Policies Issued After June 11, 2019 Must Step Up to $250,000/$500,000 Bodily Injury Minimums After July 1, 2020: The Michigan Supreme Court’s Textual Re-Reading of MCL 500.3009 in Bonter v. Progressive

Policies Issued After June 11, 2019 Must Step Up to $250,000/$500,000 Bodily Injury Minimums After July 1, 2020: The Michigan Supreme Court’s Textual Re-Reading of MCL 500.3009 in Bonter v. Progressive

Introduction

In Cody Bonter v. Progressive Marathon Insurance Company, the Michigan Supreme Court addressed whether the 2019 reforms to Michigan’s no-fault act—specifically the heightened minimum bodily injury (BI) liability limits in MCL 500.3009 enacted by 2019 PA 21 and 2019 PA 22—apply midterm to automobile liability policies that were delivered before July 2, 2020 but after the amendments’ effective date (June 11, 2019). The policy at issue, issued June 19, 2020 for a six-month term (June 20–December 20, 2020), carried the pre-reform $20,000/$40,000 BI limits throughout its term. The accident occurred on July 25, 2020.

The key question: Must a policy delivered after June 11, 2019 include a “step-up” to the post–July 1, 2020 statutory minimum BI limits of $250,000/$500,000 for that part of the term occurring on or after July 2, 2020, absent a valid opt-down selection under MCL 500.3009(5)?

The Supreme Court answered yes, reversing the Court of Appeals’ contrary reading (which had followed Progressive Marathon Ins Co v. Peña) and holding that the statute’s structure requires policies delivered after June 11, 2019 to be “subject to all” of the specified limits—meaning the policy must satisfy both the “before July 2, 2020” minimums and, for the portion of the term after July 1, 2020, the elevated minimums—unless an insured validly opts down after July 1, 2020.

Parties: Plaintiffs (injured motorists) Cody Bonter and Kaytlin Jackman; Defendant-Insurer Progressive Marathon Insurance Company; Defendant/Cross-Defendant insured, Taylon Williams. The Court reversed the Court of Appeals and remanded for consideration of Progressive’s remaining arguments. Justice Zahra dissented (joined by Justice Welch). Justices Bernstein and Hood took no part.

Summary of the Opinion

  • The Court reverses the Court of Appeals’ judgment that the 2019 increased BI minimums do not apply to policies delivered or issued before July 2, 2020.
  • Textual holding: Under MCL 500.3009(1), as amended effective June 11, 2019, an auto liability policy “must not be delivered or issued for delivery” unless its liability coverage “is subject to all of the following limits.” Subsections (1)(a) and (1)(b) define those limits across two time periods:
    • Before July 2, 2020: minimum BI limits of $20,000 per person and $40,000 per accident.
    • After July 1, 2020: minimum BI limits of $250,000 per person and $500,000 per accident.
  • A policy delivered after June 11, 2019 must incorporate both sets of limits so that, as of July 2, 2020, the policy provides at least $250,000/$500,000, unless the insured makes a valid opt-down election under Subsection (5) “after July 1, 2020.”
  • Progressive’s policy issued June 19, 2020 (effective June 20–December 20, 2020) provided only $20,000/$40,000 for the entire term and therefore failed to comply with the statutory minimums for the post–July 1, 2020 period.
  • The Court rejects the Court of Appeals’ contrary reading in Peña, reasoning that the dates in (1)(a)-(b) define the “limits” on coverage, not the timing of delivery or issuance.
  • The Court rejects reliance on Department of Insurance and Financial Services (DIFS) website guidance that conflicted with this reading, reiterating that agency guidance cannot rewrite a statute’s plain text.
  • Remand: The case returns to the Court of Appeals to address Progressive’s remaining arguments (the Supreme Court did not reach whether a July 6, 2020 “replacement vehicle” change constituted a new delivery or issuance).

