Michigan Court of Appeals; Docket No. 147265; Published
Judges Neff, Marilyn Kelly, and White; Unanimous; Per Curiam
Official Michigan Reporter Citation: 203 Mich App 548; Link to Opinion 
STATUTORY INDEXING:
Ways to Provide Required Security [§3101(3) + 3101(4)]
Rental Car Company Liability Insurance Obligations [§3131]
TOPICAL INDEXING:
Leased / Rented Vehicles
Motor Vehicle Code (Financial Responsibility Act) (MCL 257.501, et seq.)
Private Contract (Meaning and Intent)
CASE SUMMARY:
In this unanimous per curiam published Opinion, the Court of Appeals held that "self insurance" for purposes of a residual liability claim is the functional equivalent of insurance under the No-Fault and Financial Responsibility Acts, and therefore, a provision in a rental car contract extending coverage for losses caused by the rental vehicle operator constituted "other collectible insurance" within the meaning of Allstate's insurance policy.
This case arose from an automobile accident which occurred while defendant Elassal was driving a rented car and injured a pedestrian. The rental car was owned by Enterprise Leasing Company being rented to Elassal to replace a family car under repair. The Elassal family was covered for residual liability claims by Allstate Insurance Company. The Allstate policy provided liability coverage with respect to the "owned automobile," and any "temporary substitute automobile." A temporary substitute automobile was defined as one used in place of the owned automobile "when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction."
However, Allstate's liability for a temporary substitute vehicle was limited by the provisions of Allstate's policy providing that it "shall be excess insurance over any other collectible insurance."
Enterprise Leasing, in its rental contract, provides that financial responsibility "extends to renter" for third-party claims arising from the use of the car. Enterprise did not actually carry insurance on its cars, but had obtained self-insured certification from the Secretary of State pursuant to MCLA 257.531 and MCLA 500.3101(4). Those statutes impose requirements on motor vehicle operators pertaining to liability insurance, and allow for "proof of financial responsibility" for liability purposes in the form of a certificate of liability insurance, a bond, a certificate of deposit of money, or by qualifying as a self-insurer by obtaining a certificate of self-insurance issued by the Secretary of State.
Allstate filed a declaratory judgment action claiming that it was not obligated to pay for the damages caused to the pedestrian injured by Elassal because its policy language provided that its coverage was "excess insurance over any other collectible insurance" and that Enterprise's contractual obligation constituted such other collectible insurance. Enterprise contended that its self-insured status did not constitute "other insurance" as set forth in Allstate's policy, because being self-insured was not the equivalent of being insured, and therefore, Allstate remained the primary insurer. The trial court agreed with Enterprise, and held that the certificate of self-insurance was not other insurance as provided in Allstate's policy. On appeal, the Court of Appeals reversed and remanded on the grounds that self-insurance is the functional equivalent of insurance under the No-Fault and Financial Responsibility Acts. Enterprise's agreement to indemnify its renters against third-party claims was "other collectible insurance" within the meaning of Allstate's policy terms. The court noted that the no-fault act explicitly treats a self-insurer as an insurer, with "all the obligations and rights of an insurer." MCLA 500.3101(4). Therefore, the Court of Appeals held that Allstate's coverage was excess within the meaning of its policy.
