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One Court of Justice Blog

January 09, 2018

Can equitable estoppel expand your insurance coverage? The MSC has granted leave to decide

Many insurance policies provide for automatic termination when a home is unoccupied or vacant for a few months.  But what if the insurance company knows you plan to move and sell the home and then sends the automatic renewal notice many months after you do, while the home is still on the market?  The Court of Appeals decided in April of this year that Farm Bureau General Insurance Company of Michigan could be estopped from denying coverage because of this.  The Michigan Supreme Court has granted leave in Yu v. Farm Bureau General Insurance Co of Michigan, No. 155811, with an order that suggests a different answer.  The court has asked the parties address: 
(1) whether the plain language of the insurance policy precluded coverage;
(2) if so, whether and under what circumstances the doctrine of equitable estoppel may be applied to require an insurer to expand coverage that is contrary to the express terms of an insurance contract;
(3) whether an equitable estoppel claim requires that (a) a party against whom the doctrine of equitable estoppel is to be applied has full knowledge of the facts and circumstances involved, and (b) justifiable reliance on the part of the party seeking to invoke it is shown; and
(4) whether the defendant-insurer should be equitably estopped from denying coverage in this case.
The court has allowed only 20 minutes for oral argument on each side, suggesting that it does not anticipate the question will be that hard to answer.

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