Michigan Court of Appeals Decision Addresses Priority of Coverage Based on Insurer’s Proof of Insured’s Domicile

In a recent unpublished opinion, the Michigan Court of Appeals held that because the claimant did not establish a new domicile after moving from his grandparents’ home, the trial court properly granted summary disposition when it held that the grandparents’ insurer was in higher priority and responsible for reimbursement of no-fault benefits.

In Farm Bureau General Ins. Co. of Michigan v. Progressive Michigan Ins. Co., the claimant was injured in an automobile accident as a pedestrian. The police report indicated that the claimant’s address was the same as his grandparents’ residence. As a result, he applied for benefits from his grandparents’ insurer, Progressive, as a resident relative of his grandparents. But when Progressive denied the application, he pursued a claim for no-fault benefits from Farm Bureau, which insured the operator of the motor vehicle involved in the accident.

After paying benefits, Farm Bureau filed a complaint for declaratory relief on the issue of insurance coverage, asserting that Progressive was a higher priority insurer and seeking full reimbursement of all benefits paid on the claimant’s behalf. Farm Bureau moved for summary disposition, arguing that the claimant was domiciled at his grandparents’ home at the time of the accident and that there was no evidence that the claimant established a new domicile to replace his domicile at his grandparents’ home. In response, Progressive argued that because the claimant had moved out of his grandparents’ home three or four months before the accident and did not intend to return, he was not domiciled at his grandparents’ residence.

Michigan’s No-Fault Act determines which insurer is in a priority position to pay PIP benefits to a non-occupant claimant involved in a motor vehicle accident – such as a pedestrian or an individual riding a moped. Under MCL 500.3115, if the claimant is not insured through an automobile policy providing PIP benefits – either as a named insured or through a policy of a spouse or relative domiciled in the same household – the insurer of the owner or registrant of the vehicle involved in the accident is responsible for payment.

Interpreting the Michigan Supreme Court’s decision in Grange Ins. Co. of Michigan v. Lawrence, the Court of Appeals held that “to terminate an established domicile, an individual must establish a new domicile through a combination of residency and intent.” Applying Grange, the Court of Appeals noted, “it is clear that although [the claimant] no longer planned to permanently reside with his grandparents, he had not yet established a new domicile.” At the time in question, the claimant was living in various places, including with unknown friends at unknown addresses and at the auto shop where he worked. Thus, the transient nature of his living arrangements after moving from his grandparents’ home did not allow for the inference that he was residing at a new place with the intention to remain permanently or indefinitely.

The Court of Appeals rejected Progressive’s defense that it was only required to prove the claimant was no longer domiciled with his grandparents and that it had no obligation to prove exactly where his new domicile was. The court found Progressive was unable to meet its burden of proof that the claimant had established a new domicile in order to show that he had terminated his old domicile.

Based on the Farm Bureau ruling, it is no longer sufficient for insurers to prove that a claimant abandoned a prior domicile. Instead, insurers seeking to avoid liability on the basis that a claimant is no longer a resident relative of their insured must be able to prove that the claimant established a new domicile elsewhere.