A young man, 22, got drunk. He got on a motorbike. He injured himself, severely. He submitted the medical bills to his insurer, but the policy excluded "[s]ervices, supplies, care or treatment of any injury or [s]ickness which occurred as a result of a Covered Person’s illegal use of alcohol."
Tough case, no? Does an accident as a result of drunk driving - an illegal act - constitute "illegal use of alcohol"? As it happens, according to the Sixth Circuit, no it does not: "illegal use" is "illegal consumption," not the after-effects. The opinion is here, and I should note it is very well-written.
Distantly related Sixth Circuit case: Palmer Park Square v. Scottsdale Insurance. Palmer Park Square had a fire; Scottsdale was, allegedly, late in paying. Michigan, like Texas (see summary below) has a steep interest rate for insurers who are slow in paying.
Palmer Park Square's insurance policy requires claims "under the policy" to be brought within two years. Palmer Park Square brought its claim for interest more than two years later, but less than six (six years being the statute's time limit). The district court said the claim for penal interest is "under the policy' so it must be brought within two years; the Sixth Circuit reversed: no, it's not a claim under the policy.
That has to be the right result: Michigan passes a law to encourage insurers to pay timely. Michigan is saying it doesn't trust insurers to do this right by themselves. The insurer can't get around that with policy language. If it could, there would be no reason for the legislature to pass a punitive interest rate in the first place.