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Pugh v Zefi and Farmers Ins Exc.; (COA-PUB, 10/20/11; RB# 3212)


Michigan Court of Appeals; Docket No. 299034; Published
Judges Owens, Jansen, and O’Connell; Unanimous, Per Curiam 
Official Michigan Reporter Citation:  ___ Mich ___ (2010); Link to Opinion alt 

Not applicable

Underinsured Motorist Coverage: Exclusions from Underinsured Motorist Benefits   

In this unanimous published per curiam opinion, the Court of Appeals affirmed the trial court’s denial of Farmers Insurance Exchange’s motion for partial summary disposition on the issue of whether the plaintiff was entitled to underinsured motorist coverage under the Farmers Insurance policy at issue. 

The Farmers Insurance policy at issue contained an exception to underinsured motorist coverage that specifically stated, “This coverage does not apply to bodily injuries sustained by a person . . . [w]hile occupying your insured car when used to carry persons or property for a charge.  This exclusion does not apply to shared-expense car pools.”

The plaintiff in this case was injured in a motor vehicle accident while riding as a passenger in a car owned by Orlander Meadows, Jr. who was insured under the Farmers Insurance policy at issue.  Mr. Meadows and the plaintiff were colleagues and worked in locations near to one another.  The accident occurred while Meadows was driving to work.  Notably, the plaintiff did not have a driver’s license and, thus, never took turns driving to work.  Plaintiff gave Meadows approximately $20 per week.  Mr. Meadows testified that he never charged or billed the plaintiff for his driving services and that the money he collected from plaintiff “was used primarily for gas and was not earned income.”

In efforts to apply the coverage exception, Farmers Insurance argued that the plaintiff essentially hired Meadows to drive her around and, therefore, she was not entitled to any underinsured motorist benefits.  The trial court ultimately disagreed with this argument, reasoning that the arrangement between the plaintiff and Mr. Meadows could fit into the definition of a car pool. 

In affirming the trial court’s ruling, the Court of Appeals first noted that this case does not concern the application of the Michigan No-Fault Act, because underinsured motorist coverage is optional and thus solely contractual.  The court further noted that insurance contracts are interpreted like any other contract and their construction and interpretation are questions of law for the court.  In support of these propositions, the court cited the cases of Rory v Continental Ins Co, 473 Mich 457 (2005) and Farm Bureau Mut Ins Co v Buckallew, 246 Mich App 607 (2001).

The court went on to explain that the definition of the word “car pool” was the key issue of interpretation regarding whether the exception applied to this case.  The court noted that there were not any Michigan cases directly on point with this issue.  However, the court noted that courts in other jurisdictions have interpreted analogous insurance policy language and found no requirement that car pool participants take turns driving in order for the arrangement to be considered a car pool.  The court focused on a New York appellate court, Aetna Cas & Surety Co v Mevorah, 149 Misc 2d 1011 (1991), in a decision from the 7th Circuit United States Court of Appeals, General Acc Ins Co of America v Gonzales, 86 F3d 673 (1996).  The facts of Mevorah and Gonzales were very similar to the facts in this case.  The courts in both of these cases concluded that a car pool can consist of an arrangement where a person is sharing the expenses of the transportation, but not sharing vehicles and/or driving responsibilities.  The court ultimately agreed with this analysis of these decisions and applied to the case at bar.  In this regard, the court specifically explained:

“The passengers in Mevorah and Gonzales rode in the same driver’s vehicle each day and did not take turns driving their own cars. Moreover, although the passengers in Mevorah and Gonzales paid a regular fee to the driver, both the Mevorah court and the Gonzales court ultimately concluded that the arrangement at issue qualified as a “share-the-expense car pool.”  Mevorah, 149 Misc 2d at 1016; Gonzales, 86 F3d at 679. Like the courts in Mevorah and Gonzales, we conclude that “shared-expense car pools” require only the sharing of costs—not the sharing of cars. We also conclude that, because plaintiff’s weekly payment of $20 was used merely to help defray the cost of gasoline, and not to generate a profit for Meadows, plaintiff was not being “carr[ied] . . . for a charge” within the meaning of the insurance policy.”

The court then rejected Farmers’ argument that a different result was compelled by the Michigan Supreme Court’s decision in Burgess v Holder, 362 Mich 53 (1960).  The court noted that the facts in this case were different than the facts in Burgess.  In this regard, unlike the plaintiff in Burgess, there is no evidence that Mr. Meadows charged the plaintiff a fixed amount for his driving services. 

The court also rejected Farmers argument that a car pool requires that the participants know each other as “friends” or “co-workers.”  The court noted there is simply no requirement that members of a car pool know one another socially. 

Lastly, the court rejected Farmers argument that the arrangement was not a car pool, because the plaintiff and Meadows were not going to the same, exact location.  The court noted that many car pool arrangements involve persons who work at different locations in the same city or general geographic area.

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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