Case Name: SMART v. NEW HAMPSHIRE INSURANCE CO
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1987-06-15
Citations: 428 Mich. 236
Docket Number: Docket No. 77324
Parties: SMART v NEW HAMPSHIRE INSURANCE CO
Judges: Brickley, Boyle, and Archer, JJ., concurred with Levin, J.
Reporter: Michigan Reports
Volume: 428
Pages: 236–247

Head Matter:
SMART v NEW HAMPSHIRE INSURANCE CO
Docket No. 77324.
Argued November 13, 1986
(Calendar No. 13).
Decided June 15, 1987.
Ross D. Smart and Viola A. Smart brought an action in the Cheboygan Circuit Court against The New Hampshire Insurance Co. and its agent, seeking to recover the difference between the actual cash value and the replacement cost of property damaged by fire and covered under fire and casualty policies issued by New Hampshire and another insurer. The New Hampshire policy, which commenced on May 1, 1980, provided replacement cost coverage. The other policy, which expired on May 1, 1980, provided coverage for cash value only and for reimbursement of actual cash value. The fire occurred at 7:00 a.m. on May 1. The court, Robert C. Livo, J., entered judgment on a jury verdict for the plaintiffs. The Court of Appeals, Hood, P.J., and Mackenzie and Dunn, JJ., reversed in an opinion per curiam, finding that the New Hampshire policy did not become effective until noon on May 1 (Docket No. 79889). The plaintiffs appeal.
In an opinion by Justice Levin, joined by Justices Brickley, Boyle, and Archer, the Supreme Court held:
The Insurance Code provides that all contracts of fire insurance for real property within the state must conform to the statutory Michigan standard policy which provides that coverage commences at noon, standard time.
Both policies stated on their faces that coverage began at 12:01 a.m., standard time, on May 1, 1980; however, the New Hampshire policy contained a Michigan Amendatory Endorsement providing that coverage began at noon, standard time, on May 1. It does not appear whether the policy of the other insurer contained such a provision.
By virtue of the provisions of the code, coverage under the expiring policy ceased at noon, standard time, on May 1, and by virtue of the provisions of the code and the Michigan Amenda tory Endorsement, the New Hampshire policy became effective at noon, standard time, on May 1.
References
Am Jur 2d, Insurance §§ 475-496.
See the annotations in the Index to Annotations under Fire Insurance.
There was no misrepresentation by New Hampshire or its agent. The record indicates that the plaintiffs were concerned with obtaining replacement cost coverage and continuous coverage. There is no suggestion that the plaintiffs or the agent focused on the period between 12:01 a.m. and noon on May 1, when discussing the new coverage.
Justice Cavanagh, concurring in the result, stated that where there is a conflict between the language of an endorsement and the form provisions of an insurance contract, the terms of the endorsement prevail. Thus, as a matter of law, the insurer did not misrepresent the inception time of its policy.
Affirmed.
Chief Justice Riley, dissenting, stated that the Insurance Code must be construed in the light of the legislative intent to protect policyholders. In this case the policyholders contracted with the insurer to provide coverage greater than that required by the Insurance Code, including an endorsement providing that the policy would be effective at 12:01 a.m. to the extent that it replaced coverage of another policy terminating at 12:01 a.m. The endorsement is not ambiguous, and the plaintiffs reasonably could have expected coverage to begin at 12:01 a.m. Because the defendant’s policy replaced a policy which terminated at 12:01 a.m., under the plain terms of the endorsement, it was in effect at the time of the fire and should be enforced as written.
Justice Griffin took no part in the decision of this case.
148 Mich App 724; 384 NW2d 772 (1985).
Insurance — Fire and Casualty — Michigan Standard Policy.
All contracts of fire and casualty insurance on real property within Michigan must conform to the Michigan standard policy; coverage under the standard policy commences at noon, standard time (MCL 500.2806, 500.2832; MSA 24.12806, 24.12832).
Daniel Loznak for the plaintiffs.
Peacock & Ingleson, P.C. (by Gregory A. Elzinga and Lyle Andrew Peck), for the defendants.

Opinion:
Levin, J.
Defendant The New Hampshire Insurance Co., issued, for a period commencing May 1, 1980, a policy of fire insurance covering a motel and other property owned by plaintiffs Ross and Viola Smart. This policy replaced a policy issued by Great American Insurance Company that expired May 1, 1980. There was thus continuous coverage on May 1, 1980, the date on which the fire occurred.
The Great American policy required the insurer to pay the actual cash value of property that was lost. The New Hampshire policy provided that the insurer would pay the replacement cost, a difference found by the jury to be $30,000.
After the Smarts had been paid the actual cash value, $90,000, by Great American, they commenced this action against New Hampshire. The Court of Appeals reversed a $30,000 judgment for the Smarts entered by the circuit court on the jury verdict, finding that the New Hampshire policy did not become effective until noon on May 1, five hours after the fire broke out at 7:00 a.m. on that day. We agree and affirm the judgment of the Court of Appeals.
i
There is a standard form of fire insurance policy in use throughout the United States that is prescribed by statute in Michigan. It appears that the policy period may commence at 12:01 a.m. in some states. In Michigan, the statute prescribes that the policy period begins at "noon, Standard Time" on the date the policy period begins.
