CYNTHIA C RUZAK V USAA INSURANCE AGENCY INC
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STATE OF MICHIGAN
COURT OF APPEALS
CYNTHIA C. RUZAK,
UNPUBLISHED
April 27, 2010
Plaintiff-Appellee,
v
No. 288053
Grand Traverse Circuit Court
LC No. 06-025177-NI
USAA INSURANCE AGENCY, INC.,
Defendant-Appellant,
and
JAY D. RUZAK,
Defendant.
Before: MURPHY, C.J., and JANSEN and ZAHRA, JJ.
MURPHY, C.J. (concurring).
I agree with the majority that the law of the case doctrine requires us to apply the renewal
rule, taking into consideration all of the policies of insurance issued from 1966 forward. See
Ashker v Ford Motor Co, 245 Mich App 9, 13; 627 NW2d 1 (2001) (discussing the parameters
of the law of the case doctrine). I also agree with the majority that the trial court properly ruled
that there was no issue of fact that defendant USAA added the family member exclusion at some
point after plaintiff and her husband Jay Ruzak left Wisconsin, thereby implicating the need
under the renewal rule to provide notice of the exclusion. Furthermore, I agree with the majority
that USAA failed to show, as a matter of law, that it provided the requisite notice. I write
separately to voice my disagreement with the majority’s position that the renewal rule should not
apply here and that, absent the law of the case doctrine, reversal would be appropriate.
Accordingly, I respectfully concur.
The core issue presented on appeal concerns the scope of the renewal rule. In Koski v
Allstate Ins Co, 213 Mich App 166, 170-171; 539 NW2d 561 (1995), rev’d on other grounds 456
Mich 439 (1998), this Court explained the rule:
An insured is obligated to read the insurance policy and to raise questions
concerning coverage within a reasonable time after issuance of the policy.
However, an exception to this rule exists “where a policy is renewed without
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actual notice to the insured that the policy has been altered.” Where a renewal
policy is issued without calling the insured's attention to a reduction in coverage,
the insurer is bound to the greater coverage in the earlier policy. The rule that
attention must be called to the reduction in coverage, and not merely to the fact
that a policy has been revised, is consistent with Giles v St Paul Fire & Marine
Ins Co, 405 F Supp 719, 724 (ND Ala, 1975), in which it was held that an
“insurer should be able to enforce only those changes in coverage as to which the
insured has been reasonably informed.” [Citations omitted; see also Parmet
Homes, Inc v Republic Ins Co, 111 Mich App 140, 145; 314 NW2d 453 (1981);
Industro Motive Corp v Morris Agency, Inc, 76 Mich App 390, 395-396; 256
NW2d 607 (1977).]
The majority, while properly recognizing that it is bound by the law of the case doctrine
with respect to the scope of the renewal rule, posits that this Court’s previous ruling in the case at
bar applied the renewal rule far too expansively. The majority opines that the renewal rule
should not apply where an insured makes an interstate move and obtains a policy in the new state
that contains a reduction in coverage, even though the insurer remains the same and there is no
break in the continuing insurer-insured relationship. The majority concludes “the prior panel
grossly misapplied the renewal rule as it has traditionally been recognized in Michigan.” Ante at
__. The majority reasons that the purpose of the renewal rule is to prevent insurers from
changing policy terms to the detriment of an unwitting insured. But when an insured moves to
another state, he or she should expect some variation in the insurance law and thus in the extent
of the coverage, giving rise to an obligation to read the policy applicable to the new venue. The
majority additionally reasons that the opinion of the prior panel failed to give due deference to
the laws of the jurisdictions in which the Ruzaks lived, and in particular Indiana, where the
Ruzaks actually had less coverage than in Michigan.
I first note that there is no language in the Michigan cases suggesting that application of
the renewal rule is limited to intrastate policy renewals; there is no indication that the rule is
inapplicable following an interstate move by the insured. There is also no caselaw support for
the majority’s position that the rule should not be implicated when an insured might reasonably
expect a change in coverage, assuming that such an expectation exists in the first place.
Principles of equity and estoppel lie at the heart of the renewal rule. Industro Motive, 76 Mich
App at 395 (the plaintiffs were not apprised of the change in insurance coverage and the
“defendants are estopped to deny liability,” as “the essential elements of estoppel have been
satisfied”); see also Koski, 213 Mich App at 171 (“defendant has entirely failed to recognize that
it had an affirmative obligation to call its insured’s attention to a reduction in coverage”). Given
that many insurers, including USAA, operate nationwide on an interstate basis, providing
ongoing insurance coverage to insured loyal customers despite the crossing of state lines, the
onus should be on the insurers to keep their insureds apprised of any policy changes decreasing
coverage. I note that there was evidence that USAA’s “products and services are only available
to members of the military community,” which, in my opinion, provides an even greater
equitable need to place the responsibility on USAA to give notice, where military personnel are
known to relocate regularly, often moving great distances as part of their service obligations.
The burden should not be on the premium-paying insured to review complex insurance policies
and to compare them against each other for purposes of detecting modifications. Considering the
intricacies of insurance law, the seasoned insurer is in the best position to be aware of the
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governing state insurance laws and to be aware of policy changes caused by an interstate move,
such that an obligation arises to make an insured aware of any modifications that could be
detrimental.
Because I cannot join in on the majority’s attack on the prior panel’s analysis, I
respectfully concur.
/s/ William B. Murphy
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