Corwin v. DaimlerChrysler Insurance
296 Mich. App. 242
Mich. Ct. App.2012Background
- Corwins sustained severe injuries in a 2007 Jeep Compass leased from Chrysler LLC; Chrysler Insurance insured the Jeep under a fronted policy that named Chrysler LLC and its U.S. subsidiaries as the insureds, not the Corwins.
- The Corwins also owned two other vehicles: one insured by Auto Club and the motor home insured by Foremost; Auto Club and Foremost paid PIP benefits, while Chrysler Insurance had not payed.
- Chrysler Insurance’s policy includes an exclusion preventing PIP if the injured person is named insured under another policy, creating a potential priority shift among insurers.
- The trial court granted summary disposition for Chrysler Insurance, finding no insurable interest by the named insureds and upholding the exclusion; Auto Club and Foremost sought reform and partial relief.
- The issue presented was whether the Chrysler policy complies with the no-fault act and, if not, whether the policy should be reformed to reflect proper insurable interest and priority for PIP benefits.
- The Michigan Court of Appeals reversed and remanded, reforming the policy to name the Corwins as insureds and to allocate PIP liability among Auto Club, Foremost, and Chrysler Insurance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Insurable interest and policy validity | Corwins lack insurable interest; policy invalid | Chrysler asserts valid named-insured structure | Policy invalid; reform required |
| Priority of PIP liability after reform | Corwins’ household policies should set priority | Chrysler should avoid primary liability under policy terms | Auto Club, Foremost, and Chrysler equally liable for John; Auto Club and Chrysler primarily liable for Vera-Anne |
| Necessity and form of reform | Reform to reflect true named insureds and statutory purpose | Policy should remain as written or minimal changes | Policy reformed to include John and Vera-Anne as named insureds; remedial restructuring required |
Key Cases Cited
- Cvengros v Farm Bureau Ins, 216 Mich App 261 (1996) (insurable-interest standard; named insured required)
- Detroit Auto Inter-Ins Exch v Home Ins Co, 428 Mich 43 (1987) (primary-responsibility allocation and Detroit Auto rule)
- Enterprise Leasing Co v Auto, 452 Mich 27 (2002) (no-fault shift provisions void; owners must provide primary coverage)
- Lee v Detroit Auto Inter-Ins Exch, 412 Mich 505 (1982) (legislative intent: injured person’s personal insurer has primary liability)