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In Corwin v DaimlerChrysler Ins Co, 2012 Mich App LEXIS
693 (April 17, 2012), the Michigan Court of Appeals held in a
published decision that a long-term lessor cannot be listed as a
named insured on a policy conferring personal injury protection
("PIP") benefits under the Michigan No-Fault Act.
The plaintiffs were injured in a car accident while in a vehicle
they had leased from Chrysler LLC. An insurance policy issued by
the defendant, DaimlerChrysler Insurance Company ("Chrysler
Insurance"), named Chrysler LLC and its subsidiaries as the
insureds. The policy additionally provided that Chrysler Insurance
was not responsible for PIP benefits to the plaintiffs in the event
the plaintiffs were entitled to PIP benefits as the named insureds
under another policy. The plaintiffs were entitled to PIP benefits
under policies with two other insurance companies on their other
vehicles.
The plaintiffs, together with one of their alternate insurers,
brought suit against Chrysler Insurance seeking declaratory relief
regarding their rights to reimbursement and recovery. The trial
court granted Chrysler Insurance's motion for summary
disposition, finding that the policy did not violate the Michigan
No-Fault Act and that the plaintiffs' other insurers were
required to provide first priority payments.
The Michigan Court of Appeals reversed. The court first noted
that "under Michigan law, an insured must have an
'insurable interest' to support the existence of a valid
automobile liability insurance policy" and that the
"insurable interest must be that of a named insured."
Id. at *16-17. While "owners and registrants have an
insurable interest," the court noted that the Michigan
No-Fault Act expressly excludes a longterm lessor from being either
an owner or registrant. Id. at *19 (citing MCL
500.3101(2)(h)-(i)). The court also noted that Chrysler LLC lacked
any insurable interest flowing from protection of a person's
"health and well-being" as it could itself not suffer
accidental bodily injury. Id.
As to whether Chrysler Insurance's policy could validly
shift primary liability for no-fault coverage to the
plaintiffs' other automobile insurers, the court held such a
policy violated legislative intent that "an injured
person's personal insurer stand primarily liable for
PIP benefits." Id. at *25 (emphasis in original).
The court thus reformed Chrysler Insurance's policy to list
the plaintiffs as the named insureds. The court also held that
Chrysler Insurance would be equally liable for PIP benefits with
the plaintiffs' other insurers. The court remanded for a
determination of the amount of liability and to order appropriate
reimbursement.
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