Michigan Families Shocked by Insurance Claim Denials: Are Children Covered If They Aren’t Listed on the Policy?

Michigan Car Accident Lawyer Explains Child Coverage Denials in No-Fault Claims

A recent Michigan news story raised serious concerns for families across the state. According to reports, parents involved in car accidents were told their insurance claims could be denied because their young children were not specifically listed on the auto insurance policy—even though the children lived in the household, were passengers in the vehicle, and would not be old enough to drive for a decade or more. If your family is facing a denial after a crash, speaking with a Michigan Car Accident Lawyer can help you understand your rights and next steps

For many Michigan parents, myself included, this came as a surprise. My 5-year-old daughter and 2-year-old son don’t drive, and not only because they can’t reach the pedals or see over the steering wheel. They won’t be able to obtain driver’s licenses for over a decade. Most families reasonably assume their children are covered simply by being members of the household. It is common practice to add children to an auto insurance policy once those children begin legally driving.

So what’s really going on here? And what should Michigan residents do if they face a similar situation?

From a legal perspective, this issue highlights the importance of understanding both Michigan’s no-fault law and the fine print of auto insurance policies.

What Happened in These Cases?

Multiple families involved in motor vehicle accidents in 2023 and 2024 submitted standard post-accident insurance claims. Afterward, the insurance companies denied coverage because the children injured in the crash were not individually listed on the policy as household members, which the insurance companies treated as a material misrepresentation. After denying coverage, the insurers retroactively voided the policies, invalidating them entirely.

The families were stunned to learn that insurers were relying on policy language—rather than common sense—to argue that coverage could be limited or denied.

This has understandably caused confusion and fear among Michigan drivers, especially parents, many of whom are accustomed to adding their children to auto policies once those children are old enough to drive.

Why Insurance Companies Are Raising This Issue

Auto insurance policies are contracts. Many insurers include provisions, often buried in the fine print, requiring policyholders to list all household members, even non-drivers, regardless of age.

From the insurer’s standpoint, they argue that:

• Household composition and family size affect risk assessment
• Failure to list all household members regardless of age may be considered a material omission
• Certain coverages may be impacted if disclosure requirements are not met

It has long been the law in Michigan that an insurer is entitled to rescind and retroactively void a policy when the policyholder makes a material misrepresentation in an application for no-fault insurance. Lash v. Allstate Ins. Co., 210 Mich. App. 98, 103; 532 N.W.2d 869 (1995). The Court of Appeals has explained “[r]escission is justified without regard to the intentional nature of the misrepresentation, as long as it is relied upon by the insurer. Reliance may exist when the misrepresentation relates to the insurer’s guidelines for determining eligibility for coverage.” Lake States Ins. Co. v. Wilson, 231 Mich. App. 327, 331; 586 N.W.2d 113 (1998).

In this context, the number and ages of minor children in your household could relate to your “insurer’s guidelines for determining eligibility for coverage.” However, just because an insurer raises this issue does not automatically mean a denial is proper or lawful.

What Michigan Law Says — And Why This Gets Complicated

Michigan operates under a no-fault auto insurance system, which requires Personal Injury Protection (PIP) benefits to be available to people injured in auto accidents, regardless of fault. Michigan’s No-Fault Act, MCL § 500.3114(1), mandates coverage for a resident relative domiciled with a policyholder. 

Under Michigan law:

• Resident relatives are generally entitled to PIP benefits
• Minor children are typically considered resident relatives of their parents
• The No-Fault Act itself does not expressly require toddlers or young children to be named on the policy to receive basic PIP benefits
• The Michigan Insurance Code permits insurance companies to set rates for PIP coverage based on the “number of dependents of income earners insured under their policy” (MCL § 500.2111(2)(b)(ii))

The legal conflict arises when insurance companies rely on policy language to impose additional disclosure requirements that go beyond what most consumers expect.

This creates a gray area between:

• Statutory no-fault obligations, and
• Contractual provisions written by insurers

Generally, contractual provisions in an insurance policy that conflict with Michigan statutes are invalid. Corwin v. DaimlerChrysler Ins. Co., 296 Mich. App. 242, 261; 819 N.W.2d 68 (2012). Disputes over entitlement to no-fault benefits are highly fact-specific and often require legal analysis to determine whether the insurer’s position is enforceable. 

What a Coverage Denial Could Mean for a Family

If an insurer improperly denies or limits coverage after a serious accident, the consequences can be severe:

• Medical bills may go unpaid
• Ongoing treatment for injured children could be delayed
• Families may face pressure from medical providers to pay expenses out of pocket
• Policies may be threatened with cancellation or rescission

Importantly, a denial letter is not the final word.

What To Do If Your Child’s Claim Is Questioned or Denied

1. Do Not Assume the Insurance Company Is Right

Insurance companies are not neutral decision-makers. You have the right to challenge their initial determination.

2. Request the Exact Policy Language in Writing

Ask the insurer to identify:

• The specific policy provision they are relying on
• How that provision applies to a minor child
• Whether the denial affects PIP coverage, liability coverage, or both

3. Review the Declarations Page Carefully

In your policy’s Declarations Page, look for:

• Definitions of “insured,” “resident relative,” and “household member”
• Any endorsements or exclusions
• Disclosure requirements pertaining to who must be identified in your policy

4. Document Everything

Keep copies of anything you send to or receive from your insurer, including:

• Policy documents
• Emails and letters
• Claim notes
• Medical bills and treatment records

5. Speak With an Attorney Experienced in Michigan’s Auto Insurance Laws

Coverage disputes involving children, resident relatives, and no-fault benefits often require legal intervention—especially when insurers attempt to deny statutorily mandatory benefits. An attorney can assess:

• Whether your policy’s language is ambiguous
• Whether the insurance company’s denial violates Michigan no-fault law
• Whether the insurer acted improperly or in bad faith

How Michigan Families Can Protect Themselves Going Forward

To avoid disputes like this:

• Ask your insurance agent directly whether all household members, including children, must be listed
• Update your policy after major life changes (births, moves, custody changes)
• Review your declarations page annually
• Do not assume coverage — confirm it
• If something seems unclear, get clarification in writing.

A Final Legal Perspective

This issue underscores a larger problem: insurance policies are often written in ways that consumers do not fully understand until something goes wrong. Not only are they intentionally vague, but oftentimes they are dozens of pages long with critical policy language buried in fine print. However, in the event of a dispute over coverage, policyholders are deemed to have read and understood virtually everything in their policy.

Families should not wait until after a serious accident to learn about or identify gaps in their motor vehicle insurance—especially when children are involved. At that point, it may already be too late.

If you or your child were injured in a car accident and your insurance company is questioning coverage, do not ignore it and do not accept the first answer without review. The stakes are simply too high. Contact a Michigan Car Accident Lawyer like Giroux Pappas Trial Attorneys. We can help.

ABOUT THE AUTHOR

Giroux Pappas Trial Attorneys | Farmington Hills, MI | Serving All of Michigan | 248-531-8665