Analysis

Precedents and Authorities Cited and Considered

  • Progressive Marathon Ins Co v. Peña, 345 Mich App 270 (2023): The Court of Appeals had held that the heightened BI minimums do not apply to policies issued before July 2, 2020, even if the term extended beyond that date. The Supreme Court expressly rejects the Peña panel’s interpretive approach, holding that it conflicts with the statute’s plain language and structure. A separate appeal in Peña was held in abeyance; this order signals Peña’s reasoning cannot stand.
  • Farrington v. Total Petroleum, Inc., 442 Mich 201 (1993): The Court quotes Farrington for the principle that courts cannot assume the Legislature inadvertently omitted language used elsewhere and then supply it by interpretation. Here, other no-fault amendments expressly tied application to policies “issued or renewed after July 1, 2020.” The absence of that phrase in MCL 500.3009(1) is meaningful.
  • In re Complaint of Rovas Against SBC Michigan, 482 Mich 90 (2008): Stands for the proposition that while agency interpretations may be afforded respectful consideration, they cannot alter unambiguous statutory text. The Court relies on Rovas to discount DIFS website guidance that suggested the higher BI minimums apply only to policies issued or renewed after July 1, 2020.
  • Wells v. Detroit Auto Inter-Ins Exch, 29 Mich App 235 (1970): Cited in the dissent (and noted in the Supreme Court’s footnote declining to reach the issue) for the proposition that swapping a vehicle under a “replacement auto” clause does not constitute delivery of a new policy. The majority did not reach this question.
  • Related 2019 no-fault reforms:
    • MCL 500.3107c (PIP level selections for policies “issued or renewed after July 1, 2020”)
    • MCL 500.3107d (qualified persons may decline PIP for policies “issued or renewed after July 1, 2020”)
    • MCL 500.3109a(2) (offer of qualified health coverage exclusion “for an insurance policy issued or renewed after July 1, 2020”)
    • MCL 500.3135(3)(c) (expanded tort liability for allowable expenses exceeding selected PIP limits or without limit if PIP declined)
    • MCL 500.2105, 500.2111f, 500.3104 (timing and rate-filing provisions around July 1, 2020)
    The majority uses textual differences across these statutes to underscore that where the Legislature intended application only to policies “issued or renewed after July 1, 2020,” it said so; in MCL 500.3009(1), it did not. The dissent sees these provisions as a coordinated package that should be read in pari materia to apply together only to policies issued or renewed after July 1, 2020.

Legal Reasoning

The Court adopted a textual and structural reading of MCL 500.3009(1):

  • Subsection (1) sets a condition on delivery or issuance of a policy: it “must not be delivered or issued for delivery” unless “the liability coverage is subject to all of the following limits.” The phrase “all of the following limits” refers to what follows—Subsections (1)(a)-(c)—which define the required minimum coverage limits across categories and time periods.
  • Subsections (1)(a) and (1)(b) do not modify the clause “must not be delivered or issued for delivery.” Rather, they specify the minimum BI limits that must be built into the policy’s coverage, delineated by date:
    • Before July 2, 2020: $20,000/$40,000
    • After July 1, 2020: $250,000/$500,000
    Because Progressive issued the policy after the amendments’ effective date (June 11, 2019), Subsection (1) required that its coverage be “subject to all” of these limits—meaning the policy had to step up to $250,000/$500,000 for any accident occurring after July 1, 2020, unless a valid opt-down applied.
  • “Subject to subsections (5) to (8)” aligns with this reading. Subsections (5)-(8) are operative only after July 1, 2020:
    • Subsection (5): After July 1, 2020, an applicant or named insured may choose lower BI limits than those in (1)(a)-(b), but not lower than $50,000/$100,000, by completing a director-issued form.
    • Subsection (6): After July 1, 2020, on application for issuance or renewal, the insurer must present options, prices, and the election form.
    • Subsection (7): Specifies content of the election form.
    • Subsection (8): After July 1, 2020, if a policy is issued or renewed and the insured has not made an effective choice under (5), the higher limits under (1)(a)-(b) apply.
    The majority stresses that Subsection (5) textually extends to any “applicant for or named insured in [a] policy described in subsection (1),” not only to those first seeking a policy after July 1, 2020. Thus, even for policies issued before July 2, 2020, insureds could opt down after that date; absent an effective choice, the $250,000/$500,000 minimums apply for the post–July 1, 2020 period.
  • Contrast with other provisions: Where the Legislature wanted reforms to apply only to policies “issued or renewed after July 1, 2020,” it said so (e.g., in MCL 500.3107c and 500.3107d). The absence of that phrasing in MCL 500.3009(1), coupled with the “subject to all of the following limits” structure, supports the conclusion that the BI minimums are coverage limits that vary by date within a policy term, not preconditions tied to the date of delivery or renewal.
  • Policy rationale: Once PIP coverage choices could reduce first-party benefits (effective on or after July 2, 2020), at-fault drivers faced heightened tort exposure for medical expenses not covered by reduced PIP. The Legislature could reasonably have ensured that all policies already subject to the amended statute provided higher default BI limits for the post–July 1, 2020 period unless the insured affirmatively opted down.
  • Agency guidance: DIFS’s FAQ stating the new BI limits become effective “for policies that are issued or renewed after July 1, 2020” cannot override the statute’s text; courts are bound by the Legislature’s words.

