956 N.W.2d 535
Mich. Ct. App.2020Background
- On July 4, 2016, Kenneth Flesher was struck in a hit-and-run and believed the striking vehicle was a GMC Yukon owned by Nicholas Fetzer.
- Nicholas owned the Yukon; his mother, Kelly Fetzer, was the named insured on a MemberSelect automobile liability policy after Nicholas asked her to add the vehicle because it was cheaper.
- Kelly paid the premiums; Nicholas reimbursed her; Kelly did not live with Nicholas and did not use the vehicle.
- MemberSelect assigned Nicholas defense counsel in Flesher’s negligence suit and separately filed a declaratory-judgment action seeking a ruling that Kelly lacked an insurable interest and the policy was void.
- The trial court granted summary disposition in the negligence suit (finding insufficient proof the Yukon was the vehicle) but denied MemberSelect’s declaratory motion, holding Kelly had an insurable interest as the mother of the driver; MemberSelect appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the named insured (Kelly) had an insurable interest so the policy is valid | MemberSelect: Kelly lacked an insurable interest because she was neither owner nor registrant; policy void ab initio | Kelly/Nicholas: parental interest in adult child’s well‑being and payment/reimbursement of premiums creates a sufficient insurable interest | Court affirmed: Kelly had a sufficient insurable interest as a parent; policy not void |
| Whether the insurable-interest requirement applies in automobile liability insurance and how broadly | MemberSelect: insurable-interest rule applies and invalidates policies issued without such interest | Kelly: the public‑policy rationale for insurable interest is weak for liability insurance; family interests and no‑fault goals favor coverage | Court: bound by Clevenger/Allstate that the rule can apply, but recognized tensions with no‑fault policy and declined to extend the doctrine to void this policy; urged Supreme Court clarification |
Key Cases Cited
- Clevenger v. Allstate Ins. Co., 443 Mich 646 (Supreme Court of Michigan) (insurable interest discussed in automobile liability/no‑fault context)
- Allstate Ins. Co. v. State Farm Mut. Auto. Ins. Co., 230 Mich App 434 (Mich. Ct. App.) (applied Clevenger and questioned scope of insurable‑interest rule)
- Morrison v. Secura Ins., 286 Mich App 569 (Mich. Ct. App.) (parent named insured; family interest and weak insurable‑interest rationale under liability policies)
- Corwin v. DaimlerChrysler Ins. Co., 296 Mich App 242 (Mich. Ct. App.) (insurable‑interest requirement and owners/registrants context)
- Dye v. Esurance Prop. & Cas. Ins. Co., 504 Mich 167 (Supreme Court of Michigan) (no‑fault benefits availability does not depend on who procured the insurance)
- Crossman v. American Ins. Co., 198 Mich 304 (Mich. 1917) (broad definition of insurable interest)
- Madar v. League Gen. Ins. Co., 152 Mich App 734 (Mich. Ct. App.) (insurable interest in one’s health and well‑being for PIP entitlement)