Michigan Court of Appeals; Docket No. 286936; Published
Judges Talbot, O’Connell, and Davis; 2-1 (Talbot dissenting)
Official Michigan Reporter Citation: 286 Mich. App. 569, Link to Opinion 
STATUTORY INDEXING:
Compulsory Insurance Requirement for Owners or Registrants of Motor Vehicles Required to be Registered [3101(1)]
TOPICAL INDEXING:
not applicable
CASE SUMMARY:
In this 2-1 published opinion by Judge Davis, the Court of Appeals held that where a family member purchased a no-fault insurance policy for a vehicle which she owned, the policy, which had not expired, was not rendered void by the sale of the vehicle to another family member.
The issue in this case arises out of a motor vehicle accident in which plaintiffs were seriously injured when Sarah Jo Warfield struck their motorcycle with her vehicle. Warfield’s mother purchased the no-fault insurance policy covering the vehicle. Although the mother was listed as the named insured, both she and her daughter were listed as drivers. However, the daughter was the only person who drove the vehicle. At the time the mother purchased the insurance policy, she was the owner and registrant of the vehicle. Later, within the policy period, the mother transferred title to the vehicle to her daughter, who applied for a new title and registered the vehicle in her name but did not apply for a new insurance policy. The accident occurred one month after the transfer. Defendant argued that the mother did not have an insurable interest in the vehicle at the time of the accident and, therefore, the insurance policy was void.
In affirming, the court recognized that in Michigan a person must have an insurable interest in order to obtain a valid automobile insurance policy. However, there is no requirement that a valid policy must be rendered void when an insurable risk changes, such as when the ownership of a vehicle changes. In this case, the mother had an insurable interest in the vehicle when she purchased the insurance policy as the owner of the vehicle. The court noted that it was not presented with an issue in which the insured renewed a policy after she no longer had any interest in the vehicle. Further, the court noted that the purpose behind the insurable interest requirement was not present in this case. The insurable interest requirement arose to prohibit insureds with “nothing to lose” to “commit socially intolerable acts for financial gain.”
However, the court noted that the conveyance of the vehicle was between family members. The transference of vehicles between family members is not treated the same as it is between strangers. Under public policy, the family unit is entitled to special status in the law. The court stated that it would not find that public policy supported terminating what amounted to a family insurance policy upon the transfer of a vehicle between family members. In this regard, the court stated:
“Fisher did have an unambiguous insurable interest in the Cavalier at the time she purchased the insurance policy and paid the entire year’s premiums. The case law we have found on the genesis and development of the ‘insurable interest’ requirement shows that public policy forbids the issuance of an insurance policy where the insured lacks an insurable interest. Public policy does not appear to require an otherwise valid insurance policy to become void automatically. . . .
Furthermore, and even more significantly, the purpose behind the ‘insurable interest’ requirement is not present here: we cannot imagine how Fisher, or anyone in her position, could possibly be tempted by the transfer of ownership to commit any illegal or unethical act in order to collect proceeds from the insurance policy at issue. The ‘insurable interest’ requirement arose in the context of insurance policies payable to the insured. In such a circumstance, it is obvious how an insured with ‘nothing to lose’ might be tempted to commit socially intolerable acts for financial gain. . . .
Finally, the conveyance of the Cavalier here was an intra-family transfer. . . . Public policy clearly recognizes that the family unit is, and always has been, entitled to a special status in the law.”
(emphasis in original)