The Dissent’s View (Justice Zahra, joined by Justice Welch)

The dissent would have affirmed the Court of Appeals and adhered to Peña. Its key points:

  • MCL 500.3009(1) is imprecisely drafted. Read in context—with Subsections (5)-(8) and the broader 2019 no-fault reforms—the “after July 1, 2020” language in (1)(a)-(b) should be read as modifying “delivered or issued for delivery.” That is, coverage limits of $250,000/$500,000 apply only to policies delivered or issued after July 1, 2020.
  • Because Subsections (5)-(8) all begin “After July 1, 2020,” the Legislature structured opt-down mechanics, disclosure duties, and default rules around issuance or renewal after July 1, 2020. If higher BI limits applied midterm to pre–July 2, 2020 policies, (6)’s disclosure obligations would not be triggered and insureds would be deprived of the statutorily contemplated information and process to opt down.
  • Contemporaneous no-fault reforms (PIP selections in MCL 500.3107c, PIP opt-out in 500.3107d, health coverage exclusion in 500.3109a(2), expanded tort in 500.3135) all expressly apply to policies “issued or renewed after July 1, 2020,” suggesting a coordinated scheme that should not split BI minimums from the rest of the package.
  • DIFS guidance mirrored this integrated approach; insurers relied upon it. Forcing a midterm increase to 12.5x the BI limits without additional premium is inequitable and not what the Legislature contemplated.
  • On the “replacement vehicle” dispute, the dissent agrees with the Court of Appeals that the July 6, 2020 vehicle swap under a “replacement auto” clause did not constitute issuance of a new policy.

Impact and Practical Consequences

The decision is a consequential, text-focused reconfiguration of BI minimums across the transition to the 2019 reforms. Key implications include:

  • Immediate coverage effect:
    • Any auto liability policy delivered or issued for delivery on or after June 11, 2019 must be read to include:
      • Minimum BI limits of $20,000/$40,000 through July 1, 2020; and
      • Minimum BI limits of $250,000/$500,000 on and after July 2, 2020, unless the insured made a valid opt-down election under MCL 500.3009(5) after July 1, 2020.
    • Policies that did not include a midterm “step-up” are noncompliant; as a matter of Michigan law, nonconforming policy terms are reformed to meet statutory minimums. Expect BI limits to be deemed at least $250,000/$500,000 for accidents occurring on or after July 2, 2020 under such policies.
  • Retroactive claims exposure:
    • Insurers may face increased exposure on pending or recently resolved BI claims arising from accidents after July 1, 2020 where the underlying policies were delivered between June 11, 2019 and July 1, 2020 and carried only 20/40 limits.
    • Whether settled claims can be reopened depends on settlement terms, releases, and procedural posture; counsel should assess res judicata, accord and satisfaction, and statute of limitations constraints before attempting to revisit closed files.
  • Underwriting and policy drafting:
    • Policies must be drafted to incorporate dynamic minimums keyed to statutory dates—i.e., to be “subject to all” applicable limits. Step-up provisions should be explicit to avoid disputes.
    • Insurers should maintain clear records of any post–July 1, 2020 opt-down elections under MCL 500.3009(5), including director-approved forms and disclosures of options and prices.
  • Agency guidance vs. statutory text:
    • DIFS FAQs that suggested the higher BI limits applied only to policies issued or renewed after July 1, 2020 cannot override statutory text. Insurers that followed that guidance may nevertheless be held to statutory minimums.
    • Going forward, align policy forms and practices with statutory language rather than web-based guidance where the two diverge.
  • Peña’s vitality:
    • Although the Supreme Court’s order does not formally overrule Peña in a separate opinion, it directly rejects its rationale. The Court of Appeals is bound to proceed “not inconsistent with” this order and should treat Peña as superseded.
  • Open questions on remand:
    • The Court remanded for the Court of Appeals to consider Progressive’s remaining arguments. Potential issues may include whether any valid opt-down occurred after July 1, 2020, and any case-specific defenses or procedural points.
    • The Supreme Court expressly did not decide whether a midterm “replacement vehicle” endorsement constitutes a new policy “delivery” or “issuance”; the dissent would answer no under Wells.
  • Interaction with PIP and tort reforms:
    • The majority decouples the BI minimums from the “issued or renewed after July 1, 2020” triggers that govern PIP elections, noting that textual variation across statutes is deliberate. Thus, even if PIP reforms apply only to post–July 1, 2020 issuance or renewal, BI minima still step up midterm after July 1, 2020 for policies delivered after June 11, 2019, unless opted down.

