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Husted v Auto-Owners Insurance Company; (MSC-PUB, 4/27/1999; RB #2033)


Michigan Supreme Court; Docket No. 104447; Published  
Opinion by Justice Taylor; 4-3 (with Justices Kelly, Brickley, and Cavanagh Dissenting)  
Official Michigan Reporter Citation:  459 Mich 500; Link to Opinion alt   

Not Applicable 

Private Contract (Meaning and Intent)   

In this 4-3 Opinion written by Justice Taylor, the Supreme Court affirmed the Court of Appeals (Item No. 1815; 213 Mich App 547 [1995]), and upheld a i exclusion contained in a personal automobile insurance policy, thus denying coverage for damages caused in a motor vehicle accident while the insured was operating his employer's uninsured truck.

Auto-Owners, the employee's personal automobile insurance provider, relied on its exclusion contained in its policy which stated that coverage under the employee's personal policy did not apply to:

"Any automobile not of the passenger type while used in a business or occupation of a named insured."

Justice Taylor, joined by Justices Weaver, Corrigan and Young, found the business use exclusion in the employee's personal automobile policy to be valid and enforceable, even in the circumstance where the employee was operating his employer's uninsured truck without any knowledge that the truck in fact had no liability insurance. The majority rejected plaintiff’s statutory argument that sections 3135(1), 3131(1) and 3009(1) of the No-Fault Act, when read together, require residual liability coverage when an insured drives any motor vehicle, not just vehicles designated in the insured's policy. The majority found that the No-Fault Act does not require residual liability coverage to cover an insured's operation of a vehicle he does not own or has not registered and which is excluded from the coverage. In its ruling, the majority held that:

"Consideration of these provisions demonstrates that they do not evince a policy to require residual liability coverage for an insured's operation of any vehicle, i.e., even a vehicle specifically excluded from coverage by the insured's policy."

The majority also ruled that the Essential Insurance Act, MCLA 500.2101, et seq, specifically permits insurers to limit insurance coverage on the basis of business use.

In her dissent, Judge Kelly, joined by Justices Cavanagh and Brickley, would reverse the lower court and hold that the public policy underlying the No-Fault Act favors a minimum level of coverage, and enforcement of the exclusion on the facts of this case would be unconscionable.

In her dissent, Justice Kelly stated:

“This Court's holding potentially exposes to unlimited liability all employees in this State whose occupations require that they drive vehicles owned by their employers. These employees will frequently have relied in good faith on their employers to obey the law and insure their vehicles."

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