936 N.W.2d 834
Mich. Ct. App.2019Background
- Defendant USA Underwriters (USAU) sold and issued a policy to Steven Vandeinse that provided only comprehensive/collision and other optional coverages but omitted Michigan's mandatory no-fault coverages (PIP, PPI, residual liability).
- Vandeinse purchased the 2011 Chevrolet Impala June 19, 2015, was given a USAU Certificate of Insurance, registered the car, and paid premiums; USAU knew the vehicle would be driven because it sold collision coverage.
- On September 8, 2015, a permissive driver of the Impala injured bicyclist Niles Johnson; the car and policy were identified at the scene as insured by USAU.
- Johnson sued and the trial court concluded USAU’s policy violated MCL 500.3101 by failing to include mandatory no-fault coverages and reformed the contract to include those coverages; USAU appealed.
- The dispute centers on whether an insurer may lawfully issue an automobile insurance policy in Michigan that supplies only optional coverages (e.g., collision/comprehensive) without first providing the statutory no-fault minimums, except where the vehicle is not driven on a highway.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insurer may sell an "automobile insurance" policy in Michigan that omits mandatory no-fault coverages (PIP, PPI, residual liability) when the vehicle will be driven on highways | Johnson (and trial court) — such policies violate MCL 500.3101; insurers must start with mandatory no-fault coverages; reformation appropriate | USAU — its policy documents and disclosures show the insured accepted a comprehensive/collision-only policy without PIP; financial responsibility schemes permit multiple policies to satisfy statutory requirements | Trial court correct in treating USAU’s policy as violative; the no-fault act requires initial inclusion of mandatory coverages unless vehicle will not be driven on a highway (dissent would affirm) |
| Whether the Financial Responsibility Act allows insurers to circumvent the no-fault act by allocating mandatory coverage across multiple policies | Johnson — the Financial Responsibility Act cannot be used to justify policies that are repugnant to the no-fault act | USAU — reliance on statutes permitting multiple policies to fulfill financial responsibility requirements | Court (and cited precedent) — financial responsibility provisions do not authorize insurers to circumscribe no-fault mandates; no-fault act controls |
| Whether an insurer’s issuance of a certificate that resembles Secretary of State registration proof and omission of mandatory coverage supports reformation for intent to deceive | Johnson — the certificate and conduct evidenced deceptive practice justifying reformation to include mandatory coverages | USAU — contends insured knowingly accepted limited coverage per application/disclosures | Trial court found evidence supported reformation; dissent would affirm that issuing such noncompliant policies is unlawful |
| Whether prior caselaw (e.g., Integral) allows combining non-PIP policies with others to meet no-fault requirements | Johnson — Integral does not authorize selling policies that lack PIP; Integral involved temporally complementary PIP policies, not non-PIP policies | USAU — majority relied on Integral to support permissibility of multiple policies | Court’s analysis (dissent) — Integral concerned priority and temporally complementary PIP coverage; it does not permit issuing policies that omit PIP altogether |
Key Cases Cited
- Johnson v. Recca, 492 Mich. 169 (Supreme Court) (describing mandatory PIP under the no-fault act)
- Citizens Ins. Co. of America v. Federated Mut. Ins. Co., 448 Mich. 225 (Supreme Court) (financial responsibility act cannot justify policies that conflict with the no-fault act)
- Integral Ins. Co. v. Maersk Container Serv. Co., Inc., 206 Mich. App. 325 (Mich. Ct. App.) (priority dispute between no-fault insurers; policies provided complementary PIP coverage)
- Krohn v. Home-Owners Ins. Co., 490 Mich. 145 (Supreme Court) (owners may buy greater coverage than no-fault minimums)
- Dobbleare v. Auto-Owners Ins. Co., 275 Mich. App. 527 (Mich. Ct. App.) (insurer electing to provide automobile insurance is liable for no-fault benefits)
- MEEMIC Ins. Co. v. Michigan Millers Mut. Ins., 313 Mich. App. 94 (Mich. Ct. App.) (statutory interpretation standards on no-fault provisions)