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Allstate Insurance Company v Defrain; (COA-PUB, 2/23/1978; RB #71)


Michigan Court of Appeals; Docket No. 77-2080; Published   
Judges Bronson, R. B. Burns, and R. Boyle; Unanimous  
Official Michigan Reporter Citation: 81 Mich App 503; Link to Opinion alt   

Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [§3101(1)]
General / Miscellaneous [§3114]
Liability Exclusions for Family Member Claims (Step-Down Exclusions) [§3131]

Casualty Insurance Policies – Minimum Coverages and Required Provisions (MCL 500.3009)
Legislative Purpose and Intent   

The Court of Appeals fully concurred with the opinion of another panel of the Court of Appeals in Gurwin v Alcodray (item number 40) and held that a "family exclusion clause" providing that residual liability coverage under the policy does not apply to bodily injury sustained by any person who is related to and resides in the same household as an insured against whom the claim is made, is invalid and unenforceable. The Court reasoned that such an exclusion clause is neither authorized by nor in harmony with the no-fault statute. The Court noted that even though the no-fault statute partially abolishes tort remedies, it retains residual liability in §3135 and that §3101 of the no-fault act requires that the policy coverage insure against serious injury to third parties. The Court disagreed that §3114 of the no-fault statute which provides for PIP benefits for members of the insured's household was intended to exclude members of the insured's household from residual liability. The Court noted that even though MCLA 500.3009(2) allows the exclusion of liability coverage when a vehicle is operated by a named person, it does not authorize the type of exclusion which is involved in this case which is designed to avoid liability when certain persons not involved in the operation of the motor vehicle are injured. The injured person in this case was the defendant's wife who was injured by a flying board which was thrown out from underneath the wheels of her husband's car when he was attempting to extricate the car from a snowbank. The Court of Appeals ruled that Allstate had a duty to defend the wife's claim against her husband.

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