A Michigan appeals court has shaken up no-fault auto insurance rules, spotlighting Progressive’s policy rescission and the limits of policy exclusions after a car crash.
On October 30, 2025, the Michigan Court of Appeals issued its decision in Muzafer Isovska v Leana Fitzpatrick, USA Underwriters, Progressive Marathon Insurance Company, and Michigan Automobile Insurance Placement Facility. The case examined whether insurers could deny or rescind coverage following a car accident, focusing on policy exclusions and alleged misrepresentation.
The dispute began when Muzafer Isovska was injured while driving a Ford Focus. Isovska was the named insured on a no-fault policy from USA Underwriters, which covered a Toyota Yaris. Her daughter, Brianna Isovska, co-registered the Focus and held a separate no-fault policy with Progressive Marathon Insurance Company, listing the Focus as the insured vehicle. After the accident, Isovska sought personal injury protection (PIP) benefits, but both insurers denied her claim.
USA Underwriters denied coverage, stating the Focus was not a listed vehicle on its policy. Progressive rescinded its policy, claiming Brianna failed to disclose that her mother was a resident relative and co-registrant of the Focus. Progressive argued this omission was a material misrepresentation, as it would not have issued the policy as written or would have charged a higher premium. Progressive voided the policy ab initio and refunded the premiums. Isovska’s claim to the Michigan Automobile Insurance Placement Facility was also denied.
The trial court granted summary disposition to the insurers, finding that USA Underwriters’ policy exclusions barred coverage and that Progressive was entitled to rescind its policy due to material misrepresentation. The court also found Isovska was not an “innocent third party,” as she was a co-registrant and resident relative, and thus a party to the misrepresentation.
The Michigan Court of Appeals reversed in part, vacated in part, and remanded the case for further proceedings. The appellate court found that USA Underwriters’ Exclusion D, which denied PIP coverage for injuries occurring in a vehicle not listed on the policy, conflicted with Michigan’s no-fault statute (MCL 500.3114(1)), which requires that PIP coverage follows the insured person, not the vehicle. The court held Exclusion D invalid and determined the trial court erred in granting summary disposition on that basis.
The court also addressed Exclusion E, which bars coverage if the vehicle involved in the accident did not have the required security at the time of the accident. The appellate court determined that whether this exclusion applied depended on the outcome of the rescission issue with Progressive.
Regarding Progressive’s rescission, the appellate court found the trial court erred in concluding Isovska was not an innocent third party without weighing all relevant equities or resolving factual disputes. The court emphasized that, under Michigan law, rescission as to an innocent third party requires a balancing of equities, and summary disposition was improper where material facts were in dispute.
The appellate court affirmed the trial court’s order granting summary disposition to the Michigan Automobile Insurance Placement Facility, as Isovska would not be entitled to PIP benefits from MAIPF under either outcome of the remand.
This case highlights the importance of aligning policy language with Michigan’s no-fault statutes and conducting thorough investigations when rescinding coverage for alleged misrepresentation. The decision underscores that exclusions conflicting with state law may not be enforceable and that determining whether an insured is an “innocent third party” requires careful factual and equitable analysis.