Complex Concepts Simplified

  • No-fault system: Michigan’s framework where injured persons primarily recover medical and wage-loss benefits from their own insurer (PIP), while tort suits are limited but still possible for certain damages and thresholds.
  • Bodily Injury (BI) liability limits: The maximum amounts an auto policy will pay to third parties for injury or death caused by the insured’s negligence. The 2019 reforms raised the default minimums from $20,000/$40,000 to $250,000/$500,000.
  • “Delivered or issued for delivery”: Statutory language referring to the insurer providing the policy to the insured. It is the trigger in MCL 500.3009(1) for requiring the policy’s liability coverage to be “subject to” the mandated limits.
  • “Subject to all of the following limits”: A structural phrase in MCL 500.3009(1) that incorporates everything that follows (Subsections (1)(a)-(c)), including the date-based BI minima, as the mandatory limits the policy’s coverage must meet.
  • Opt-down (MCL 500.3009(5)): After July 1, 2020, an applicant or named insured may choose BI limits lower than the default $250,000/$500,000 but not lower than $50,000/$100,000, using a director-approved form with specified warnings.
  • Agency deference (Rovas): Courts may consider but are not bound by agency interpretations, particularly when statutory text is clear.
  • Reformation to statutory minimums: As a general rule, when policy terms conflict with statutory minimum requirements, courts read the policy as if it contained the statutory minimums.

Conclusion

Bonter v. Progressive establishes a clear textual rule: For any automobile liability policy delivered or issued for delivery after June 11, 2019, the policy’s BI coverage must be “subject to all” statutory minimum limits, which means it must automatically step up to at least $250,000/$500,000 for the portion of the policy term on and after July 2, 2020, unless the insured validly opts down after July 1, 2020 under MCL 500.3009(5). The Court’s reading rejects the Court of Appeals’ Peña framework, declines to import “issued or renewed after July 1, 2020” language that appears elsewhere but not in MCL 500.3009(1), and treats agency guidance as non-controlling when it diverges from statutory text.

Practically, the decision may expand insurers’ BI exposure on accidents occurring after July 1, 2020 under policies delivered between June 11, 2019 and July 1, 2020 that did not include a step-up or a valid opt-down. It also realigns policy drafting and claims handling with the statute’s internal structure and timing. While the dissent viewed the 2019 no-fault reforms as a coordinated suite applicable only to post–July 1, 2020 issuances or renewals, the majority’s approach emphasizes textual distinctions chosen by the Legislature and the ordinary meaning of “subject to all of the following limits.”

The case returns to the Court of Appeals for further proceedings consistent with this order. Going forward, stakeholders should audit policies and claims from the 2019–2020 transition window, ensure robust opt-down processes and records, and harmonize forms and practices with the statute’s date-based coverage requirements. The decision marks a significant clarification in Michigan’s no-fault regime regarding how and when the elevated BI minimums apply.

Case Details

Year: 2025
Court: Supreme Court of Michigan

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