What the No-Fault Act Giveth the No-Fault Act can Taketh Away

The Michigan Court of Appeals recently ruled that an auto insurance policy, when read as a whole with related documents like the corresponding declaration page, was sufficient to deny a claim based on the excluded driver provision.

A Michigan motorist was involved in an automobile accident while driving a motor vehicle insured under a personal auto policy issued to his wife. The husband sustained injuries and received medical care, and assigned to the medical provider his right to seek payment of Michigan Personal Protection Insurance (PIP) no-fault benefits.

The medical provider, in turn, sought to recover payment for PIP benefits under the assignment, which were denied by the auto insurer. The medical provider filed suit, arguing that the injured person had a statutory right to receive PIP benefits.

The auto insurer filed a motion for summary disposition, arguing that the injured husband was an excluded operator under the policy, and thus, barred from receiving PIP benefits. The plaintiff medical provider argued that the “Named Driver Exclusion Endorsement” did not specifically state that PIP benefits would not apply if the husband operated the vehicle.

In a published decision, Bronson Health Care Group, Inc v State Auto Prop & Cas Ins Co, No. 345332, 2019 WL 5849013 (Mich Ct App, November 7, 2019), the Michigan Court of Appeals, while acknowledging that PIP benefits are statutorily mandated benefits, ruled that the no-fault act (MCL 500.3113(d)) provides, in relevant part, that a “person is not entitled to be paid personal protection insurance benefits for accidental bodily injury if at the time of the accident ... the person was operating a motor vehicle … as to which he or she was named as an excluded operator as allowed under section 3009(2).”

The court noted that “a validly-excluded-driver’s ‘act of driving the insured vehicle at the time of the accident render[s] the vehicle uninsured[.]’” The appellate court reasoned that the auto policy and related documents, including the declarations page, when read as a whole, clearly and unambiguously, named the husband as an excluded operator and complied with MCL 500.3009(2).

The moral of our story is that while the declarations page of a policy can giveth benefits, it can also taketh them away!

A link to the full opinion may be found here

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