Michigan Court of Appeals; Docket # 348571; Unpublished
Judges Boonstra, Riordan, and Redford; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Insurable Interests in Motor Vehicles
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s denial of the plaintiff’s motion for summary disposition seeking declaratory relief. The plaintiff, MemberSelect Insurance Company, argued that its insured, Kelly Fetzer, had no insurable interest in a vehicle that was owned by her adult son who did not live with her, and that she never drove. The Court of Appeals refused to void the policy based on the insurable interest requirement, however, holding that Kelly Fetzert’s “interest in the well-being of her adult child” trumped the public policy interests that gave rise to the insurable interest requirement.
Kenneth Flesher was operating his motor vehicle when he was struck by a motor vehicle in a hit-and-run collision. At some point thereafter, Flesher came to believe that the vehicle that struck him was owned by Nicholas Fetzer, and insured under Kelly Fetzer’s policy with MemberSelect. Flesher ultimately filed a third-party lawsuit against Nicholas Fetzer, and MemberSelect assigned counsel to represent him. MemberSelect also filed its own action for declaratory relief, however, “seeking a declaration that Kelly had no insurable interest in the Yukon and that the policy covering it was therefore void.” Both Kelly and Nicholas Fetzer testified that the Yukon was only listed on Kelly’s policy so that Nicholas could avoid a higher premium. Moreover, Kelly testified that she never rode in the vehicle and that Nicholas, aged 33, did not live with her. The trial court ultimately granted summary disposition in Fetzer’s favor in Flesher’s third-party lawsuit, but MemberSelect argued that that did not render the issue in the declaratory action moot. Ultimately, the trial court entered an order denying MemberSelect’s motion for summary disposition in the declaratory action.
The Court of Appeals affirmed the trial court’s denial of MemberSelect’s motion for summary disposition in the declaratory action, relying on previous decisions contemplating the insurable interest doctrine—Morrison v. Secura Ins., 286 Mich. App. 569 (2009), Allstate Ins. Co. v. State Farm Mut. Auto. Ins. Co., 230 Mich. App. 434 (1998), and Clevenger v. Allstate Ins. Co., 443 Mich. 646 (1993)—as well as Dye v. Esurance Prop. & Cas. Ins. Co., 504 Mich. 167 (2019). While none of these cases were on point, they persuaded the Court “to leave intact the trial court’s determination that Kelly had an insurable interest in this case.” The Court examined the public policy concerns related to the insurable interest doctrine, but gave greater weight to a different public policy interest: the interest of parents in their children’s well-being:
We conclude, reaching the issue that this Court declined to reach in Morrison, that Kelly had a sufficient interest in the well-being of her adult child that we should not void her insurance policy on public policy grounds. An insurable interest may be found, at least in some instances, in “the property, or the life insured” by an insurance policy. Crossman, 198 Mich at 308. Although, unlike the adult child in Morrison, Nicholas does not live with Kelly (and in fact has several children of his own), we do not believe that is so dispositive a factor as to divest Kelly of an insurable interest; our courts have long noted that even a de minimis insurable interest may be insured, see Morrison, 286 Mich App at 572 n 2, citing Hill v Lafayette Ins Co, 2 Mich 476, 484- 485 (1853). We conclude that the interest of a parent in an adult child’s welfare, including such aspects as being covered for potential injury, being protected from financial ruin from injuring another, even the avoidance of civil infraction or other legal penalties for driving while uninsured, is sufficient to avoid temptations and social ills of “wager policies.” Allstate, 230 Mich App at 438-439.
Moreover, although in the context of the no-fault act specifically, rather than in the context of applying a public-policy doctrine that existed before the act was enacted, our Supreme Court has recently held that a registrant or owner of a vehicle may satisfy his or her statutory obligation to “maintain” the security required by the no-fault act when “someone other than that owner or registrant purchased no-fault insurance for that vehicle.” Dye v Esurance Prop & Cas Ins Co, 504 Mich 167, 193; 934 NW2d 674 (2019). The Dye Court stated that “determining whether no-fault benefits are available to an injured person does not depend on ‘who’ purchased, obtained, or otherwise procured no-fault insurance.” Id. at 181.
While Dye concerned itself with the interpretation of specific provisions of the no-fault act, see MCL 500.3101(1), MCL 500.3113(b), we conclude that Dye demonstrates that tensions may exist between the goals of the no-fault act and the application of the “insurable interest” rule so as to void an insurance policy from its inception. It may be that the “insurable interest” requirement in fact conflicts with the goals of the no-fault act; as discussed, other panels of this Court have questioned the applicability of such a requirement for policies (specifically, automobile liability insurance policies) that do not readily lend themselves to gambling and rarely, if ever, result in non-compensatory cash payouts to an insured. In light of Clevenger and Allstate, we cannot go so far as to say that the insurable interest requirement does not apply in the automobile liability insurance context; rather, we merely hold under the circumstances of this case that Kelly had a sufficient insurable interest in Nicholas’s well-being that we should not declare the policy void on public-policy grounds. We would, however, be delighted if our Supreme Court would take the opportunity in this or some other case to clarify the insurable interest requirement, its applicability in the context of automobile liability insurance, and the continued viability of Clevenger in that regard.
