Insurance Law Lesson 88: “Contact Your Agent”

Representing insurance companies, I won many cases based on fraud. I like to think that in those cases, the people had truly acted to pull the wool over the insurer. For example, in one case the insured had checked “single” on the policy application and listed nobody else as being over 14 years old in his household. The policy was rescinded (successfully) because the insured was actually living with his wife of 14 years (See Lessons 50-53).

What happens when the insured was honest but an insurance agent made a mistake? Lesson 3 discusses that independent insurance agents (those not limited to selling policies from a single insurer) in Michigan represent the policyholder, not the insurance company. In such a case, the agent’s mistake can hurt the policyholder. That was the case in the recent Michigan Court of Appeals decision Maurer v Fremont Ins Co, no. 336514 (9/18/18).

In 2006 and 2012 Mr. Maurer told his agent that Mrs. Maurer used one of their cars part time to do postal delivery, contrary to what the agent had written on the application. The agent told Mr. Maurer not to worry and never told Fremont. Everything was fine until Mrs. Maurer got in an accident. While delivering mail. Fremont denied coverage and sought to rescind the policy based on material misrepresentation. But, there was a problem:

The precise wording in the application was “[i]f the covered autos are not used as indicated above, contact your agent.” Maurer had complied and, even though the correct info never made it to Fremont, his coverage was saved.

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