UNAMBIGUOUS EXCLUSIONARY PROVISION APPLIES TO EXEMPT NO-FAULT INSURER FROM COVERAGE WHERE ITS INSURED WAS DELIVERING PIZZAS FOR A FEE AT THE TIME THE ACCIDENT OCCURRED.

In the recent unpublished decision, Farm Bureau Mutual Insurance v Wagner and Lewis, et al, (Docket No. 322738, 11/17/15), the Michigan Court of Appeals reaffirmed that a No-Fault Insurer is not liable for risks it did not assume.  In particular, because Farm Bureaus’ policy specifically excluded from coverage liability arising out of the ownership or operation of a vehicle being used to carry persons or property for a fee, Farm Bureau was not obligated to defend and indemnify its insured who caused a motor vehicle accident while delivering pizza for his employer.

On May 17, 2010, Conor Lewis was involved in a motor vehicle accident with Michelle and James Wagner while operating a vehicle owned by his father, Greg Lewis, and insured by Farm Bureau.  The accident occurred while Conor was delivering pizza for his employer, Pizza Hut.  The Wagners filed suit against Conor, Greg and Pizza Hut.  Greg argued that Farm Bureau was obligated to defend him against the Wagners’ claims and indemnify him for damages arising out of the May 17, 2010 motor vehicle accident.  Farm Bureau filed a declaratory judgment action against Conor, Greg, the Wagners and Pizza Hut claiming that it was not obligated to defend or indemnify any involved party, as the policy specifically excluded liability with respect to a vehicle being used to carry property for a fee.  There was no question of fact that Conor Lewis was delivering pizza at the time of the accident in question.

The trial court held that the policy at issue was not ambiguous, and that because there was no question of fact that Conor Lewis was delivering property for a fee, Farm Bureau was exempt from liability.  Michelle and James Wagner appealed.

The Michigan Court of Appeals agreed that the contract at issue in this claim was not ambiguous.  Moreover, MCL 500.2118(2)(f) permits insurers to limit coverage on the basis of business use.  Husted v Dobbs, 459 Mich 500, 509 (1999).  If any exclusion in a policy applies, coverage is lost.  Century Surety Co v Charron, 230 Mich App 79, 83 (1998).  “[B]ecause an insurance company cannot be liable for a risk it did not assume, clear and specific exclusions must be given effect.”  Id.  The Michigan Court of Appeals thus found that the exclusion was valid and enforceable.

The Michigan Court of Appeals previously held that exclusions similar to those at issue in this case included delivering pizzas for a wage.  Amerisure Ins Co v Graff Chevrolet, Inc., 257 Mich App 585, 592-595 (2003), rev’d in part on other grounds 469 Mich 1003 (2004).  Because Conor was delivering pizza for a fee at the time of the accident in question, and because the policy specifically excluded from coverage damage arising from such actions, Farm Bureau could not be liable.  The Court did not support the Wagner’s argument that because Pizza Hut reimbursed Conor for each delivery, the exclusion of the policy does not apply.  It likewise did not support the argument that the policy did not apply to Conor because he was not licensed under the Motor Carrier Act, MCL 475.1 et seq.

Consequently, because there was no evidence presented that the contract at issue was ambiguous, and because there was no question of material fact that Conor was delivering property for a fee at the time of the accident, the exclusionary provision applied to exempt Farm Bureau from coverage.

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