Michigan Supreme Court; Docket Nos. 60483, et al and 60945; Published
Opinion by J. Levin; Unanimous
Official Michigan Reporter Citation: 409 Mich 1; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Private Contract (Meaning and Intent)
Uninsured Motorist Benefits: Exclusions from Uninsured Motorist Benefits
Uninsured Motorist Benefits: Setoffs Applicable to Uninsured Motorist Case
CASE SUMMARY:
In a long awaited unanimous Opinion by Justice Levin involving eight consolidated cases, the Supreme Court made significant holdings regarding two major issues: (1) the setoff of no-fault PIP benefits against uninsured motorist benefits, and (2) the stacking of uninsured motorist benefits.
PIP - UM Setoff— In the Schigur portion of this opinion, the court reversed the Court of Appeals and held that it was illegal for an insurer, pursuant to a written endorsement so providing, to reduce uninsured motorist in no-fault personal insurance protection benefits. The Court stated that by writing uninsured motorist coverage, the insurer agrees to stand in the place of an uninsured tortfeasor, who would have had third party residual liability insurance if he had complied with the No-Fault Act As such, that tortfeasor would have liability for excess economic losses and noneconomic losses above the threshold. If the injured person were to obtain a tort recovery in this situation, his no-fault carrier has no right of reimbursement unless the tort recovery includes duplicative economic loss benefits that the injured person recovered in PIP benefits. That being the case, the insurer and insured, under an uninsured motorist endorsement, should have corresponding rights relative to amounts recoverable under the uninsured motorist endorsement-- "The insurer should be permitted a setoff only to the extent a recovery duplicates benefits it has already paid."
The Court reasoned that such a holding was necessary so as to prevent a frustration of the reasonable expectations of the insured. The Court stated, "One who has purchased uninsured motorist coverage would not expect to collect twice for the same economic loss and the insurer prevents this from happening through the setoff clause. But neither would he expect to have his uninsured motorist coverage reduced or eliminated altogether because of other coverage reduced or eliminated altogether because of other coverage he has purchased. He would expect, even in the face of the setoff clause, that amounts paid by the insurer for economic loss would not reduce the amounts payable for noneconomic or excess economic loss.”
[Author's Comment: Two comments are in order regarding this portion of the Court's opinion. First, the Court states, in what is probably dicta, "If a motorist is uninsured he may be sued for all economic loss as well as above - threshold noneconomic loss." This raises the question of whether or not the Court meant to say that all uninsured tort feasors have immunity for noneconomic losses below the threshold, or whether such an immunity exists only in the context of an uninsured motorist arbitration where the insurer allegedly stands in the shoes of the tortfeasor only to the extent of the tortfeasor's liability had he carried the requisite insurance. In Shavers v Attorney General (item number 85) the Supreme Court wrote strong dicta indicating that an uninsured tort feasor has no immunity whatsoever. In addition, there is very strong dicta in the Supreme Court's opinion in Belcher v Aetna, et al (item number 313), decided six days after Schigur, to the effect that an uninsured motorist has no tort immunity (see Comment to item number 313).
Second, the decision leaves unresolved whether or not the uninsured motorist insurer can claim any offset if it was not the insurer paying the no-fault PIP benefits. As the Court stated at, page 30 of the slip opinion,". . . .the insurer should be permitted a setoff only to the extent a recovery duplicates benefits it has already paid."]
UM Stacking - With regard to whether or not benefits available under separate uninsured motorist endorsements may be "stacked," the Court made a crucial distinction between those policies issued before the enactment of the no-fault law and repeal of the uninsured motorist law and those policies issued after that date (October 1, 1973).
With regard to those policies issued before 1973 the Court held (a) an owned vehicle exclusion which denies uninsured motorist coverage to a liability insured when his injuries are sustained in a family owned vehicle which is not a vehicle for which the endorsement was purchased is violative of the legislative policy and is unenforceable; (b) where premiums had been paid for multiple statutorily mandated uninsured motorist endorsements, an injured person may stack benefits and recover under each endorsement in an aggregate amount not greater man the actual loss.
With regard to policies effective on or after October 1,1973, "other insurance" clauses which provide that damages shall be deemed not to exceed the policy limits and that the uninsured motorist coverage of the policy shall apply pro rata where there is other similar insurance available, are enforceable and benefits under such policies may not be stacked.
As part of its rationale for prohibiting stacking after no-fault, the Court noted that the premiums assessed for uninsured motorist coverage bear no relation to the risk that a named insured or family member will be involved in an accident Illustrative of this point is the fact that the premium charged for uninsured motorist coverage between a family of three and a family often is substantially the same. Thus, such a premium is a standardized charge for participation in the uninsured motorist coverage system. The Court further observed that "there is presently no requirement that the premium charge for voluntarily provided and purchased automobile insurance accurately reflect the risk covered by such insurance, and there is no evidence that the insurer reaps a windfall..." Then the Court states in footnote 64 that although uninsured motorist coverage is not specifically mentioned in the essential Insurance Act, it might be within the scope of that Act This statute (1979 PA 145) does not become effective until January 1,1981. Thus, there is a question of whether or not the prohibition against stacking will continue without modification after the effective date of the essential Insurance Act