Michigan Court of Appeals; Docket #348571; Published
Judges Boonstra, Riordan, and Redford; Authored
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Insurable Interests in Motor Vehicles
In this unanimous published decision by Judge Boonstra, the Court of Appeals affirmed the trial court’s denial of Plaintiff MemberSelect Insurance Company’s (“MemberSelect”) motion for summary disposition in its underlying declaratory action against Defendant Nicholas Fetzer. MemberSelect argued that Fetzer’s mother, who insured the vehicle Fetzer owned but never rode in it, did not have an insurable interest in the vehicle, and that her policy was therefore void. The Court of Appeals disagreed, holding that Fetzer did have an insurable interest in the vehicle by virtue of the fact that she was Fetzer’s mother, and that, as Fetzer’s mother, her interest in her son’s physical and financial well-being gave her a sufficient insurable interest in the vehicle.
Kenneth Flesher was operating his motorcycle when he was injured in a hit-and-run collision. He came to believe that the vehicle involved in the collision was a GMC Yukon owned by Fetzer, and thereafter filed suit against Fetzer for negligence. MemberSelect insured Fetzer’s Yukon under a policy issued to his mother, Kelly Fetzer, and both Nicholas and Kelly Fetzer testified that the Yukon was added to Kelly’s policy because Nicholas could not afford the premiums. Kelly further testified that she never drove in the Yukon, and that Nicholas did not live with her. Based on this information, MemberSelect filed a declaratory action—moving for summary disposition—arguing that Kelly had no insurable interest in the Yukon and that the policy was therefore void with regard to that vehicle. The trial court denied MemberSelect’s motion, ruling that Kelly did have an insurable interest because of the “familial relationship” between her and Nicholas, which created a sufficient insurable “interest in her son’s well-being both physically and financially.”
The Court of Appeals affirmed the trial court’s summary disposition order, noting first that Michigan’s insurable interest requirement was not created by statute, but rather arose out of a public policy “desire to avoid a situation in which an insured can receive a payout under a policy despite not actually having lost anything.” The Court then discussed various cases which have contemplated the insurable interest requirement, relying especially on a statement in Morrison v Secura Ins, 286 Mich App 569 (2009): that “an ‘insurable interest’ need not be in the nature of ownership, but rather can be any kind of benefit from the thing so insured or any kind of loss that would be suffered by its damage or destruction.” The Court also noted that, in Dye v Esurance Prop & Cas Ins Co, 504 Mich 167 (2019), the Supreme Court “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 on that vehicle.’” Based on this prior case law, the Court held that a parent’s interest in her child’s “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 [give her an insurable interest in the vehicle].”
“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.”