Michigan Court of Appeals; Docket No. 172743; Published
Judges Gribbs, Markey, and Taylor; Unanimous; Per Curiam
Official Michigan Reporter Citation: 213 Mich App 547; Link to Opinion 
STATUTORY INDEXING:
Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [§3101(1)]
Liability Policy Exclusions for Business Use [§3131]
Liability Policy Exclusions for Owned and Non-Owned Vehicles [§3131]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous per curiam published Opinion, the Court of Appeals upheld the validity of an exclusion in a no-fault policy which excluded liability coverage when the insured person is driving a non-owned, non-passenger vehicle for business use. In rendering this holding, the court reached several conclusions.
First, the court rejected the argument that such an exclusion violates the provisions of the no-fault act, because "portable liability coverage" is optional, not mandatory under the no-fault statute. The court rejected plaintiffs arguments that §3101(1), §3131(1) and §3135(1) require all no-fault policies to provide coverage to all persons insured under those policies whenever those insured persons are driving any kind of automobile. The court cited the Supreme Court's recent opinion in Citizens Insurance Company v Federated [Item No. 1758], which rejected the concept that the no-fault statute requires residual liability coverage when an insured drives any automobile, and thus exclusionary clauses which defeat this residual liability requirement are void as against public policy in the no-fault act. In applying the holding in Citizens Insurance v Federated to the case at bar, the court noted:
"In the case at bar, the terms of Auto Owners Insurance contract excluded coverage when an insured drove a non-owned, non-passenger vehicle for business purposes. This is an unambiguous exclusion that does not violate the no-fault act because portable liability coverage is optional, not mandatory under the act."
Second, the court rejected the argument that case law regarding leased cars invalidated the exclusion in the case at bar. In rejecting the application of the leased car case law, the court stated:
"While those cases are instructive in reviewing the legislative intent behind the no-fault act and considering policy arguments, they are not applicable to the case at bar because here, defendant insured the driver not the owner, and did not attempt to circumvent the statutory requirement that an owner retain the residual liability insurance."
Third, the court rejected the argument that the type of exclusion involved in the case at bar violates public policy. The court stated:
"While public policy prevents an automobile liability insurance policy from containing exclusions not specifically authorized by the legislature, an exclusionary clause is not per se invalid simply because it is not specifically provided for in the no-fault act... Under plaintiffs interpretation, any policy exclusion would violate the no-fault residual liability requirement when the exclusion resulted in no coverage to someone involved in an accident. Thus the validity of an exclusion would turn on whose was involved in an accident and the parties' respective insurance coverages. This type of ad hoc determination would cripple the insurers ability to assess their risk, result in additional excessive litigation, and make the policy coverage in each case fact determinative. Consequently, we find that an insurance policy exclusion that precludes coverage while an insured drives a non-owned, non-passenger vehicle for business use does not violate public policy or the residual liability requirement of the no-fault act"
