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 personal automobile and homeowner insurance documents and forms.

“Michigan consumers deserve to have their insurance contracts scrubbed to make sure the fine print isn’t unreasonable,” Ross said. 

Ross’s order amends a 1997 order by former Insurance Commissioner Joe Olson, which exempted many contracts and other documents from filing requirements. Commissioner Olson found that prior review of insurance contracts was unnecessary for the protection of the public.

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, 473 Mich 475 (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.

These issues demonstrated that the protection of the public requires the review of personal auto and home insurance policies before they are put into use.

The order stipulates that on and after July 1, 2009, insurers shall, prior to use, submit new or revised personal auto insurance documents and forms and on and after September 1, 2009, insurers shall, prior to use, submit new or revised home insurance documents and forms.

To view Ross’s order visit: http://www.michigan.gov/documents/dleg/ExemptOrder09-023-M_280797_7.pdf

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