BOBTAIL INSURER NOT HIGHEST IN PRIORITY

L. Ladd Culbertson

In Alesevic v Progressive/Acceptance Indemnity, decided June 30, 2022 (Docket No. 358507), the Michigan Court of Appeals interpreted a non-trucking insurance policy (also known as a “bobtail” policy) in the context of coverage for the payment of No-Fault PIP benefits.

The plaintiff in this case, Haris Alesevic, was insured under a personal auto insurance policy issued by Progressive. He had also obtained, from Acceptance Indemnity Insurance Company (“Acceptance”), a “bobtail” policy covering a 2007 Volvo tractor which he used to haul semi-trailers. Both insurance policies had coverage for Michigan PIP, although Acceptance’s “bobtail” policy included an exclusion stating that they would not pay PIP benefits for “bodily injury” to anyone entitled to Michigan No-Fault benefits as a Named Insured under another policy.

Because the plaintiff was a named insured under both policies, Progressive argued that Acceptance was responsible for a pro-rata portion of the plaintiff’s PIP benefits under MCL 500.3114(1). Progressive further argued that the exclusion relied upon by Acceptance was unenforceable because the Michigan No-Fault statute mandates PIP-benefit coverage in automobile insurance policies.

The Court of Appeals found that the introductory language found in Acceptance’s PIP endorsement modified language regarding insurance coverage for the Volvo, but only regarding coverage forms that were not applicable in this case. There was nothing in the endorsement that negated or broadened the language in the certificate of insurance that limited PIP coverage to injuries arising out of accident involving the Volvo tractor. Further, the Court noted that the No-Fault Act did not preclude the exclusion relied upon by Acceptance. Quoting Johnson v USAA Underwriters, 328 Mich App 223; 936 NW2d 834 (2019), the Court noted that the No-Fault Act does not bar an insurer’s ability to sell optional insurance coverages, nor does it require that every insurer must provide mandatory coverages. Instead, MCL 500.3101(1) of the statute requires that any insured who intends to drive on a highway must have the mandatory coverages.

The Court also found that even if the endorsement did apply, an exclusion in Acceptance’s policy precluded PIP coverage because plaintiff is a named insured on Progressive’s policy. Therefore, the Court held that the non-trucking insurance policy (the “bobtail” policy) issued by Acceptance was not required to provide PIP benefits to the plaintiff. Further, the plaintiff had existing PIP coverage through Progressive, so he was not without such coverage.