October 9, 2026
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seva firm
CURE v. Sanders: Innocent Misrepresentation About Vehicle Ownership Can Support Rescission of a No-Fault Policy
By Pratheep Sevanthinathan, Esq. The Seva Law Firm
Case: Citizens United Reciprocal Exchange v. Sanders, Nos. 372671 & 372672 (Mich. Ct. App. Oct. 9, 2026) (Unpublished)
Court: Michigan Court of Appeals
Panel: Gadola, C.J., and O’Brien and Mariani, JJ.
Decision: Reversed and Remanded — Per Curiam
Lower Court: Wayne Circuit Court, Case Nos. 23-008463-CK and 22-013148-NI
- Introduction
The Michigan Court of Appeals has reinforced an important rule governing rescission of no-fault insurance policies: an insurer relying on innocent misrepresentation does not have to prove that the applicant intended to deceive it. In Citizens United Reciprocal Exchange v. Sanders, the Court held that the insured’s incorrect statement that she solely owned and registered two leased vehicles was material as a matter of law where the insurer presented unrebutted evidence that a nonresident, nonrelative fiancé was actually a co-owner and that the insurer would have declined the risk had the truth been disclosed.
The decision does not itself rescind the policy. Instead, it reverses the denial of the insurer’s summary-disposition motion and sends the case back to the trial court to decide, in equity, whether rescission should be imposed as to the parties involved.
- Facts
Toneysha Sanders applied to CURE Auto Insurance for a policy covering a Ford Explorer and a Ford Expedition. For each vehicle, the application asked whether it was solely owned by and registered to the applicant. Sanders answered “Yes.” The application also identified the vehicles as leased.
CURE issued the policy. Soon afterward, Sanders was involved in an accident while driving the Explorer with her sister, Varnesha Sanders, and her minor daughter, AT, as passengers.
During its investigation, CURE learned that Sanders’s fiancé, Janorris Hopkins, was a co-owner and coregistrant of both vehicles. Hopkins did not live with Sanders, and they were not yet married. CURE’s underwriting manager testified that CURE does not insure vehicles with nonrelative, nonresident co-owners and would have declined the policy had Sanders disclosed Hopkins’s ownership interest.
CURE sought summary disposition and rescission based on innocent misrepresentation. The trial court denied the motion, reasoning that Sanders may have been confused about whether a coregistrant or lessee was an “owner,” creating a factual dispute about fraud. CURE appealed.
- Issues
The principal issue was whether a genuine issue of material fact existed concerning rescission when the application incorrectly represented that Sanders alone owned and registered the vehicles, but the evidence showed that her fiancé was a co-owner and coregistrant.
The Court also had to determine whether Sanders’s possible confusion, or the absence of evidence that she intended to deceive CURE, prevented summary disposition under an innocent-misrepresentation theory.
- Holding
The Court of Appeals reversed. It held that the record established, without a genuine factual dispute, that Sanders made a material misrepresentation and that CURE relied on it when issuing the policy.
Documents associated with the title, registration, and lease showed that Sanders and Hopkins applied as lessees and that Hopkins held an ownership interest in the Explorer. Sanders also admitted in her deposition that both vehicles were registered in both names. The Court relied on Michigan’s statutory definition of an owner, which includes a person with the right to exclusive use of a vehicle under a lease lasting more than 30 days.
The misrepresentation was material because CURE’s underwriting manager testified that the company would not insure a vehicle co-owned by a nonrelative who did not reside with the applicant. She further testified that CURE relied on Sanders’s representation of sole ownership when issuing the policy. The opposing parties offered no evidence disputing Hopkins’s co-ownership or CURE’s underwriting evidence.
Most importantly, the Court explained that intent to deceive is not an element of innocent misrepresentation. Even if Sanders misunderstood the application’s ownership question, that would not alter the legal effect of an innocent but material misstatement on which the insurer relied. The trial court therefore applied the wrong framework when it focused on whether Sanders was confused or acted fraudulently in the intentional sense.
The Court did not order rescission outright. A showing of material misrepresentation and reliance makes rescission potentially available, but rescission remains an equitable remedy. The case was remanded for the trial court to exercise its discretion and determine whether the policy should be rescinded as to the affected parties. The Court declined to address CURE’s separate uninsured/underinsured motorist argument because that issue was outside the scope of the leave granted.
- Conclusion
The Court of Appeals reversed the order denying CURE’s motion for summary disposition and remanded the case. There was no genuine issue of material fact that Sanders incorrectly represented that she was the sole owner and registrant, that the information was material to CURE’s underwriting decision, and that CURE relied on it. The trial court must now decide whether equity warrants rescission and how that remedy applies to the parties involved.
- What Does This Mean for Our Clients?
Accuracy on an insurance application matters, even when a mistake is unintentional. An insurer proceeding under innocent misrepresentation does not need to prove that an applicant lied deliberately. An incorrect answer may support rescission if it was material and the insurer relied on it.
Ownership and registration questions should be answered with particular care. A person who signs a lease, has a right to use the vehicle for more than 30 days, or appears as a coregistrant may qualify as an owner under Michigan law. Everyday assumptions about who “really owns” a leased vehicle may not match the legal definition.
The insurer still must prove materiality and reliance. It is not enough for an insurer merely to identify an error. The insurer must show that truthful information would have caused it to reject the risk, charge a different premium, or issue a different contract, and that it actually relied on the incorrect answer.
Rescission is not automatic. Even after the insurer establishes the elements supporting rescission, the trial court must decide whether to grant that equitable remedy and how it affects the parties. The interests of passengers, family members, medical providers, and other claimants may require careful analysis.
If your insurer has denied no-fault benefits or is attempting to rescind your policy based on an application answer, contact The Seva Law Firm. These disputes are fact-intensive, and early review of the application, registration records, underwriting evidence, and the parties’ rights can make a significant difference.
Pratheep Sevanthinathan is the owner and managing attorney of The Seva Law Firm, located at 100 W. Big Beaver Rd, Suite 500, Troy, MI 48084. He can be reached at (248) 385-5704.
This article is for informational purposes only and does not constitute legal advice. Every case is different, and past results do not guarantee future outcomes.