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Yang v. Everest National Insurance Co.

Court of Appeals of Michigan

August 27, 2019

WESLEY ZOO YANG and VIENGKHAM MOUALOR, Plaintiffs-Appellees,
v.
EVEREST NATIONAL INSURANCE COMPANY, Defendant-Appellant, and MOTORIST MUTUAL INSURANCE COMPANY, Defendant-Appellee.

          Wayne Circuit Court LC No. 17-018062-NF

          Before: Shapiro, P.J., and Gleicher and Swartzle, JJ.

          SHAPIRO, P.J.

         Defendant Everest National Insurance Company (Everest) sent plaintiff Wesley Yang (Yang) a bill requesting a premium payment for his no-fault insurance policy and informing him that the policy would be cancelled if payment was not received by the due date. Yang did not make the payment and he and his wife, plaintiff Viengkham Moualor, were subsequently injured in a pedestrian-automobile accident. Plaintiffs sought coverage under the policy, and Everest argued that it effectively cancelled the policy. The trial court disagreed and denied Everest's motion for summary disposition.

         Everest appeals by leave granted. At issue in this case is whether an insurer may cancel a policy by sending the statutorily required "notice of cancellation" to the insured before the grounds for cancellation have occurred. We hold that such notice does not satisfy the Insurance Code, MCL 500.100 et seq., and is therefore ineffective to cancel the policy. Accordingly, we affirm the trial court.

         I. BACKGROUND

         On September 26, 2017, Yang made the first premium payment on a six-month policy issued by Everest. The policy term was from September 26, 2017, to March 26, 2018, and the subject accident occurred during that term. As required by MCL 500.3020, the policy included a cancellation provision that stated in pertinent part:

         This Policy may be canceled during the policy period as follows:

* * *
2. We may cancel by mailing you at the address last known by us or our agent:
a. at least 10 days notice by first class mail, if cancellation is for non-payment of premium[.] [Bolding removed.]

         On October 9, 2017, Everest mailed Yang a bill for the second premium installment payment that contained a notice of cancellation for nonpayment of the premium. The document informed Yang that he must pay the premium by October 26, 2017. It stated that the failure to pay that amount by the due date "will result in the cancellation of your policy with the indicated Cancellation Effective Date," October 27, 2017. (Italics removed). Thus, the document provided that if the premium payment was not received by October 26 the policy would be cancelled effective the next day. It also stated that the cancellation notice did not apply if the bill was paid by the due date.

         On October 30, 2017, Everest, having not received the premium payment, sent Yang an offer to reinstate the policy. It informed Yang that his insurance was cancelled as of October 27, 2017, because it did not receive the premium payment by the due date. The letter informed Yang that he could reinstate the "policy with a lapse in coverage" if it received payment by November 26, 2017.

         Yang sent a payment for the premium on November 17, 2017, and Everest reinstated the policy effective on that date. The notice of reinstatement informed Yang that there was a lapse ...


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