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A Better Partnership
July 24, 2015

COA: A properly crafted named-driver exclusion in a vehicle insurance policy allows insurers to exclude coverage for damages caused by specific drivers

In Frankenmuth Insurance Co. v. Poll, No. 320674, the Michigan Court of Appeals reviewed the trial court’s ruling on a motion for summary disposition as well as de novo issues involving statutory construction and construction of insurance contracts as they apply to named-driver exclusion provisions in an insurance policy under the No-Fault Act, MCL 500.3101. The Court of Appeals held that a named-driver exclusion may allow insurers to exclude specific drivers from an insurance policy.
In September 2011, Mr. Poll crashed a car into a home that plaintiff Frankenmuth Insurance Company insured. Frankenmuth paid money to the homeowner for damages and initiated this subrogation action under the No-Fault Act against the vehicle's insurer. That insurance company insured the vehicle under a policy issued to Mr. Poll's mother.  That policy named Mr. Poll as an excluded driver, and warned that all liability coverage would be void if Mr. Poll operated the insured vehicle and caused damage.  The trial court granted summary disposition in favor of the auto insurer and denied plaintiff’s motion for reconsideration.
The Court of Appeals affirmed, noting that Michigan has passed a named-driver exclusion provision under Michigan’s Exclusion of Named Person Statute, 500.3009(2).  The Court held that, under MCL 500.3009(2), an insurer is free to limit the scope of coverage “as long as the policy language fairly leads to only one reasonable interpretation and is not in contravention of public policy” and “the Legislature has made it possible for insured and insurers to exclude bad drivers from a policy.” The Court found the auto insurance company’s named-driver exclusion provision to be clear and unambiguous because it contained, verbatim, the language set forth in MCL 500.3009(2). It also found that the named-driver provision was not against public policy because it did not conflict with a statute. Finally, the Court of Appeals held that the trial court did not abuse its discretion in denying plaintiff’s motion for reconsideration.

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