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Many Detroit drivers – and drivers throughout the state – do not know what the rules are if their car insurance company tries to cancel their coverage for non-payment of premiums.

It is not uncommon for people to believe that their auto insurance coverage can be cancelled immediately – or at least the next day – if they do not pay their premiums.

But that is not what Michigan law says. Michigan law prevents auto insurance companies from cancelling coverage unless:

  • First – The auto insurance company has provided the driver with notice that coverage will be cancelled.
  • Second – The cancellation will not occur until 10 days have passed since the notice was provided to the driver by the auto insurance.

Auto insurance companies try to take advantage of the fact that drivers are unaware of the law’s cancellation rules and, thus, neglect to provide drivers with the necessary, legally-required notice of cancellation before they actually cancel coverage.

At least one auto insurance company has tried sending drivers preemptive cancellation notices before non-payment has occurred so they could impose immediate cancellation after non-payment and, thus, eliminate the statutorily-prescribed 10-day waiting period window between non-payment and cancellation.

Thankfully, the Michigan Court of Appeals reject this attempt circumvent the law, ruling:

“In sum, issuance of a notice of cancellation necessarily requires that the grounds for cancellation have occurred before the notice is issued. . . . We see no basis to conclude that the Legislature intended to depart from that ordinary meaning and to allow insurers to provide the statutorily required notice on the mere possibility that the insured might not make a premium payment. For those reasons, we hold that a notice of cancellation sent before the time for making the premium payment has passed does not satisfy MCL 500.3020(1)(b).”

To learn more about what happens to Detroit drivers if car insurance is cancelled for non-payment, please check out my page “car insurance cancellation for non-payment.”

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