Michigan Court of Appeals; Docket No. 108733; Published
Opinion by Judge Marilyn Kelly; 2-1 (Judge Michael Kelly Dissented)
Official Michigan Reporter Citation: 177 Mich App 705; Link to Opinion 
STATUTORY INDEXING:
Scope of Mandated Coverages [§3131(1)]
Liability Exclusions Prohibiting Stacking of Coverages [§3131]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this significant 2-1 published Opinion authored by Judge Marilyn Kelly, the Court of Appeals issued an important holding regarding the stacking of automobile liability insurance policies. The policy in question contained an "other insurance" clause that purported to deny multiple recovery (i.e., stacking) of insurance payments under more than one policy issued by the company. The clause limits the total dollar amount payable to the highest amount applicable under any one policy. The other insurance clause was found at paragraph 9 of the section entitled "Conditions." It did not appear in the Exclusion section.
There were two separate insurance policies involved in this case, each issued by Farmers. The first policy covered the automobile involved in the accident, which vehicle was driven by Ramon Garcia. The second policy insured a vehicle owned by Ramon's father with whom Ramon lived. This second policy covered others in the household while driving vehicles additional to the one named in the policy.
The court found the second policy to be ineffective in prohibiting stacking for two reasons: First, the other insurance clause is in the nature of an exclusion and thus should have been set forth in the exclusions section rather than the conditions section. As such, it was deceptively placed. Second, the court held that the language of the other insurance clause was ambiguous.
In rendering its holding, the court stated:
"The trial court's final conclusion was that the insurance contract violated the reasonable expectations of the insured. It may be true that an insured cannot reasonably expect to stack his coverage. We doubt it occurs to most people to consider if they could stack coverage when selecting a policy. However, in a broader sense, we find that an insured is not without some reasonable expectations when choosing insurance. One such expectation is that when one refers to the 'Exclusions,' one will find listed there the situations which the policy will not cover. A situation in which more than one policy has liability for an accident falls in that category. Thus we agree that this Farmer's insurance contract defeated the insured's reasonable expectation that exclusions would appear in the Exclusions section. Farmers had a duty to make the exclusions it chose clear to the people who paid for its insurance. It violated that duty through the obfuscating use of language in the 'other insurance' clause and by deceptive placement of the clause in the policy. We affirm the trial court's ruling voiding the other insurance provision.”
Judge Michael Kelly dissented. He found the language of the other insurance clause to be unambiguous and did not believe that its placement under the "Conditions" section was significant.
