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Michigan Supreme Court Lansing, Michigan 48909 ____________________________________________________________________________________________
C hief Justice Justices

Maura D. Cor rigan

Opinion
THISHA COHEN,
Plaintiff/Counter Defendant/Appellee,
v AUTO CLUB INSURANCE
ASSOCIATION,
Defendant/Counter-
Plaintiff/Appellant.
________________________________ PER CURIAM


Michael F. Cavanagh Elizabeth A. Weaver Marilyn Kelly Clifford W. Taylor Robert P. Young, Jr. Stephen J. Markman

____________________________________________________________________________________________________________________________

FILED JANUARY 17, 2001


No. 116473


The defendant insurance company sold the plaintiff a
policy that included a clause voiding the policy in the event
the plaintiff misrepresented a material fact. The insurer


later denied coverage on the basis of that clause, but the
circuit court and Court of Appeals ruled that the clause was
unlawful. We reverse in part the judgments of the circuit


court and the Court of Appeals and remand this case to the
circuit court.
I
In December 1993, plaintiff Thisha Cohen was involved in


a motor vehicle

accident in the city of Detroit.1

She


describes her injuries as "severe and debilitating," and says
that they have resulted in "a serious impairment of a body
function." She alleges economic and noneconomic damages.


At the time of the accident, Ms. Cohen was insured by
defendant Auto Club Insurance Association (ACIA). of the other vehicle was an uninsured motorist.
Ms. Cohen's policy included uninsured motorist coverage,
as well as a provision allowing such claims to be submitted to
arbitration.2 However, ACIA refused to provide coverage and
The basis of ACIA's
The driver


refused to participate in arbitration.

refusal was its conclusion that Ms. Cohen had submitted false
documentation regarding her wage loss.3
In denying coverage, ACIA relied on a policy clause that
voids the entire policy if the insured misrepresents a


material fact relating to a claim.

The clause states:


This entire Policy is void if an insured
person has intentionally concealed or
misrepresented any material fact or circumstance
relating to:


Various dates appear in the file. It appears, though,
that the accident occurred on December 16, 1993.
The materials at hand do not include the full policy or
the page on which its arbitration clause appears. However,
there is no dispute that Ms. Cohen's uninsured motorist clause
would be arbitrable, absent the present controversy.
The details are not important, but the dispute centers
on when she left her job, and on whether she left because of
a physical inability to perform its duties (entitling her to
wage-loss benefits) or was fired for insubordination.
2

3 2

1

a. b. c.

this insurance;
the Application for it;
or any claim made under it.


Faced with ACIA's refusals, Ms. Cohen filed suit in
circuit court. She asked for an order compelling ACIA to


submit her uninsured motorist claim to arbitration.4
In a motion for summary disposition, Ms. Cohen denied any
misconduct. For purposes of the motion, she further argued


that the alleged misrepresentation should have no bearing on
her claim. She said that "no portion of the Uninsured


Motorist Claim seeks wage loss benefits" and that she "seeks
an uninsured motorist arbitration to ascertain to what pain
and suffering damage she is entitled." Thus, "every


allegation of fraud is totally irrelevant to the uninsured
motorist arbitration." Further, she argued that a no-fault


policy can be rescinded only for misrepresentation in the
course of applying for the policy.
Responding disposition uninsured be to the motion, in its is ACIA favor. asked It that summary
that
not


entered

observed and is

motorist

coverage

contractual,

required by statute.

Thus, there is no basis in law for


failing to enforce the policy clause.
The circuit court ruled that "the insurance policy can
only be void if there's a material misrepresentation in the


ACIA filed a counterclaim in which it alleged breach of
contract and fraud. It sought an order requiring Ms. Cohen to
return insurance benefits that ACIA already had paid to her.
3


4

application

for

no-fault

insurance."

The

court

granted


summary disposition in favor of Ms. Cohen, and ordered that
her uninsured motorist claim be submitted to arbitration.5
The Court of Appeals granted leave to appeal,6 and later
issued a judgment in which it affirmed the circuit court order
that sent Ms. Cohen's uninsured motorist claim to


arbitration.7

238 Mich App 602; 606 NW2d 664 (1999).8


ACIA has applied to this Court for leave to appeal.
II
This case involves issues concerning the proper


interpretation and application of a contract of insurance, and
we review such questions de novo. Morley v Automobile Club of
Michigan, 458 Mich 459, 465; 581 NW2d 237 (1998). It also


presents issues of statutory construction, which likewise are
reviewed de novo. Brown v Michigan Health Care Corp, 463 Mich
368, 374; 617 NW2d 301 (2000).


The court also directed that ACIA's counterclaim be
heard at the same arbitration.
Unpublished order entered February 17, 1998 (Docket No.
207022).
The Court of Appeals also reversed in part, finding
error in the circuit court's decision to order arbitration of
ACIA's counterclaim for fraud. The Court of Appeals remanded
the case to circuit court for further proceedings with regard
to the counterclaim.
Reh den, unpublished order entered February 16, 2000
(Docket No. 207022).
4

8
7
6

5

III
The Court of Appeals affirmed on the authority of MCL
257.520(f)(1); MSA 9.2220(f)(1), which provides in part that
"[e]very motor vehicle liability policy shall be subject to
the following provisions":
The liability of the insurance carrier with
respect to the insurance required by this chapter
shall become absolute whenever injury or damage
covered by said motor vehicle liability policy
occurs; said policy may not be cancelled or
annulled as to such liability by any agreement
between the insurance carrier and the insured after
the occurrence of the injury or damage; no
statement made by the insured or on his behalf and
no violation of said policy shall defeat or void
said policy, and except as hereinafter provided, no
fraud, misrepresentation, assumption of liability
or other act of the insured in obtaining or
retaining such policy, or in adjusting a claim
under such policy, and no failure of the insured to
give any notice, forward any paper or otherwise
cooperate with the insurance carrier, shall
constitute a defense as against such judgment
creditor.
The Court of Appeals concluded that the disputed clause
of the policy made violated by the the statutory or on mandate his that and "no
no


statement

insured

behalf

violation of said policy shall defeat or void said policy."
MCL 257.520(f)(1); MSA 9.2220(f)(1). Acknowledging that an


insurer can declare a policy void ab initio if the insured
obtains the policy through intentional misrepresentation of a
material fact in the application process, the Court of Appeals
contrasted the present case, in which the policy was obtained
without initial untruth. 238 Mich App 607.


