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(In Re: Certified Question) Preferred Risk Mutual Insurance Company v Michigan Catastrophic Claims Association; (MSC-PUB, 12/19/1989; RB# 1323)


Michigan Supreme Court; Docket No. 82968; Published  
Justice Boyle, Riley, Brickley, Cavanagh, Archer, and Griffen (Justice Levin Writes in a Separate Opinion)  
Official Michigan Reporter Citation:  433 Mich 710; Link to Opinion alt     

Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [§3101(1)]  
Catastrophic Claims Association: Creation and Membership [§3104]  
Reimbursement of Member Claims [§3104]  
Nonresident Claimants [§3104]

Legislative Purpose and Intent    

In this decision written by Justice Boyle and signed by five other Supreme Court Justices, the Supreme Court, after accepting the certification of the question from the United States Sixth Circuit Court of Appeals, held that the Michigan No-Fault Act does not require the Michigan Catastrophic Claims Association to indemnify its member insurers for losses paid in excess of $250,000 to insureds who are not residents of the state of Michigan, but who are injured as a result of an automobile accident occurring in the state of Michigan. The court went onto state:

"We understand the term 'resident' to refer not only to those insureds who actually live within this state and who must therefore purchase no-fault automobile insurance policies written in this state which provide the compulsory security requirements of §3101(1) for the owners or registrants of motor vehicles required to be registered in this state, but also to certain insureds who do not live within this state but who are nonetheless required to register, and thus insure, their vehicles in this state."

In reaching its conclusion, the court drew a distinction between benefits paid under no-fault policies issued pursuant to §3101(1) and benefits paid to non-residents pursuant to the foreign insurers certification requirements of §3163. In this regard, the court stated:

"In our opinion, when §3104 is read as a whole, and §3104(2) is examined in the proper context of the entire section, it becomes clear that the reference to personal protection insurance coverages under which the CCA may be liable for indemnification in the event of a catastrophic loss is not simply a general reference to all insurance coverages under which an insurer might be required to pay Michigan no-fault benefits. Rather, it is a shorthand reference to the no-fault personal protection insurance coverages that are generally the subject of the act, i.e., those which were written in this state to provide the compulsory security requirements of §3101 (1) of the no-fault act for the 'owner or registrant of a motor vehicle required to be registered in this state' — 'residents,' in the language of the CCA's plan of operation. In this case, plaintiff did not pay benefits in excess of $250,000 under a policy issued pursuant to §3101(1) to a 'resident,' but rather paid benefits to a nonresident pursuant to its certification under §3163."

The court also relied upon §3104(7)(d) which establishes the method by which the CCA is to calculate and assess its member insurers the premiums which fund the operation of the CCA. Under this section, assessments are based only on policies written in the state of Michigan. The court stated that because the Legislature granted the CCA authority to charge premiums only with respect to policies written in Michigan, this, "Compels the conclusion that it intended to similarly limit the CCA's liability for indemnification under §3104(2). Put simply, we can think of no reason why the Legislature would want to provide such indemnification coverage to insurers, even member insurers who do a significant amount of business within this state, absolutely free of charge, or, perhaps more appropriately, at no cost to them."

The court did emphasize, however, that its conclusion was based solely upon the court's interpretation of the Catastrophic Claims Act itself, not upon the CCA's argument that it had been imbued by the Legislature with the authority to decide who was entitled to indemnification. The court stated:

"In particular, we emphasize that our analysis does not rest upon any finding by this court that the association's plan of operation constitutes a reasonable interpretation of §3104 in light of the Legislature's deference to its expertise in this area. In our opinion, the Legislature did not leave it up to the CCA to decide who will receive indemnification. As Plaintiff-Appellee argues, the requirement in §3104(2) that the CCA 'shall provide' indemnification for losses in excess of $250,000 can hardly be called differential. Thus, while we agree with the CCA's interpretation of §3104(2)'s indemnification requirement, we do so on the basis of the language of the statute itself."

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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