Where Michigan Law Changes the National Property and Casualty Rule

National forms state rules for the whole country, and Michigan changes several of them. Where a Michigan statute and a standard form differ, the statute governs a Michigan policy.

Cancellation and Nonrenewal of Home Policies

Standard homeowners and dwelling forms generally let the insurer cancel for any reason during the first 60 days of a new policy on 10 days’ notice. After that, they allow cancellation for nonpayment, material misrepresentation or a substantial change in risk, the last two on 30 days’ notice.

Standard form	Michigan	Source
First 60 days, any reason, 10 days’ notice	A notice mailed in the first 55 days after initial issuance may take effect in not less than 20 days. There is no any-reason window: every termination must conform to the insurer’s underwriting rules	MCL 500.2123(2), (4)
Later cancellation or nonrenewal	At least 30 days’ written notice stating each specific reason	MCL 500.2123(1)

Nonpayment is outside these limits and takes effect as the policy provides (MCL 500.2104(5), 500.2123(3)). The rule covers home insurance as the Essential Insurance Act defines it, not commercial property (MCL 500.2103(3)). Qualifying group plans and insurers exempt under section 2129 are outside it (MCL 500.2105(2), (3), 500.2129).

Cancellation and Nonrenewal of Auto Policies

The standard personal auto policy generally gives 10 days’ notice for nonpayment or in the first 60 days, 20 days otherwise, and 20 days for nonrenewal. After 60 days or on a renewal, it permits cancellation for nonpayment, license suspension or revocation, or material misrepresentation (PP 00 01 09 18, Part F).

In Michigan:

• The early period is 55 days, not 60 (MCL 500.2123(2), 500.3220).
• A termination other than for nonpayment needs at least 30 days, or 20 days inside the first 55 (MCL 500.2123(1), (2)). Chapter 32 separately requires 20 days by certified mail (MCL 500.3224(3)). A 30-day certified notice meets both, and chapter 21 controls where they differ (MCL 500.2106(4)).
• A refusal to renew is a termination under chapter 21 (MCL 500.2104(5)), so it needs 30 days and each specific reason. The 20 days in the form matches only the minimum chapter 32 sets for a nonrenewal not to count as a cancellation (MCL 500.3204(2)).
• After 55 days, or on a renewal, chapter 32 allows cancellation of private passenger auto liability only for a final license suspension or revocation. Material misrepresentation is not on that list (MCL 500.3220). Nonpayment falls outside chapter 32 (MCL 500.3208, 500.3212).

Refund When the Insured Cancels

The national rule is that an insured who cancels may receive less than pro rata, a short-rate refund. In Michigan, a casualty policy other than workers’ compensation or mortgage guaranty, including all classes of motor vehicle coverage, must provide that on the insured’s request the insurer refunds the excess of paid premium over the pro rata premium for the expired time (MCL 500.3020(1)(a)). Except on auto, the minimum earned premium is that pro rata premium or $25, whichever is greater (MCL 500.3020(1)(c)). Short rate is allowed only for a motorcycle, watercraft, off-road vehicle or snowmobile, and only under a filed rule (MCL 500.3020(4), (7)). Auto insurance may carry a filed minimum retention rule, but it cannot apply to a renewal, or when the insured no longer needs security or replaced the coverage with another insurer’s policy (MCL 500.3020(2)). An insurer may also issue a noncancelable, nonrefundable 6-month prepaid auto policy so an insured can meet the vehicle registration requirements (MCL 500.3020(3)).

For a fire policy, the statute sets a floor on what the insurer keeps: at least the pro rata premium for the expired time or $25, whichever is greater (MCL 500.2833(1)(h)). It does not say the retention cannot be higher. Section 3020 does not say whether a combined homeowners policy, which includes liability coverage, is a casualty policy (MCL 500.624).

Paying a Fire Loss

The standard homeowners and dwelling forms make a loss payable 60 days after the insurer receives proof of loss and the amount is agreed, judged or appraised. Michigan requires that a fire loss be paid within 30 days after receipt of proof of the amount of the loss, notwithstanding any contract provision, except for the 25% withholding under section 2845 on certain building losses (MCL 500.2833(1)(p), 500.2836(2)).

Contributory Negligence

The common-law defense of contributory negligence bars a claimant who is at all responsible for the injury. In Michigan, in an action for personal injury, property damage or wrongful death, the court reduces damages by the claimant’s percentage of comparative fault. Only if the claimant’s fault is greater than the combined fault of the others are noneconomic damages not awarded, and economic damages are still reduced, not barred (MCL 600.2959).

Where the Forms and Michigan Agree

• The standard 20 days to name appraisers and 15 days to agree on an umpire match MCL 500.2833(1)(m).
• The standard two-year suit period is allowed, because Michigan requires 1 year or the policy’s period, whichever is longer, but Michigan tolls the time from notice of loss until formal denial (MCL 500.2833(1)(q)).

Lesson summary

• In Michigan, a home policy termination takes 30 days’ notice stating each specific reason, or 20 days if notice is mailed within the first 55 days. Every termination must conform to the insurer’s underwriting rules.
• Private passenger auto cancellation after 55 days, or on a renewal, is limited to a final license suspension or revocation, and nonrenewal takes 30 days with reasons.
• A casualty policy, including motor vehicle coverage, generally refunds the excess over pro rata when the insured cancels, with short rate allowed only on motorcycles, watercraft, off-road vehicles and snowmobiles.
• A fire policy requires earned premium of at least the pro rata amount or $25, whichever is greater.
• A fire loss is payable within 30 days after proof of the amount of the loss.
• Michigan reduces damages for a claimant’s fault by percentage and bars noneconomic damages only when the claimant’s fault is greater than the others’ combined.