The Michigan Supreme Court opened the door to increased liability for no-fault insurers with its July 11, 2019 opinion in Dye v Esurance, holding that a vehicle owner is not excluded by statute from recovering no-fault benefits when the owner fails to personally obtain insurance for the vehicle.
Rather, the injured owner may be able to recover benefits under any applicable no-fault policy that provides the owner coverage so long as someone—conceivably, anyone—has purchased a policy that lists the vehicle.
The plaintiff, Matthew Dye, purchased a vehicle for his own use and asked his father to register the vehicle in his name and obtain insurance. The father registered the vehicle as requested in his son’s name, and obtained insurance on the vehicle under an Esurance policy listing only the father as the named insured. At that time, Matthew lived with his wife, who had insurance on her own vehicle through a GEICO policy.
Matthew was injured in an accident while driving his vehicle and sought PIP benefits from both Esurance and GEICO. The trial court ruled that GEICO was first in priority for payment of benefits without addressing the holding in Barnes v Farmers Ins Exch, 308 Mich App 1 (2014) that an owner is barred from recovering PIP benefits when none of the owners of a vehicle maintains the requisite coverage. The Court of Appeals remanded pursuant to Barnes to determine whether Matthew’s father was a co-owner of the vehicle.
In an opinion authored by Justice Brian Zahra, the Supreme Court overturned Barnes and found the requirement in MCL 500.3101(1) that a vehicle owner or registrant “maintain” insurance was satisfied so long as the owner or registrant directed or arranged for someone to insure the vehicle. Therefore, the owner’s failure to personally obtain insurance for the vehicle was no longer a statutory bar to no-fault benefits under MCL 500.3113(b). This is because the phrase “with respect to which the security required by section 3101 or 3103 was not in effect” refers to the vehicle, not its owner or registrant.
In a dissenting opinion, Justice Elizabeth Clement disagreed with the Court’s ruling that security “with respect to” a vehicle is the same as insurance “for” or “on” that vehicle, because the no-fault act requires people and not vehicles to be insured. Justice Clement argued that the whole of the no-fault act, including the priority schemes, was consistent with the holding in Barnes requiring a vehicle owner to obtain insurance for his own vehicle.
This opinion potentially creates liability for insurers as to vehicle owners where none previously existed, although the specific terms of policies may still limit liability depending on the circumstances. For more information, or if you have any questions regarding this topic, please contact any of our no-fault attorneys.