unambiguous insurance policies should be applied as written,” courts should take into consideration “the unique character of insurance policies.”

“To strictly enforce notice provisions … would amount to a forfeiture for the insured and provide a windfall to the insurer by way of a ‘technical escape-hatch,’ contrary to the function of the contract’s notice requirement,” Cavanagh said.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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