Michigan No-Fault Rescission After Sherman v. Progressive (2026)

By Attorney Manny Chahal · Updated May 2026 · Reading time: ~9 min

On April 20, 2026, a unanimous Michigan Supreme Court handed Progressive a clean win in Sherman v. Progressive Michigan Insurance Co., Docket No. 167826, sharpening when an auto insurer may rescind a Michigan no-fault policy ab initio for material misrepresentations made on the application. For injured drivers in Michigan, the takeaway is sobering: an inaccurate garaging address, an undisclosed household resident, or a hidden driver on the application can erase your PIP benefits after a serious crash, even if the misstatement was innocent.

What Sherman v. Progressive actually decided

Janice Sherman bought a Progressive no-fault policy in November 2020 covering a Cadillac and a Chrysler. On the application she listed Clinton Township as her residence and garaging address and identified herself as the sole resident and the sole driver. After she was injured as a passenger in a July 2021 rear-end collision and submitted a PIP claim, Progressive’s investigation found that Sherman actually lived in Detroit with her adult son, garaged one of the vehicles at her brother’s address, and had additional resident relatives she never disclosed. Accurate information would have driven the premium up by 83.2%. Progressive denied the claim, rescinded the policy ab initio, and refunded the $1,491.54 in premiums Sherman had paid.

The trial court granted Sherman summary disposition. The Court of Appeals reversed, and the Michigan Supreme Court affirmed the Court of Appeals. The Justices held that the trial court had abused its discretion by denying rescission and that, on these facts, Progressive was entitled to walk away from the contract.

How Sherman fits into Michigan’s rescission case law

Step 1: Titan v. Hyten (2012) buried the “easily ascertainable” rule

For years, Michigan courts had refused to let an insurer rescind a policy when the misrepresentation on the application was something the carrier “could have easily ascertained” with basic due diligence. The Michigan Supreme Court ended that doctrine in Titan Ins. Co. v. Hyten, 491 Mich 547; 817 NW2d 562 (2012), holding that an insurer has no duty to investigate or verify the applicant’s representations and may seek rescission notwithstanding that the fraud could have been discovered.

Step 2: Bazzi v. Sentinel (2018) protected innocent third parties — sometimes

In Bazzi v. Sentinel Ins. Co., 502 Mich 390; 919 NW2d 20 (2018), the Court confirmed that the old “innocent third-party rule” no longer survives in no-fault cases. But the Court added a critical equitable step: rescission is not automatic against third-party claimants. The trial court must separately balance the equities between the insurer and each third-party claimant before allowing the policy to be voided as to that person. Courts now refer to those equitable considerations as the Markman factors, after the named plaintiff in Pioneer State Mutual Insurance Co. v. Wright.

Step 3: Meemic v. Fortson (2020) walled off post-claim fraud

The Court drew a different line in Meemic Ins. Co. v. Fortson, 506 Mich 287 (2020). A policy provision purporting to rescind coverage based on a claimant’s post-procurement misrepresentations — for example, padded attendant care invoices submitted after a crash — is inconsistent with the no-fault act and unenforceable as to mandatory PIP benefits. Only fraud that induced the contract or its inception supports rescission of the mandatory coverages.

Step 4: Sherman (2026) cements the framework and fixes the procedure

Sherman did not overturn Bazzi, Meemic, or Titan. It synthesized them. It also resolved a recurring procedural muddle: lower courts had been applying a clear-error standard to “factual findings” on rescission motions under MCR 2.116(C)(10), even though summary disposition under that rule involves no factual findings at all. The Supreme Court directed appellate courts to (a) review de novo whether the record establishes no genuine issue of material fact, and then (b) review the rescission ruling itself for abuse of discretion.