5


As indicated, MCL 257.520(f)(1); MSA 9.2220(f)(1) states
requirements for a "motor vehicle liability policy." However,
the analysis of the Court of Appeals omits MCL 257.520(g); MSA
9.2220(g), which limits that crucial term:
Any policy which grants the coverage required
for a motor vehicle liability policy may also grant
any lawful coverage in excess of or in addition to
the coverage specified for a motor vehicle
liability policy and such excess or additional
coverage shall not be subject to the provisions of
this chapter. With respect to a policy which
grants such excess or additional coverage the term
"motor vehicle liability policy" shall apply only
to that part of the coverage which is required by
this section." [Emphasis supplied.]
That concluding phrase ("the coverage which is required by
this section") means a policy of liability insurance as
specified in the earlier subsections of MCL 257.520; MSA
9.2220.
The effect of MCL 257.520(g); MSA 9.2220(g), therefore,
is to render MCL 257.520(f)(1); MSA 9.2220(f)(1), upon which
the Court of Appeals relied, inapplicable to the present case.
Ms. Cohen seeks arbitration of her uninsured motorist claim,
which all agree is optional coverage not required by statute.9
Because the term "motor vehicle liability policy" does not
apply to that portion of her ACIA policy, MCL 257.520(f)(1);
MSA 9.2220(f)(1), has no bearing on this matter.


9

Morley, 458 Mich 461.
6


IV
The Court of Appeals also noted that wage-loss benefits
are an element of "personal protection insurance" (PIP or
first-party) benefits, and must be included in any no-fault
policy. MCL 500.3105, 500.3107; MSA 24.3105, 24.13107.


Rohlman v Hawkeye-Security Ins Co, 442 Mich 520, 524-525; 502
NW2d 310 (1993). The Court cited Husted v Auto-Owners Ins Co,
459 Mich 500, 512; 591 NW2d 642 (1999), where we explained
that "a policy exclusion that conflicts with the mandatory
coverage requirements of the no-fault act is void as contrary
to public policy." 238 Mich App 607-608.


Continuing, the Court of Appeals rejected ACIA's argument
that, because uninsured-motorist coverage is optional, the
disputed clause can be effective in that context. In this


regard, the Court observed that the disputed clause voided all
coverages, including those that are not optional. App 608.
The Legislature requires a Michigan motorist to maintain
a no-fault policy that includes certain elements mandated by
law. Those required coverages are the bedrock of the no-fault
system and, as we have held on many occasions, are not subject
to removal by policy language that conflicts with the statute.
Once again, however, we observe that the present case concerns
uninsured-motorist coverage that is not required by statute.
In this regard, it is instructive to consider the full
paragraph of Husted, from which the previously quoted sentence
7
238 Mich


is drawn:
[T]he language of the no-fault act indicates
that it does not require residual liability
insurance to cover an insured's operation of any
vehicle. In other words, such coverage is not
mandatory under the no-fault act. This Court has
indicated that a policy exclusion that conflicts
with the mandatory coverage requirements of the no fault act is void as contrary to public policy.
Citizens Ins Co of America v Federated Mut Ins Co,
448 Mich 225, 232; 531 NW2d 138 (1995). However,
because the no-fault act does not mandate residual
liability coverage for an insured's operation of
any vehicle, it would not void an otherwise valid
and unambiguous exclusion, like the business-use
exclusion at issue here. [459 Mich 511-512
(emphasis in original).]
In the present case, we believe that the proper


application of these principles is evident.

Ms. Cohen seeks


uninsured-motorist benefits. ACIA denied those benefits under
a clause that, if applicable to this case, voids the entire
policy. and this Mindful of the great protection that the Legislature
Court have provided for the no-fault benefits


required by statute, we need not decide today the full extent
to which the disputed clause, if applicable, could void the
policy. We need only decide whether it can void uninsured It can. A contractual provision that


motorist coverage.

plainly governs the facts alleged to exist in this case is
enforceable to the extent that it is not contrary to law.
Citizens Ins Co of America v Federated Mut Ins Co, 448 Mich
225, 234; 531 NW2d 138 (1995).10


Citizens concerned the allocation of responsibility
between a car rental company and its customer. With regard to
that issue, Citizens is now controlled by State Farm Mut
8


10

V
For these reasons, we reverse in part the judgments of
the circuit court and the Court of Appeals,11 and we remand
this case to the circuit court for further proceedings that
are consistent with this opinion. CORRIGAN , C.J., and CAVANAGH , MCR 7.302(F)(1).
WEAVER , KELLY , TAYLOR , and


MARKMAN, JJ., concurred.
YOUNG , J., took no part in the decision of this case.


Automobile Ins Co v Enterprise Leasing Co, 452 Mich 25; 549
NW2d 345 (1996).
We "reverse in part" because the second question in
this case-whether ACIA's counterclaim should be sent to
arbitration-is not before us.
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