Michigan Court of Appeals; Docket No. 204019; Published
Judges Doctoroff, Sawyer, and Fitzgerald; Unanimous; Opinion by Judge Sawyer
Official Michigan Reporter Citation: 233 Mich App 281; Link to Opinion 
STATUTORY INDEXING:
Ways to Provide Required Security [§3101(3) + 3101(4)
TOPICAL INDEXING:
Leased / Rented Vehicles
Motor Vehicle Code (Financial Responsibility Act) (MCL 257.501, et seq.)
CASE SUMMARY:
In this unanimous published Opinion by Judge Sawyer, the Court of Appeals held that where a company seeks and obtains a certificate of self-insurance issued by the Secretary of State, the certificate is the “Functional equivalent of a commercial policy of insurance with respect to the No-Fault Act," and therefore, the self-insured's liability extends to the full value of its assets. The Court of Appeals rejected the claim by Enterprise Leasing, the self-insured, that its liability was limited to the minimum limits of $20,000/$40,000 imposed by the Financial Responsibility Act, and that any amounts beyond the minimum limits would be the responsibility of State Farm, the excess carrier, up to the maximum of its limits, and then any remainder would be the responsibility of Enterprise.
In this case, defendant Sako rented an automobile from plaintiff Enterprise and became involved in an automobile accident. Defendant State Farm was Sako's no-fault automobile insurance carrier, while Enterprise was self-insured, with plaintiff Travelers being Enterprise's excess carrier for claims over $500,000. As a result of the accident, action was brought against Enterprise under the owner liability statute. These lawsuits were settled by Enterprise and its excess carrier, Travelers, for $593,321. Enterprise and Travelers then commenced action against Sako and State Farm seeking indemnification and primary coverage by State Farm.
The trial court ruled that Enterprise could not limit the amount of its liability and also rejected the indemnity claim against Sako. On appeal, the Court of Appeals affirmed the trial court ruling, finding that a certificate of self-insurance issued by the Secretary of State, amounts to a representation that the company applying for self-insured status is able and will continue to be able to satisfy judgments obtained against it MCLA 257.351.
The court held that there is nothing in the financial responsibility statute that limits the self-insured's liability to the minimum coverage requirements of the No-Fault or Financial Responsibility Acts. A self-insured's liability extends to the full value of its assets. A company that prefers to avoid unlimited risk has the option of purchasing a commercial insurance policy. Therefore, Enterprise is liable for the full amount of the settlement. Further, because State Farm's excess coverage was excess to any other insurance, and because Enterprise's self-insurance was not limited to the statutory minimum, State Farm is not directly liable for any portion of the settlement.
The court further found that the indemnification claim against Sako should be deemed abandoned.
Finally, it should be noted that subsequent to the accident involved in this case, the owner liability statute was amended to limit the liability of a vehicle lessor. MCLA 257.401.
