How rescission works
Rescission unwinds the contract. The insurer refunds the premiums and takes the position that no policy ever existed, so it owes nothing on any claim. Insurers usually raise it after a serious injury claim, often after an examination under oath reveals something about the application.
To rescind for a misrepresentation in the application, the insurer must show:
- A misrepresentation or omission in procuring the policy
- That it was material: the insurer would have refused the risk or charged more
- That the insurer relied on it
Then the court decides, in its discretion, whether rescission is fair under all the circumstances.
The key cases
| Case | Court and date | What it held |
|---|---|---|
| Bazzi v Sentinel Ins Co | Supreme Court, July 18, 2018 | Ended the “innocent third party” rule that barred rescission whenever an innocent person had a claim. Rescission is equitable and not automatic; courts must balance the equities. |
| Pioneer State Mut Ins Co v Wright | Court of Appeals, Feb. 11, 2020 | Set out five factors for balancing the equities when an innocent third party is involved. |
| Meemic Ins Co v Fortson | Supreme Court, July 29, 2020 | A policy antifraud clause voiding mandatory PIP coverage is enforceable only if it rests on a statutory or common-law defense. Fraud after the policy was issued, in the claim, does not by itself allow rescission. |
| Wilmore-Moody v Zakir | Supreme Court, May 31, 2023 | A post-accident rescission does not make you “uninsured” for purposes of suing the at-fault driver. |
| C-Spine Orthopedics v Progressive | Supreme Court, July 3, 2025 | Noted that rescission does not necessarily extend to third parties such as medical providers; the equities must be balanced. |
| Sherman v Progressive Mich Ins Co | Supreme Court, Apr. 20, 2026 | Upheld rescission for a misstated garaging address and omitted household members. Intent does not matter if the insurer relied on the misrepresentation. Trial court decisions on rescission are reviewed for abuse of discretion. |
The Pioneer State factors
When an innocent person, such as a passenger or a household member who did not sign the application, claims under a policy procured by fraud, courts weigh:
- Whether the insurer could have uncovered the fraud before the innocent person was injured
- The relationship between the insured and the innocent person, and whether that person knew of the fraud
- Whether the innocent person was reckless or negligent in causing the crash
- Whether the innocent person has another way to recover if the policy is not enforced
- Whether enforcing the policy would only relieve the fraudulent insured of personal liability to the innocent person
The insurer has the burden. In Reese v Citizens United Reciprocal Exchange (July 15, 2026, unpublished), the Court of Appeals upheld a trial court’s refusal to extend rescission to an injured third party.
Rescission versus denying a fraudulent claim
These are different. Rescission depends on fraud in getting the policy. After Meemic v Fortson, fraud in the claim itself, such as inflated mileage or attendant care logs, does not let the insurer void mandatory PIP coverage through a policy clause, but the insurer can refuse to pay the false part. A court can also award the insurer attorney fees against a claim that was partly fraudulent or so excessive it had no reasonable basis (MCL 500.3148(2)). For assigned claims, a knowingly false material statement makes the claim ineligible under MCL 500.3173a(4).
If your insurer threatens rescission
- Keep every letter and any premium refund check, and talk to a lawyer before responding to either.
- Get your application. Many applications are filled out by an agent over the phone. Who wrote the answer, and what you were asked, matters.
- Identify alternate coverage. A spouse’s or resident relative’s policy, or the assigned claims plan, may apply if the policy falls.
- Watch the deadlines. A rescission fight can take years, and the one-year rules in MCL 500.3145 keep running. See the deadline calculator.
Medical providers named in rescission lawsuits have their own issues. See rescission suits that name providers.
Sources: MCL 500.3148; MCL 500.3173a; Bazzi v Sentinel Ins Co, 502 Mich 390 (2018); Pioneer State Mut Ins Co v Wright, 331 Mich App 396 (2020); Meemic Ins Co v Fortson (Mich. Sup. Ct., July 29, 2020); Wilmore-Moody v Zakir (Mich. Sup. Ct., May 31, 2023); C-Spine Orthopedics, PLLC v Progressive Mich Ins Co (Mich. Sup. Ct., July 3, 2025); Sherman v Progressive Mich Ins Co (Mich. Sup. Ct., Apr. 20, 2026); Reese v Citizens United Reciprocal Exch (Mich. Ct. App., July 15, 2026, unpublished).
Questions people ask us
Can my insurer cancel my policy after I was hurt?
An insurer can ask a court to rescind the policy, treating it as if it never existed, if you made a material misrepresentation in applying for it and the insurer relied on it. Rescission is an equitable remedy, so the court balances the equities and it is not automatic.
What counts as a material misrepresentation?
A false statement or omission that would have led the insurer to refuse the policy or charge a higher premium. Common examples are leaving a household driver off the application and listing the wrong garaging address. Under Sherman v Progressive (2026), it does not matter whether the misstatement was intentional.
If my policy is rescinded, can my passengers and doctors still get paid?
Possibly. Rescission does not automatically reach innocent third parties. The court weighs factors such as whether the third party knew of the fraud and whether they have another way to recover. Medical providers’ direct claims are also not automatically barred.
Can the insurer void my policy for lying on a claim form?
Not under a policy antifraud clause alone. In Meemic v Fortson (2020), the Supreme Court held that a policy clause voiding mandatory PIP coverage for fraud after the policy was issued is unenforceable. The insurer can still deny the fraudulent part of the claim.