U.S. Insurance News® Article Michigan OFIS Protects Consumers With Uninsured Driver Claims January 16th 2006 In December 2005, the Office of Financial and Insurance Services (OFIS) took action to protect consumers by requiring that insurance policyholders have at least three years to file uninsured motorist benefit claims or lawsuits under new policy forms put into use in Michigan. OFIS issued a prohibition order that specifically prohibits Michigan insurance companies, in new policy forms, from putting one year limitations on claims or legal actions respecting uninsured motorist coverage. This prohibition order determined that a limitation period of less than three years is misleading and unreasonably affects the risk purported to be assumed in the general coverage of the policy and, therefore, may not be used in new or revised forms. This came in response to a Michigan Supreme Court ruling (Rory v Continental Ins Co (2005)) allowing insurance companies to impose a one year limitation period for uninsured motorist benefits. The limitation barred claims and the bringing of lawsuits if more than one year elapsed after an accident, and overturned decades of judicial decisions holding that courts may refuse to enforce contractually - shortened limitation periods that are unreasonable. In the ruling, the Supreme Court overturned the Michigan Court of Appeals, which ruled that Continental’s one year limitation period for challenging the denial of an uninsured motorist claim was unreasonable. The Supreme Court instead said that it is the OFIS Commissioner, not the court system, that has been given the authority to police unreasonable insurance contract provisions. “The Granholm administration and my staff are always interested, first and foremost, in protecting consumers,” said OFIS Commissioner Linda A. Watters. “OFIS is taking decisive action here to ensure there is enough time for policyholders to file a claim or bring a lawsuit after an accident with an uninsured motorist.” OFIS will also issue a survey in early 2006 to property and casualty companies to determine how many forms or contracts currently being used contain this one year reporting requirement. Once this information is collected, OFIS will initiate the process to disapprove those forms. Companies will have the statutory appeal process to contest this action. Uninsured motorist coverage pays damages that a covered person is legally entitled to recover from an uninsured driver. Under no-fault, drivers may be sued for certain accidents including where a covered person suffers death, serious impairment of a body function, or permanent serious disfigurement. Serious impairment of a body function is defined in law as “an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life.” The claimants in Rory were severely injured. The no-fault law allowed them three years to sue the other driver. They filed on time and then found out that the other driver was uninsured. The claimants then made an uninsured motorist claim with their own insurer, only to have it denied. Continental, their insurance company, had a one-year limitation on filing a claim in their policy form that began running from the date of the accident. The claimants sued Continental to obtain their benefits. The Court of Appeals found that the one year limitation is not reasonable because the insured: • may not have sufficient opportunity to investigate and file an action because of insufficient information about his own physical condition to warrant filing a claim. • will likely not know if the other driver is insured until legal process is commenced. • is subject to a time period so short as to lose the right of action. • may have his or her action barred before the loss can be ascertained. The Michigan Supreme Court determined that this is a matter in the OFIS Commissioner’s jurisdiction, not the courts. As a result, this Prohibition Order has been issued to protect the public from limitation periods that unreasonably affect the risk purported to be assumed in the general coverage of the policy. The prohibition order has been sent to all Michigan property/casualty companies.   - U.S. Insurance News