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December 05, 2019
In a recent opinion, Vantol v Home-Owners, the Court of Appeals held that PIP coverage under a Non-Trucking Use/Bobtail insurance policy did not apply because of a valid exclusion, despite the insurer issuing a policy in the same order of priority as another applicable auto insurer. In Vantol, the plaintiff was a truck driver who was injured in an accident while driving a semi-truck of which he was the titled-owner. The plaintiff, self-employed by Hammer Transport, LLC, leased the semi-truck to Short Transit, LLC. Plaintiff had obtained a Non-Trucking Use policy (commonly referred to as a “bobtail” policy) from Progressive Insurance covering the truck. Short Transit had also obtained an insurance policy on the truck with Home-Owners. Both the Home-Owners and Progressive policies included Michigan PIP benefit coverage.
There was no dispute that the plaintiff and Short Transit were both “owners” of the truck at the time of the accident, MCL 500.3101(3)(l)(i), and that the two insurers were equal in priority for purposes of PIP payments. The Progressive policy, however, contained a “Contingent Liability Endorsement Limited Liability Coverage for Non-Trucking Use of an Automobile” provision which excludes PIP coverage while a vehicle was leased to anyone other than the named insured, while being used to transport goods for anyone other than the named insured. The named insured on Progressive’s policy was Hammer Transport, and the goods being transported by plaintiff at the time of the accident were for Short Transit, not Hammer Transport. Thus, Progressive argued its exclusion applied and Progressive was not liable for payment of PIP benefits to plaintiff.
The Court of Appeals agreed with Progressive and found that Progressive’s exclusion was valid and allowable under the No-Fault Act. The Court noted that the Progressive policy met the requirements of the No-Fault statute, as it did provide for the payment of PIP benefits, but that the policy simply detailed that it would not pay PIP benefits if (1) the semi-tractor was being leased to a person or organization other than the insured named in Progressive’s policy, (2) if it was also being used to transport goods for another under a lease agreement, and (3) only if the required no-fault insurance was in place by virtue of another policy. The Court found that even though the policy does not provide for complete PIP benefits in all circumstances, when it combined with the Home-Owners policy, it ensured the semi-tractor was covered by the required insurance at all times.
Because Short Transit, an owner of the truck, maintained the required coverage on the vehicle, the plaintiff was free to obtain the limited “extra” PIP insurance on the truck from Progressive if he so desired, and neither plaintiff nor Hammer had a compulsory duty to obtain any insurance on the vehicle. Further, Progressive’s policy did not avoid or shift its primary responsibility for PIP benefits, but instead provided PIP coverage with essentially a “business exclusion” which applied only if the vehicle was otherwise properly insured under the requirements of the No-Fault Act.
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Sarah Nadeau, Editor of the Law Fax Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or firstname.lastname@example.org