INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
She’s offended by being rescinded
Progressive Michigan Insurance Company (Progressive) agreed to provide a no-fault auto insurance policy to Janice Sherman (Sherman). It was in force when she was rear-ended by a vehicle that fled the scene (the at-fault party was never identified).
Sherman was injured while a passenger in one of her two vehicles that were insured by Progressive. She requested coverage under her policy’s Personal Injury Protection (PIP) benefits. Instead of protection, her insurer responded with poor news: Her coverage request was denied. Worse, Progressive also advised her that her policy was rescinded, and it refunded all the premium she had paid. The total of the refund was nearly $1,500.
Progressive’s reason for rescinding the policy was for material represen-tation that existed on Sherman’s application and which continued after her policy’s first, six-month renewal. Specifically, Progressive learned that Sherman’s application indicated that her two vehicles were garaged at a location that was different from the truth. Use of her vehicles’ actual location would have resulted in Sherman being charged a substantially higher premium. Later, the insurer also discovered that there were several relatives in her household. Sherman had listed only herself as a sole resident and operator in her household.
Sherman sued, alleging breach of contract due to the insurer’s denial of PIP benefits. Progressive responded, filing its own request for summary judgment. It argued that its decision to void the policy and return all premiums was proper in light of the false information provided by Sherman.
Sherman’s complaint included a request that, rather than rescission, the policy be reformed in accordance with the correct garaging location. Progressive appealed after the initial court ruled in Sherman’s favor. It ordered the policy to be reformed and for Sherman to return the refunded premium along with additional premium (roughly $1,100) to comply with the proper rating.
An appellate court, after an initial hearing as well as a reconsideration (requested by Sherman), determined that the lower court’s decision was erroneous. It reversed the matter in favor of Progressive and the policy’s voidance via rescission. Sherman appealed.
The higher court considered all the previous activity that occurred in both lower courts in light of the arguments of Sherman and Progressive, including consideration of a court case Sherman cited in support of her position that policy reformation, rather than rescission, was merited.
In the higher court’s view, the initial court’s acceptance of Sherman’s argument was problematic. The actions of the litigating parties were not equitable. Sherman, on her part, knowingly provided false information in her application in two areas that significantly affected the premium charged by her insurer. Further, Progressive relied on the information it was provided for both rating and acceptability. On the other hand, Progressive’s action in rescinding and refunding all policy premium aligned with the discovery of receiving false information. The higher court found no evidence that the initial court even considered Progressive’s decisions when, based on the fact that it was deceived, investigation was warranted. Therefore, it found that the initial court abused its discretion.
The higher court ruled in favor of Progressive, affirming the appellate court decision to allow Sherman’s policy to remain rescinded.
Janice Sherman v. Progressive Michigan Insurance Company and John Doe—State of Michigan Supreme Court—No. 167826—April 20, 2026.
