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Smith v Allstate Ins Co and State Farm Mutual Automobile Ins Co; (COA-UNP, 6/23/1998; RB # 2006)


Michigan Court of Appeals; Docket No. 191759; Unpublished   
Judges Saad, Wahls, and Gage; Unanimous;  
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt    

Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [§3101(1)]  

Motor Vehicle Code (Definition of Owner) (MCL 257.37) (MCL 257.401a)  
Motor Vehicle Code (Financial Responsibility Act) (MCL 257.501, et seq.)   

In this unanimous published Opinion written by Judge Wahls, the Court of Appeals, relying upon the Supreme Court's opinion in Clevenger v Allstate Insurance Company (S/C Item No. 1629), held that the owner of a vehicle who sells the vehicle, receives payment, signs over the title to the purchaser, and removes his license plates, registration and certificate of insurance from the vehicle, is no longer the owner, registrant, or a person who has an "insurable interest in the vehicle," and therefore, the liability insurance policy previously purchased by the original owner does not apply to provide liability coverage to the new purchaser. In analyzing the Clevenger decision, the Court of Appeals concluded that the Supreme Court "held that an insurable interest is necessary to support a valid automobile insurance policy. It also appears that the Supreme Court held that the insurable interest must belong to a named insured." Based on Clevenger, the Court of appeals held that in the instant case, the previous owner of the vehicle did not have an insurable interest sufficient to support a valid automobile liability insurance policy. In this regard, the court noted that the previous owner "did exactly what the Supreme Court suggested a seller do; he removed his license plate, registration, and certificate of insurance from the vehicle before giving [the new purchaser] possession. These actions, in conjunction with the bona fide sale of the vehicle, destroyed [the previous owner's status as owner and as registrant. Unlike Clevenger, there simply are no facts from which we can infer that [the previous owner] voluntarily remained the insuring registrant." Therefore, in light of the fact that the previous owner no longer had a remaining interest in the vehicle, and thus had no insurable interest, his automobile liability insurance policy did not provide coverage to the new purchaser.

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