April 03, 2025
When a person is injured while occupying a dealership’s shuttle van, does he seek PIP benefits from his own insurer, or is this considered a “motor vehicle operated in the business of transporting passengers” under MCL 500.3114(2) such that the shuttle van’s insurer is in priority? The Court of Appeals addresses this scenario in the recent published opinion, Keith Smith v. Farm Bureau Mut Ins Co of Michigan (2025).
The case arises out of an April 2020 motor vehicle accident. Keith Smith was having his vehicle serviced at the George Matick Chevrolet Dealership in Redford, Michigan. A dealership employee offered him a ride home in the dealership’s shuttle van. The van, insured by Motorist Commercial Mutual Insurance Company, rear ended another vehicle while driving Smith home. Smith sought PIP benefits from Farm Bureau (the insurer of his wife’s vehicle), Motorists (the insurer of the dealership) and the MAIPF as he did not maintain insurance on his own vehicle. This sparked a dispute over which insurer was in priority under the No-Fault Act.
Dispositive motions were filed. The trial court dismissed the MAIPF, finding that the MAIPF, as an insurer of last resort, would not be in priority where two other carriers–Farm Bureau and Motorists–had been identified. Farm Bureau also sought summary disposition, arguing that since Smith was injured while a passenger in the dealership shuttle van, MCL 500.3114(2) applied to place Motorists (as the insurer of the van) in priority. The trial court denied Farm Bureau’s motion, finding that the shuttle van was ancillary to the dealership’s primary business rendering MCL 500.3114(2) inapplicable, and placing Farm Bureau in priority. The trial court dismissed Motorists and this appeal followed.
In a published opinion, the Court of Appeals reversed the trial court’s ruling, finding a disputed fact question regarding whether the shuttle van is “a motor vehicle operated in the business of transporting passengers.”
The Court analyzed the statutory priority scheme in MCL 500.3114. It noted that under subsection (1), a resident relative’s insurer (here, Farm Bureau) typically has priority, but subsection (2) shifts priority to the vehicle’s insurer (Motorists) if it is “operated in the business of transporting passengers.”
The Court canvassed precedent interpreting subsection (2) and analyzed the published case Farmers Ins. Exchange v AAA of Michigan, 256 Mich App 691 (2003). Farmers developed a test to determine whether a “vehicle operated in the business of transporting passengers” called the “primary purpose/incidental nature test.” The relevant inquiry under this test is “(1) whether the transportation of passengers is a primary purpose for which the vehicle is used; and (2) whether the transportation of passengers is a primary, as opposed to incidental, component of the overall business or activity of the operator.”
Applying Farmers, the Smith Court agreed the shuttle van’s primary purpose was transporting passengers, with no dispute from Motorists. However, on the second prong, conflicting evidence—such as Google reviews highlighting the service’s regularity versus an affidavit from the dealership’s Vice President deeming it an incidental courtesy—created a genuine issue of material fact. The Smith Court held reasonable minds could differ on the service’s role, precluding summary disposition. The case was remanded for a trier of fact to resolve this question.
Judge Young, while concurring in the result only, wrote separately, questioning the “primary purpose/incidental nature test’s” consistency with MCL 500.3114(2)’s plain language. She argued the statute focuses on the vehicle’s purpose, not the operator’s overall business, and urged the Michigan Supreme Court to reconsider the test’s second prong, suggesting it complicates litigation unnecessarily.
This published decision clarifies the application of MCL 500.3114(2) to courtesy shuttle services, emphasizing factual scrutiny under Farmers’ “primary purpose/incidental nature test.” Insurers of commercial vehicles offering transport may face increased exposure if such services are deemed central to the operator’s business, while personal insurers could avoid priority in similar scenarios. Judge Young’s concurrence signals potential future review of the test’s framework, which could streamline priority disputes if her view gains traction.