Michigan Court of Appeals; Docket #303726; Unpublished
Judges Meter, Servitto, and Stephens; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not applicable Link to Opinion
STATUTORY INDEXING:
Limits of Liability Insurance [3131(2)]
TOPICAL INDEXING:
Motor Vehicle Code (Financial Responsibility Act) (MCL 257.501, et seq)
In this unanimous per curiam unpublished Opinion, the Michigan Court of Appeals reversed the trial court’s determination that Pioneer State Mutual Insurance Company was responsible to provide residual liability insurance coverage for the applicable policy limits in the amount of $300,000. The Court of Appeals held that Pioneer was only responsible for providing residual liability insurance coverage for the statutory minimum amount of $20,000 because, at the time of the subject accident, the vehicle insured under the Pioneer policy was being driven by a non-family member and the policy had a provision that allowed Pioneer to reduce residual liability insurance coverage to the statutory minimum amount of $20,000, in the event a non-family member was operating the vehicle and caused an accident.
In this case, the injured person, Janice Kammers, was a passenger in an automobile owned by Robert and Ethel Long who together insured the vehicle under a Pioneer State insurance policy. At the time of the accident, this vehicle was being operated by Robert and Ethel Long’s daughter-in-law, Tammy Long. The Pioneer policy included residual liability insurance coverage in the amount $300,000, if the named insureds or any of their family members, as defined by the policy, caused an accident to occur while operating the vehicle. However, the Pioneer policy included a separate provision that limited the amount of available residual liability insurance coverage to $20,000, the minimum amount required under MCL 257.520(2), in the event a non-family member operated the vehicle and caused an accident. This provision specifically stated:
“Not withstanding [sic] the coverage limits shown in the declarations page of this Insuring Agreement, any insurance for “bodily injury” under this coverage section with respect to “your covered auto” or “trailer” provided to any person or organization other than you or any “family member” using “your covered auto” or “trailer” is limited to the minimum limits of liability specified in the Financial Responsibility Law of the jurisdiction of the state or province in which the “auto accident” occurs.”
Notably, there was no dispute that Tammy Long, who did not reside with her in-laws, was not a family member under Pioneer’s policy. There was also no dispute that Pioneer had first priority with regard to residual liability coverage for any accident involving the vehicle that Tammy Long was operating at the time of the subject motor vehicle accident. The trial court found that Pioneer was responsible to provide residual liability insurance coverage for the policy limits in the amount of $300,000. The Court of Appeals did not fully explain the trial court’s reasoning underlying its ruling.
Ultimately, the Court of Appeals reversed the trial court's decision on the grounds that the step-down provision quoted above did not violate public policy because it still provides that Pioneer must provide residual liability insurance coverage in the amount of the statutory minimum. In reaching its holding, the Court of Appeals relied on the cases of Manier v MIC Gen Ins Corp, 281 Mich App 485 (2008) and Ryder Truck Rental, Inc v Auto-Owners Ins Co, Inc, 235 Mich App 411 (1999). The Court of Appeals specifically explained its reasoning as follows:
“In light of our holdings in Manier and Ryder Truck Rental, Inc, we find that Pioneer’s policy was valid and enforceable. The policy is enforceable because it does not completely exclude coverage when non-family members operate the automobile; rather, it merely limits the amount of coverage when such persons operate the automobile. Because this reduced amount is equal to the statutory minimum for such coverage, we find that the challenged provision does not violate public policy. Manier, 281 Mich App at 492. Moreover, we also find that the challenged provision does not impermissibly shift the order of priority for residual liability because, in spite of the fact that Pioneer limits the amount of coverage that is available, it nonetheless remains in first priority for residual liability. See Ryder Truck Rental, Inc, 235 Mich App at 416 (an insurer does not impermissibly shift priority by retaining its position of first priority and limiting the extent of that priority to a level at or above the statutory minimum). Thus, Pioneer’s policy that limits coverage to $20,000 with regard to non-family members is valid and enforceable. Id.”
