Opinion ID: 782001
Heading Depth: 4
Heading Rank: 1

Heading: Michigan Insurance Contracts

Text: 16 The parties do not dispute that Michigan law governs. Under Michigan law, courts construe an insurer's duty to defend more broadly than its duty to indemnify. See generally Radenbaugh v. Farm Bureau Gen. Ins. Co. of Mich., 240 Mich.App. 134, 610 N.W.2d 272, 275 (2000) (It is well settled in Michigan that an insurer's duty to defend is broader than its duty to indemnify. (quotation omitted)); Am. Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 207 Mich.App. 60, 523 N.W.2d 841, 844 (1994) (noting that an insurer's duty to defend extends even to nonmeritorious claims where those claims allege theories of recovery that fall within the policy). In Advance Watch, we borrowed the district court's summation of Michigan's law with respect to an insurer's duty to defend an insured: 17 In liability policies, the obligation of the insurer depends upon the allegations of the underlying complaint. The insurer only has a duty to defend the insured if the charges against the insured in the underlying action arguably fall within the language of the policy. However, the terminology that was used by the underlying plaintiff in the complaint is not dispositive. Instead, the analysis of the issue must include the actual cause of the injury. Any doubt as to the insurer's liability must be resolved in favor of the insured. Moreover, where only some of the claims against the insured party are covered, the insurer must defend the whole claim until it becomes apparent that no recovery is possible under the covered theory. 18 Advance Watch, 99 F.3d at 799 (quotation and citations omitted). Thus unlike the duty to indemnify, Michigan's law requires a insurer to defend not only when the underlying claim is actually covered by the policy, but also when the underlying claim is arguably covered by the policy. Allstate Ins. Co. v. Freeman, 432 Mich. 656, 443 N.W.2d 734, 737 (1989). That said, [t]he duty to defend cannot be limited by the precise language of the pleadings, but rather arises if there are any theories of recovery that fall within the policy. Radenbaugh, 610 N.W.2d at 275 (quotation omitted); see also Freeman, 443 N.W.2d at 737 ([I]t is necessary to focus on the basis for the injury and not the nomenclature of the underlying claim in order to determine whether coverage exists.... [S]o must the allegations be examined to determine the substance, as opposed to the mere form, of the complaint. (quotation omitted)). Nonetheless, insurance companies should not be liable for risks not assumed in the language of the policy. Farm Bureau Mut. Ins. Co. of Mich. v. Nikkel, 460 Mich. 558, 596 N.W.2d 915, 920 (1999). The insurer has the burden of showing that a specific tendered claim is not covered under its policy. Fresard v. Mich. Millers Mut. Ins. Co., 414 Mich. 686, 327 N.W.2d 286, 289 (1982). 19 In general, interpretation of insurance policies is governed by the same principles used to interpret ordinary contracts. Nikkel, 596 N.W.2d at 919. Michigan contract law requires us to look at the policy as a whole, and to give meaning to all of its terms. Advance Watch, 99 F.3d at 799 (citing Fresard, 327 N.W.2d at 288-89). A contract provision that is clear and unambiguous must be `taken and understood in [its] plain, ordinary, and popular sense.' Equitable Life Assurance Soc'y v. Poe, 143 F.3d 1013, 1016 (6th Cir.1998) (brackets in original) (quoting Mich. Mut. Ins. Co. v. Dowell, 204 Mich.App. 81, 514 N.W.2d 185, 188 (Mich.Ct.App.1994)). Unambiguous contract provisions are not subject to interpretation and must be enforced as written. Id. In contrast, contract provisions are considered ambiguous when the terms are reasonably and fairly susceptible to multiple understandings and meanings. Id. Furthermore, courts applying Michigan law are instructed to refrain from applying a `technical or strained construction' to words in insurance policies and all ambiguities should be interpreted in a light most favorable to the insured. Advance Watch, 99 F.3d at 800 (quoting Hosking v. State Farm Mut. Auto. Ins. Co., 198 Mich.App. 632, 499 N.W.2d 436, 437 (1993)).