Michigan Court of Appeals; Docket #345639; Unpublished
Judges Stephens, Servitto, and Ronayne Krause; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Interpretation of Insurance Contracts
SUMMARY:
In this unanimous unpublished per curiam decision regarding a priority dispute, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Progressive Michigan Insurance Company from the plaintiff’s first-party action to recover no-fault PIP benefits. At issue in this case was a policy exclusion in the plaintiff’s policy with Progressive, whereby Progressive “[excluded] PIP coverage while the [subject] vehicle was leased to anyone other than named insured or while being used to transport goods for anyone other than the named insured.” The plaintiff’s vehicle was leased at the time of the collision, and the lessee maintained an insurance policy on the vehicle with Home-Owners Insurance Company. The Court of Appeals held that Progressive was not avoiding its statutory duty under the no-fault act by invoking the provision and refusing to pay the plaintiff’s PIP benefits because the provision only applied in the event that the vehicle was simultaneously insured by another policy that was also in conformance with the no-fault act and that could pay the plaintiff’s PIP benefits. Thus, Home-Owners was not entitled to a partial recoupment from Progressive for the benefits it had already paid to the plaintiff.
Michael Vantol was injured in a motor vehicle collision while driving his commercial tractor-trailer. At the time of the collision, the vehicle was being leased to Short Transit, LLC, who obtained an insurance policy for the vehicle with Home-Owners. Vantol also maintained a “bobtail” insurance policy on the vehicle with Progressive, but that policy contained an “exclusion for PIP coverage while the vehicle was leased to anyone other than the named insured.” Vantol subsequently filed a first-party action against both Home-Owners and Progressive, arguing that neither had provided him with all the PIP benefits owed to him under the no-fault act. Home-Owners then filed a cross-complaint against Progressive, asserting that the insurers were equal in order of priority for payment of benefits and that Home-Owners was entitled to a partial recoupment from Progressive for the benefits it had already paid. Both Progressive and Home-Owners moved for summary disposition—Progressive invoked the aforementioned exclusion provision, and Home-Owners argued that Progressive “[could not] avoid its mandatory statutory responsibility or PIP benefits by inserting a policy exclusion that is contrary to the no-fault act.” The trial court ultimately granted Progressive’s motion and denied Home-Owners’.
The Court of Appeals affirmed the trial court’s summary disposition order in favor of Progressive, finding that the exclusion provision was valid and allowable under the no-fault act. The Court held that Progressive did not avoid its statutory mandate to provide PIP benefits to its insured, rather, “it simply detailed in its policy exclusion that it would not pay PIP benefits if the semi-tractor was being leased to a person or organization other than the insured named . . . and only if the required no-fault insurance was in place by virtue of another policy.” Furthermore:
while “[a] motor-vehicle insurer cannot avoid or shift its statutory primary responsibility for PIP benefits,” Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 247; 819 NW2d 68 (2012), Progressive did not do so here. Instead, it provided PIP coverage with, essentially, a business exclusion that applied only if the vehicle was otherwise insured in conformance with the no-fault act. The policy exclusion clearly and explicitly provides that when the covered auto (i.e., semi-truck) is used for a lessee’s business and the lessee has sufficient liability and no-fault insurance for the auto, Progressive is not obligated to pay insurance benefits in the event of an accident that occurs during this use. Business exclusions in insurance policies are permissible and valid. See, Husted v Dobbs, 459 Mich 500, 506; 591 NW2d 642 (1999) (stating that the essential insurance act, MCL 500.2101 et seq., specifically permits insurers to limit insurance coverage on the basis of business use via MCL 500.2118(2)(f)). Our interpretation of Progressive’s policy and the exclusion at issue not only reflects the demonstrated intent of the parties to the Progressive policy but also produces a result that is consistent with public policy and the purposes of the no-fault act.
