Michigan Court of Appeals; Docket No. 138245; Published
Judges Sawyer, Hood, and Jansen; Unanimous; Per Curiam
Official Michigan Reporter Citation: 198 Mich App 262; Link to Opinion
Private Contract (Meaning and Intent)
Underinsured Motorist Coverage: Underinsured Motorist Coverage in General
Underinsured Motorist Coverage: Setoffs Applicable to Underinsured Motorist Cases
In this per curiam published Opinion, the Court of Appeals upheld summary disposition in favor of Auto Owners in connection with the interpretation of Auto Owners' underinsured motorist coverage extension which was found by the court to be properly reduced by a setoff for sums paid by or on behalf of the owner or operator of the uninsured motor vehicle.
In this case, plaintiff was a passenger in a motor vehicle struck by another vehicle which failed to stop at the stop sign. Plaintiff collected $20,000 from the insurer of the person who hit her. She then attempted to collect the $25,000 policy limit on her underinsured motorist coverage with Auto Owners. Auto Owners refused to pay more than $5,000, claiming that it was entitled to set-off the amounts paid by the other motorist's insurer.
In upholding the trial court's summary disposition in favor of Auto Owners, the court noted that the only case relied upon by plaintiff was Auto Owners Insurance Company v Boissonneaut, l 82 Mich App 368 (1990) which was reversed by the Michigan Supreme Court in 439 Mich 126 (1992).
The court relied upon two separate provisions of the policy to find that plaintiff’s recovery was limited to the $5,000 by which the underinsured motorist coverage exceeded the limits of the at-fault driver. The Auto Owners' underinsured motorist coverage extension provided that the company's liability was limited to "the amount by which the limit stated in the declarations hereof exceed the total limits of all bodily injury bonds or insurance policies applicable to the person or persons responsible... and such damages are in excess of the total limits of all such bodily injury bonds or insurance policies."
Plaintiff argued that this language required defendant to pay, up to its policy limits, the difference between plaintiff’s actual damages and the amount paid by the other driver's insurer. The court rejected this argument and held that the clause clearly stated mat the defendant's liability was limited to the difference between plaintiff’s coverage and the other motorist's coverage.
Further, the court also held that the conditions section of the policy containing a clause for "limits of liability" allowed for a "set-off" by which the underinsured motorist coverage would be reduced by the amount of any sum paid by the owner or operator of the uninsured motor vehicle or any other person or organization jointly or severally liable together with such owner or operator. The court held that this clause applied to the underinsured motorist coverage and therefore, Auto Owners was entitled to the set-off.