Opinion ID: 824706
Heading Depth: 2
Heading Rank: 1

Heading: policies as contracts

Text: Insurance policies are contracts and, in the absence of an applicable statute, are “subject to the same contract construction principles that apply to any other species of contract.” Id. at 461. As this Court noted in Rohlman v Hawkeye-Security Ins Co, 442 Mich 520, 525 n 3; 502 NW2d 310 (1993), quoting 12A Couch, Insurance, 2d (rev ed), § 45:694, pp 331-332, [the insurance] policy and the statutes relating thereto must be read and construed together as though the statutes were a part of the contract, for it is to be presumed that the parties contracted with the intention of executing a policy satisfying the statutory requirements, and intended to make the contract to carry out its purpose. Thus, when a provision in an insurance policy is mandated by statute, the rights and limitations of the coverage are governed by that statute. See Rohlman, 442 Mich at 524525 (holding that because personal injury protection benefits are mandated by MCL 500.3105, that statute governs issues regarding an award of those benefits). On the other hand, when a provision in an insurance policy is not mandated by statute, the rights and limitations of the coverage are entirely contractual and construed without reference to the statute. See Rory, 473 Mich at 465-466 (holding that because uninsured-motorist coverage is optional and not mandated by statute, “the rights and limitations of such coverage are purely contractual and construed without reference to the no-fault act”). 5 In addition, because insurance policies are contracts, common-law defenses may be invoked to avoid enforcement of an insurance policy, unless those defenses are prohibited by statute. See id. at 470. Rory noted that common-law defenses include duress, waiver, estoppel, fraud, and unconscionability. Id. at 470 n 23. In this case, Titan asserts the defense of fraud to avoid liability under the insurance policy entered into with Hyten.