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In Lawrence S. Holman v. Farm Bureau General Insurance Company Of Michigan, Jonathan Heinzman Agency, Inc., and Jonathan Heinzman, No. 357473, Court of Appeals of Michigan (August 4, 2022)
After losing his case because of the rescission the Plaintiff then sued his insurance agent claiming he was negligent in filling out the application.
BACKGROUND
The completed application misrepresented material facts about the fact that he had not driven or moved any vehicle owned by the Applicant which has NOT had the required insurance in force for the preceding six months?
The trial court granted Heinzman’s motion for summary disposition.
ANALYSIS
The Holman I panel determined that it was “meaningless” whether Heinzman provided the “bogus” AAA policy number in the application because plaintiff, as the contracting party, had a duty to read the contract and know what he signed.
It was immaterial who contributed false information to an insurance application for purposes of determining whether an insurer may rescind a policy. The contract principles relied on in Holman I have no application in a negligence action concerning whether the insurance agent breached a duty to the insured.
The insured’s failure to read the insurance application and related documents was relevant to comparative negligence, and that the jury could reasonably determine that it was the proximate cause of the insured’s damages. Applied here, an insured’s failure to identify a misrepresentation in the application allegedly made by the insurance agent should not preclude a negligence action, but it may be considered by a jury when determining comparative fault and proximate cause.
The Court’s prior decision granting rescission to the insurer does not preclude a negligence action against the insurance agent. The trial court’s decision was reversed and remanded for further proceedings.
ZALMA OPINION
There is no reasonable basis for an insured or an insurance agent seeking to obtain insurance for the prospective insured to lie to the insurer to obtain the insurance. There is no question that the policy was acquired as a result of a material misrepresentation sufficient to require the rescission of the policy. Since the plaintiff claims he told the truth to the agent then there may be a case for the agent’s wrongdoing. If he lied to the agent he will lose the negligence case. If both lied the jury will determine what percentage of responsibility each obtains. A trial will go forward and a decision will be made.
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