Michigan Court of Appeals; Docket No. 150614; Unpublished
Judges Reilly, Sawyer, and Clulo; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Rental Car Company Liability Insurance Obligations [§3131]
TOPICAL INDEXING:
Canadian Accidents and Citizens
Leased / Rented Vehicles
CASE SUMMARY:
In this unanimous per curiam unpublished Opinion, the Court of Appeals addressed the interpretation of a rental agreement which contained provisions governing the amount of residual liability insurance coverage available in the event that the operator of the rental vehicle was involved in a motor vehicle accident. The question on appeal was whether the rental contract providing bodily injury liability insurance in the amount of $25,000 per person and $50,000 per accident "unless higher minimum limits are required by applicable law for each accident arising from use of the vehicle" required payment only of the $25,000 limit as a result of the accident, or whether the higher limits required under Ontario law (where the accident occurred) were applicable under the rental agreement.
The vehicle involved was a rental vehicle owned by National Car Rental, Inc. and being rented to Nabil Hachem at the time of the accident involved in this case. The vehicle was being driven by another person with the consent of Hachem and with the authorization of the rental agreement. The accident occurred in Ontario, Canada, and resulted in the death of a passenger who then sued the operator of the vehicle. Under Ontario law, minimum policy limits of at least $200,000 are required for liability for bodily injury or death. Under the rental agreement, the contract provided for $25,000 per person unless "higher minimum limits are required by applicable law."
The rental agency, National Car Rental, Inc., contended that the reference to "applicable law" in the rental agreement presented a "choice of law" problem which defendant contended required application of the lex fori rule which would thus make Michigan law applicable to this accident Therefore, defendant contended that the minimum coverage of $25,000 per person applied, rather than the $200,000 requirement under Ontario law.
On appeal, the Court of Appeals reversed the trial court ruling in favor of the rental company, and held that the term "applicable law" referred to any law which, at the time of operation of a vehicle, would require liability coverage in excess of that explicitly provided for in the rental agreement. The court held that the purpose of this provision providing for greater liability limits than $25,000 per person when required by applicable law is to ensure that the vehicle is being operated lawfully wherever it may be found. Since the vehicle was being operated in Ontario at the time of the accident, Ontario law became the applicable law under the contract, and the Ontario requirements for minimum liability coverage of $200,000 were in effect at the time of the accident. Alternatively, the court held that the term "applicable law" is ambiguous, and when construed against the drafter, Nationwide Rental Company, required the conclusion that the law of Ontario governs the liability limits.
Judge Reilly concurred in the result only in this case.
