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Allstate Insurance Company v Citizens Mutual Insurance Company, et al; (COA-PUB, 8/23/1982; RB #550)


Michigan Court of Appeals; Docket No. 55533; Published  
Judges Allen, Riley, and Ferguson; Unanimous  
Official Michigan Reporter Citation: 118 Mich App 594; Link to Opinion alt    

Resident Relatives [§3114(1)]  
Exception for Employer Provided Vehicles [§3114(3)]  
Interest Penalty Between Insurers [§3142]

Uniform Motor Vehicle Accident Reparations Act (UMVARA)    

In this unanimous Opinion by Judge Allen, the Court of Appeals held that when an insurer issues a no-fault policy to a closely held corporation, and the corporation provides cars for the sole stockholder and his family for business and personal use and the family has no other family car, the insurer is not obligated to provide no-fault benefits to the minor son of the sole stockholder when the son is injured in an automobile accident that involves none of the corporation vehicles. In so ruling, the Court held that it would not pierce the corporate veil and hold that where a sole stockholder has exclusive use of a corporate vehicle, the stockholder should be regarded as the insured person. The Court noted there is a strong public policy to treat a corporation as a legal entity distinct from its stockholders unless the corporate entity is being used to avoid legal obligations or is perpetrating fraud, illegality, or injustice. In the facts of this case, the insurance company per §3114(3), undertook a limited risk to provide no-fault benefits to any of the corporation's employees, their spouses or relatives domiciled in the same household if such individuals were injured while occupying a corporate vehicle. To expand coverage in this case, would require rewriting the insurance contract which the Court held was improper.

This suit was between two insurance companies where one of them had paid the injured person his no-fault benefits and was suing the other for reimbursement. In this situation, the Court held that the 12 percent interest provisions of §3142 do not apply where the dispute involves two insurers acting in good faith. In reaching this conclusion, the Court placed considerable reliance on the Uniform Motor Vehicle Accident Reparations Act (UMVARA) which does not provide for an award of interest to an insurer in subrogation cases. In addition, there were several instances in the Michigan Act which could have provided for interest recovery in related situations but failed to do so.

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