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Auto Club Insurance Association v Meridian Mutual Insurance Company and Michigan Property & Casualty Guaranty Association; (COA-PUB, 9/19/1994; RB #1729)


Michigan Court of Appeals; Docket No. 150663; Published  
Judges Griffin, Sawyer, and Chamberlain; Unanimous; Opinion by Judge Sawyer 
Official Michigan Reporter Citation:  207 Mich App 37; Link to Opinion alt    

General Rule of Priority [§3114(1)]

Michigan Property and Casualty Guaranty Association (MPCGA – MCL 500.7901, et seq.)   

In this unanimous published Opinion by Judge Sawyer, the Court of Appeals discussed the role of the Michigan Property & Casualty Guaranty Association (MPCGA) with respect to the payment of no-fault PIP benefits, when those benefits are the obligation of an insolvent insurance company.  

In this case, defendant Meridian Mutual, the insurer next in the line of priority under §3114(1) argued that MPCGA steps into the shoes of the insolvent insurer, in this case Cadillac Insurance Company, and assumes payment of those PIP benefits. The Court of Appeals disagreed and affirmed the trial court's ruling that the MPCGA is an insurer of last resort, and that the insured person must first turn to the insurance company which is next on the order of priority to receive PIP benefits and MPCGA is obligated to pay those benefits only when there is no solvent insurer obligated to pay the benefits. The court held:

"This statutory provision [MCLA 500.7931(3)], in our opinion, reflects the statutory intent that an insured must first look to other possible insurance coverage before looking to the MPCGA for payment of the obligations of an insolvent insurer. That is, this statutory provision reflects an intent by the Legislature to make the MPCGA an insurer of last resort rather than merely an re-insurer who simply assumes the obligations of an insolvent insurance company That is, an insured of an insolvent insurer can look to the MPCGA for coverage only if there is no other insurance company to turn to for coverage. In the context of the case at bar, the insured does have another insurance company to turn to for coverage, namely Meridian Mutual, as the insurer at the next level of priority. The MPCGA, on the other hand, would be liable for the payment of personal protection insurance benefits only if there were no insolvent insurer at any level of priority."

The Court of Appeals further relied upon its earlier opinion in Yetzke v Fausak, 194 Mich App 414 (1992) dealing with a setoff of uninsured motorist benefits against the liability of MPCGA.  

Lansing car accident lawyer 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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