At-Fault Drivers Still Liable Even after Insurer Successfully Rescinds Policy

Published on
June 7, 2023

In another win for accident victims, the Michigan Supreme Court held this week that when an insurer successfully rescinds an insurance policy, as though it was never in effect, an at-fault driver may not avoid liability based upon the rescission because, at the time the injury occurred, the policy in fact was in effect as required by law.

In Adora Wilmore-Moody v Mohammed Zakir, the plaintiff’s insurer avoided liability by having its policy rescinded because when applying for insurance the plaintiff failed to disclose that her teenage granddaughter was living with her.  The at-fault driver argued that the plaintiff was barred from recovering because rescission treats a policy as though it was never in effect, and in order to record under Michigan’s no-fault act, the plaintiff was required to have insurance in effect “at the time the injury occurred.”

The Michigan Supreme Court rejected the at-fault driver’s argument and held that, even though the insurer succeeded in having the policy rescinded, the at-fault driver could still be held liable because the policy was in effect “at the time the injury occurred.  The Court reasoned that rescission “does not alter reality or act as a DeLorean time machine” such that it could change the plaintiff’s insured status at the time of the accident.  The Court further explained that barring liability against at-fault drivers under such circumstances “would heap an undeserved windfall onto negligent drivers seeking to avoid liability for serious injuries they are alleged to have caused.”

ATLAW has been advocating for injured persons and accident victims for over a decade. Our litigation team is proud to stand by accident victims in the fight for justice, as we celebrate yet another victory.  

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