What this means for Michigan injury claimants

The headline risk is straightforward: if an insurer finds a material misstatement on the application after a crash, your PIP claim can be wiped out retroactively. Premiums get refunded; medical bills and wage loss do not. Practical implications:

• Garaging address matters. Listing a suburban garaging address while the vehicle actually lives in a higher-rated ZIP code is a textbook material misrepresentation. Insurers price by territory; the rating difference is the materiality.
• Resident relatives matter. Failing to disclose a teen driver or any household member who could regularly use the vehicle changes the underwriting profile. Sherman lists this in the same paragraph as the address issue.
• “Innocent” misstatements still support rescission. The Court did not require willful fraud. Materiality plus reliance is enough — consistent with the rule restated in Titan.
• Passenger and resident-relative claimants are not automatically out. Bazzi’s equity-balancing step survives Sherman. If a passenger or resident relative is an innocent third party, the trial court must weigh the equities separately before allowing the policy to be voided against that person.
• Post-claim PIP padding is still its own remedy. Meemic still controls post-procurement misconduct — rescission of mandatory PIP based solely on a post-claim misrepresentation remains off the table.

Step-by-step: how a rescission defense plays out

1. Insurer issues the denial

The first sign is a rescission letter with a check for the refunded premium. Do not cash the check without counsel — depending on how it is endorsed, cashing it can be argued as ratification.

2. PIP suit or Assigned Claims petition

If the policy is voided ab initio as to the injured person, that person becomes uninsured. The next step is usually the Michigan Automobile Insurance Placement Facility (MAIPF) under the Assigned Claims Plan, MCL 500.3173a. Be aware: MCL 500.3173a’s own fraud provision allows the assigned-claims plan to deny benefits for a “false statement of material fact” made in support of the claim.

3. Discovery and the materiality fight

Plaintiff’s counsel will pursue the underwriting record. The carrier has to show (a) the statement was false, (b) it was material, and (c) the insurer relied on it — meaning it would have issued a different contract or no contract at all. The 83.2% premium delta in Sherman is now the textbook materiality benchmark.

4. The Bazzi equity hearing

For each third-party claimant, the trial court evaluates the Markman factors — the claimant’s relative innocence, whether the claimant relied on the apparent existence of coverage, the carrier’s diligence, and any prejudice that rescission would cause to the claimant. Sherman left this analysis untouched.

5. Deadlines do not stop running

Even if your priority insurer denies on rescission, you still have to file timely. The one-year-back rule and one-year statute under MCL 500.3145 keep ticking. Tort claims for noneconomic damages have a three-year clock under MCL 600.5805(2).

What Sherman did not change

Sherman is narrow in its substantive reach. It did not:

• Touch the Bazzi balancing. Third-party claimants still get a separate equity analysis. The trial court cannot rubber-stamp rescission across every claimant on the policy.
• Reach post-procurement fraud. Meemic still controls. A bad attendant-care invoice submitted after a crash does not, by itself, rescind mandatory PIP coverage.
• Modify the priority rules. MCL 500.3114 still governs the order in which insurers pay PIP — including the motorcycle priority cascade applied in Mary Free Bed v. Esurance.
• Alter the one-year-back rule. The PIP look-back limit in MCL 500.3145 still applies, as does the tolling rule from Spine Specialists v. MemberSelect Ins. Co.
• Touch tort thresholds. Serious-impairment cases under MCL 500.3135 and McCormick v. Carrier, 487 Mich 180 (2010), continue under the existing three-prong test.

Practical drafting tips for the application itself

The cleanest defense to a rescission claim is a clean application. A short checklist:

• Garaging address. Use the ZIP code where the vehicle actually spends the night. If it splits time between two addresses, ask the agent how to disclose it and document the answer in writing.
• Resident relatives. List every household member of driving age, even occasional users. Carriers cross-reference DMV records.
• Named drivers. Include anyone with regular access to the keys, not just titled owners.
• Prior claims and tickets. Disclose the full record; carriers pull MVRs anyway.
• Premium financing. If a premium-finance company is involved, retain the entire application packet they used to bind the policy.

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