State RegulationsMI specificDifficulty 3/5
2 years and 6 months after a Michigan accident and health policy was issued, the insurer denies a claim on the ground that the loss stemmed from a preexisting condition. The application never named that condition as an exclusion. Under M.C.L. 500.3408, is the denial proper?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under M.C.L. 500.3408, once the time limit on certain defenses has run — capped at 2 years for non-health disability policies in Michigan — claims arising from preexisting conditions cannot be denied unless the policy specifically excluded the condition by name in the application. Because the application here named nothing, the denial is improper after the limit expired.
Why the other options are wrong
- A: A blanket right to deny preexisting claims after the defense period is exactly what the statute takes away.
- B: 3 years is the superseded model text; Michigan caps the defense period at 2 years for non-health disability policies.
- C: Premium payment history is irrelevant to this preexisting-condition defense; the controlling factor is the expired time limit and the unnamed condition.
Memory hook
After the clock runs out, silence in the application becomes the insured's shield.