FOR IMMEDIATE RELEASE 
February 1, 2010
Contact: Jason Moon 517-335-1700
http://twitter.com/miofir

LANSING – Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross has ordered the state’s insurance companies to submit to OFIR, prior to use, all new or revised insurance documents and forms for personal, family or household purposes.

“Our goal is to scrub ‘gotcha’ clauses out of insurance contracts before they’re sold to Michigan consumers,” Ross said.

Ross’s order rescinds a 1997 order by former Insurance Commissioner Joe Olson, which exempted many contracts and other documents from filing requirements.

Legal developments in recent years showed that the review of these forms has become critically necessary for the protection of the public.  In particular, a Michigan Supreme Court determination made in 2005 dramatically changed the landscape. In Rory v Continental Ins Co (2005), the court announced that Michigan courts would no longer amend insurance contracts based upon unreasonable clauses. The court said that it was the responsibility of the Commissioner—not courts—to review clauses for legality. Thus, policyholders lost their last line of defense in the court system.

The disputed contract clause in Rory was a one-year limitation period for uninsured motorist claims. Many policyholders, as with the plaintiffs in that case, could not comply with such clauses, making their coverage, illusory. OFIR found the use of such clauses to be commonplace and has spent years securing the removal of these and other unreasonable clauses from auto and home insurance policies as they have been brought to the agency's attention by other court cases, attorneys, and complaints to the agency from policyholders.

To view Ross’s order visit: http://www.michigan.gov/documents/dleg/Order_Rescinding_Exempt_308923_7.pdf

###