Interpreting Insurance Contracts

     In two cases released this summer, a 4 member majority of the Michigan Supreme Court turned its back on consumers by rejecting any duty to assess the reasonableness of insurance contract language.  The particular cases upheld a short, one-year, limitation on suing to collect uninsured motorist coverage and rejected a 19 year old decision holding that an insured had one year from the date insurance benefits were denied in which to sue.  The Court decided that in all cases involving no fault personal injury protection benefits, the consumer was required to sue within one year on incurring the expense--even if the benefits were still under review by Blue Cross or the auto insurer.

     The case involving uninsured motorist benefits means that people lose their right to benefits in some cases, even before they know that they were hurt by an uninsured motorist.  With regard to the "one year back" rule, people get stuck with medical expenses that should have been the obligation of the insurer and which the insurer has not even denied, simply because the involved insurers take too long to process claims or the provider is slow in filing the proper forms.

     In each case, the court has essentially penalized decent people who are not eager to file suit. Because they are willing to try to avoid suit and don't jump into litigation within the first year, they end up being denied the rights they have paid for.

     These cases fit within a general trend of this extremely conservative, pro-insurance majority who have taken Michigan jurisprudence back toward the 19th century.  Their holdings claim that they have no power to decide whether an insurance contract is fair or reasonable, and they vow to enforce, as written, all of the small print--regardless of whether it comports with an insured's reasonable expectations.  Virtually no other state in the country takes such an absurd position.

     Perhaps the saddest and most ironic aspect of these decisions is that they tend to reward the litigious--whether insured or insurer--at the expense of those who are reluctant to "see you in court" and who were willing to try to achieve a non-litigated outcome.  A sad outcome for a group of jurists who complain about our overly litigious society.