Michigan Court of Appeals; Docket No. 63048; Published
Judges Wahls, Maher, and Simon; Unanimous; Opinion by Judge Maher
Official Michigan Reporter Citation: 134 Mich App 190; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this important unanimous Opinion by Judge Maher, the Court of Appeals held that the breach of a non-cooperation clause in an auto liability insurance policy by the insured, was not a valid defense which absolved the insurance company from its obligation to pay the liability coverage to innocent third party plaintiffs injured by the insured's negligence. Although a 1958 decision of the Michigan Supreme Court (Allen v Cheatum, 351 Mich 585) held that breach of a noncooperation clause by an insured tortfeasor permitted the insurer to deny paying damages to a tort plaintiff, this panel of the Court of Appeals noted that this rule was enunciated prior to the adoption of mandatory automobile insurance in Michigan. Under the present no-fault system, auto insurance is compulsory. The statute was passed in order to provide compensation for people injured in automobile accidents. The primary purpose of the statute is to benefit the auto accident victim, not to protect those who cause accidents or their insurers. Therefore, the Court ruled that where insurance is mandatory, the insured's noncooperation is not a defense to a third party garnishment action against the insurer for payment of a tort judgment
In stating its holding, the Court was careful to point out that its decision did not "invalidate noncooperation clauses." Under such clauses, the insurance company still retains the right to sue the insured defendant for breach of contract Furthermore, the insurance company would not be liable to the insured defendant for other damages under the contract This will provide the necessary incentive for the insured person to comply with the insurance company pursuant to the cooperation clause. The Court concluded "where insurance coverage is mandatory, the risk of nonrecovery sfiould be placed on the insurance company and not on the victim."
