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Insurance Company Cannot Cancel a Policy Until a Non-Payment Actually Occurs

Motor Vehicle Litigation / July 15, 2021

MCL 500.3020(1)(b) of the Insurance Code does not allow an insurance company to cancel an insurance policy when the insurance company mails its customer a letter purporting to be a notice of cancellation for nonpayment of insurance premiums before any nonpayment actually occurs. A notice of cancellation must be peremptory, explicit, and unconditional. In this case, because Everest’s letter provided that cancellation was conditioned on Yang’s failure to pay his insurance premiums, the letter was ineffective as a notice of cancellation.

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