Both the Great American and the New Hampshire policies stated, however, on the face of the policy, that the policy began at 12:01 a.m., stan dard time. The Smarts claim that the New Hampshire policy — providing for replacement cost — thus became effective at 12:01 a.m., seven hours before the loss occurred.
The New Hampshire policy contained a "Michigan Amendatory Endorsement" stating that "[t]he time of inception and the time of expiration of this policy and of any schedule or endorsement attached shall be Noon Standard Time." The policy, as so amended, thus by its terms commenced at noon rather than at 12:01 a.m.
The Michigan Amendatory Endorsement provided further that "[t]o the extent that coverage in this policy replaces coverage in other policies terminating at 12:01 a.m. (Standard Time) on the inception date of this policy, this policy shall be effective at 12:01 a.m. (Standard Time) instead of at Noon Standard Time." The Smarts argue that since the Great American policy stated on its face that it began and expired at 12:01 a.m., the New Hampshire policy, under this language of the Michigan Amendatory Endorsement, became effective at 12:01 a.m., rather than at noon.
It does not appear whether there was language in the Great American policy paralleling the language of the Michigan Amendatory Endorsement to the New Hampshire policy stating that the time of inception and expiration of the policy shall be noon standard time. In all events, the Insurance Code provides that "[a]ll contracts of fire insurance upon property real or personal located in this state shall be held and deemed to be made and consummated within this state"; and that "[t]he printed form of a policy of fire insurance, as set forth in § 2832 [of the Insurance Code], shall be known as the 'Michigan standard policy;' " and that "[n]o policy or contract of fire insurance shall be made, issued or delivered" by any insurer or agent "unless it shall conform as to all provisions, stipulations, agreements and conditions," of the Michigan standard policy. And, again, the Michigan standard policy provides that it shall be for a term commencing "at noon, Standard Time."
It is well established that "[insurance contracts are subject to statutory regulations and provisions of the statutes must be read into the contract."
In sum, without regard to whether the Great American policy provided by amendatory endorsement that it would commence at noon, by virtue of § 2832 of the Insurance Code the Great American policy expired at noon rather than at 12:01 a.m., and, by virtue of both § 2832 of the Insurance Code and of the Michigan Amendatory Endorsement that was a part of the New Hampshire policy, the New Hampshire policy became effective at noon.
ii
The Smarts contend alternatively that New Hampshire represented that its policy began at 12:01 a.m. While the policy did in a number of places state that it became effective at 12:01 a.m., the Michigan Amendatory Endorsement that was a part of the New Hampshire policy stated that the time of inception was noon. Even if the Great American policy did not contain such an endorsement and, in such event, it would or might not have been clear from an examination of the Great American policy that it expired at noon rather than at 12:01 a.m., New Hampshire made no representation concerning when the Great American policy expired. The Michigan Amendatory Endorsement stated only that if the New Hampshire policy replaced coverage terminating at 12:01 a.m., the New Hampshire policy would become effective at 12:01 a.m. instead of at noon. The Great American policy, for reasons already stated, expired at noon rather than at 12:01 a.m.
The record indicates that the Smarts were interested in obtaining replacement cost coverage in lieu of actual cash value coverage. It is clear that the Smarts expected the new coverage to be effective May 1. While they were concerned that there be continuous coverage, there was no discussion regarding specific hours, 12:01 a.m. or noon.
Since a policy period must, under § 2832, commence at noon, it might have been necessary to begin the New Hampshire policy at noon on April 30 in order to provide coverage by 12:01 A.M. on May 1. There is no suggestion that the Smarts or the insurance agent focused on the twelve-hour period commencing 12:01 a.m., May 1, when they discussed renewal of the existing or alternative coverage. The focus was rather on providing coverage for replacement cost in lieu of actual cash value and continuous coverage.
In sum, we agree with the Court of Appeals that New Hampshire's motions for a directed verdict and judgment notwithstanding the verdict should have been granted. There was no misrepresentation by the insurer or its agent. The expectations of the Smarts were met by providing replacement cost coverage commencing at noon on May 1 when the Great American policy expired.
Affirmed.
Brickley, Boyle, and Archer, JJ., concurred with Levin, J.
MCL 500.2832; MSA 24.12832.
Id.
MCL 500.2804; MSA 24.12804.
MCL 500.2832; MSA 24.12832.
MCL 500.2806; MSA 24.12806.
Id.
See n 1.
Chrysler Corp v Hardwick, 299 Mich 696, 700; 1 NW2d 43 (1941). Similarly, see Galkin v Lincoln Mutual Casualty Co, 279 Mich 327; 272 NW 694 (1937); Wendel v Swanberg, 384 Mich 468, 478; 185 NW2d 348 (1971).
See Cambron v North-West Ins Co, 70 Or App 51; 687 P2d 1132 (1984).
In stating in several places in the policy that the policy period began at 12:01 a.m. and in relying on the Michigan Amendatory Endorsement to amend those statements to make the policy effective at noon, New Hampshire might have failed to comply with the requirements of the Insurance Code.
While the Commissioner of Insurance might disapprove the issuance of a policy in the form in which this policy was issued, absent evidence that the policyholder was misled to his detriment, e.g., by statements in the policy that it began at 12:01 a.m. or by a statement by an agent that it began at 12:01 a.m., this policy of insurance replacing without a gap in coverage existing coverage did not commence before the time stated in the policy as amended by the Michigan Amendatory Endorsement.