Michigan Coverage Decisions, Issue 195

Polite v Tyler

Unpublished opinion per curiam of the Court of Appeals, issued March 29, 2016 (Docket No. 325811)

The plaintiff was injured while driving a car insured by American Bankers Insurance Company, including uninsured motorist coverage. The tortfeasor was an uninsured motorist. The plaintiff owned two other vehicles insured by Farm Bureau with the same limits of uninsured motorist coverage, but with an owned auto exclusion if the auto is not insured for uninsured motorist coverage by Farm Bureau. Farm Bureau moved for summary disposition based on the owned auto exclusion arguing that uninsured motorist coverage was not available because the plaintiff was injured while driving her car insured by another carrier and not one of the two insured vehicles on its policy. The trial court ruled that both policies were equal in priority, and that any uninsured motorist coverage was to be pro-rated between the two companies.

The Court of Appeals overruled the trial court, determining that the exclusion in the Farm Bureau policy was clear and unambiguous, therefore, Farm Bureau was not liable for any of the plaintiff’s uninsured motorist benefits arising from the accident involving the car insured by the other insurance carrier.

[su_box title=”Kallas & Henk Note”] The Court followed long standing contract interpretation standards based on the unambiguous policy language. The Court separately addressed the issue of whether or not Farm Bureau’s exclusion-clause defense was an affirmative defense that needed to be raised in its responsive pleading, ruling that it did not because a defense that addresses the merits of a plaintiff’s claim is not an affirmative defense. [/su_box]


Farm Bureau Gen Ins Co of Michigan v Estate of Andrew Stormzand

Unpublished opinion per curiam of the Court of Appeals, issued April 26, 2016 (Docket No. 325326) leave denied December 28, 2016 (Docket No. 153861)

The decedent was a sole proprietor with a business insurance policy. The policy designated that an insured was shown in the Declarations as an individual, but only with respect to the conduct of the sole-proprietor business. The decedent permitted use of his off-road vehicle for a non-business related recreational event during which the off-road vehicle was involved in an accident with injuries to a passenger. The injured passenger filed a negligence suit against the decedent, and the decedent’s business, alleging that the business was liable for the negligent entrustment of the off-road vehicle to the driver. The trial court held that the business insurance policy was not applicable because the decedent’s action to allow the use of the off-road vehicle was not related to the business.

In affirming, the Court of Appeals noted that (1) there was nothing in the record to support that the use of the off-road vehicle was for anything other than personal purposes; (2) the operator was not an employee of the business; (3) the off-road vehicle was not painted with any advertisement for the business; and (4) there was nothing in the record to indicate that any consideration of any business interests factored into the loan the off-road vehicle.

[su_box title=”Kallas & Henk Note”] The Court used dictionary definitions to provide definitions for undefined words and to ultimately enforce the policy in accordance with its plain terms. [/su_box]


McJimpson v Auto Club Group Ins Co.

Published opinion per curiam of the Court of Appeals, issued May 12, 2016 (Docket No. 320671)

The plaintiff made a claim for uninsured motorist benefits after a metal object flew off a semi-truck and struck her windshield. The driver of the semi-truck never stopped. The insurance policy’s definition of an uninsured motor vehicle included, in relevant part, “a hit-and-run motor vehicle of which the operator and owner are unknown and which makes direct physical contact with: (1) you or a resident relative, or (2) a motor vehicle which an insured person is occupying. The insurance company filed a motion for summary disposition on the grounds that the uninsured motorist coverage did not apply because the plaintiff was struck by an object propelled by or from the unidentified semi-truck, and not by the semi-truck itself, which the Court denied.

The Court of Appeals reversed the trial court denial of the insurer’s motion for summary disposition. The Court of Appeals distinguished the insurance policy language from other insurance policy language reviewed previously which specifically stated that there would be coverage if an unidentified vehicle hit or caused an object to hit an insured’s vehicle, or if the unidentified vehicle made physical contact (direct or indirect) with the insured’s vehicle. This policy made it clear that there must be direct physical contact between the unidentified vehicle and plaintiff’s vehicle.

[su_box title=”Kallas & Henk Note”] The Court of Appeals relied on the analysis in Hill v Citizens Ins, 157 Mich App 383, 394(1987) which addressed the fundamental difference between “physical contact”, finding indirect contact allows coverage so long as there is a sufficient causal connection between the unidentified vehicle and the striking object and “direct physical contact” which requires actual direct contact between the vehicles. [/su_box]


LaChapell v Home-Owners Ins Co.

Unpublished opinion per curiam of the Court of Appeals, issued May 24, 2016 (Docket No. 326003)

The plaintiff and his wife were crossing a street when struck by an underinsured vehicle, killing the wife and seriously injuring the plaintiff. The plaintiff asserted that the tortfeasor driver had an insurance policy that had limits less than the amount of damages sustained. The plaintiff’s employer had a business insurance policy which listed plaintiff as a scheduled driver. The pickup truck was not involved in the accident, but the insurance policy provided liability coverage to the “first named insured” when the first named insured was not occupying a vehicle covered under the policy. The plaintiff contended that he and his wife were covered under a broadened coverage endorsement. The trial court found that the endorsement did not apply because the plaintiff’s employer, not the plaintiff, was the first named insured on the policy.

The Court of Appeals affirmed, stating that the UIM would only cover the plaintiff and his wife under the provision applying to any person that suffered bodily injury while occupying a covered vehicle. Because the plaintiff and his wife were not occupying a covered vehicle, UIM coverage did not apply under the plain language of the policy.

[su_box title=”Kallas & Henk Note”] The Court also rejected the argument that the named insured company did not have an insurable interest because a company cannot suffer bodily injury and the Court determined that an insurable interest existed when employees occupied company vehicles. [/su_box]

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