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A Better Partnership
October 30, 2015

COA: A motor vehicle that was not driven is not statutorily required to pay for accidental damage arising out of its ownership or maintenance

In Meemic Insurance Co. v. Michigan Millers Mutual Insurance, No. 322072, the Court of Appeals held that an insurer of an owner of a motor vehicle involved in an accident is not statutorily required to pay property insurance benefits if the motor vehicle was not driven and the owner elected to forgo no-fault insurance.
John Putvin owned several motor vehicles and the one at issue, a 1966 Corvette, had not been driven since 2012 or 2013.  Putvin stored his Corvette in a commercial storage facility, and Catherine Eppard and Kevin Byrnes stored personal property at the same storage facility.  In April 2013, two individuals went to perform maintenance on the Corvette and caused a fire that destroyed more than $125,000 of Eppard and Byrnes’ personal property.  Meemic insured Eppard and Byrnes against fire losses and compensated them for the damages.  Subsequently, Meemic filed suit against Home-Owners Insurance Company as the subrogee of Eppard and Byrnes, to recover for negligence under Michigan’s no-fault act.
Home-Owners provided an automobile no-fault policy to Putvin for his motor vehicles that were in use.  The Corvette had not been driven in over a year and only had an insurance policy through State Farm for comprehensive coverage, which was permitted under MCL 500.3101(1). Meemic alleged that under the no-fault act, Home-Owners were liable to pay property protection insurance benefits for the losses caused by the fire.  Home-Owners moved for summary disposition arguing that property protection insurance was not required, and therefore, the terms of the policy, instead of the no-fault act, control which loss Home-Owners were obligated to cover.  The Home-Owners policy stated that it would pay property protection insurance benefits for accidental damage to tangible personal property, which arises out of the ownership, operation, maintenance, or use of an “insured motor vehicle as a motor vehicle.”  The trial court determined that Home-Owners were not required to pay for the loss because Putvin was not required to maintain no-fault coverage for a motor vehicle that was not driven or moved on a highway.  Subsequently, Meemic appealed.
The Court of Appeals reviewed the application of MCL 500.3101(1).  The court concluded that the statute allows an insured to “delete” specified “coverages” and only maintain the “comprehensive coverage” portion of the policy for motor vehicles that are not driven or moved on a highway.  Therefore, the Court affirmed the trial court’s decision and held that Home-Owners were not liable to pay benefits for accidental damage to tangible property arising out of the ownership, operation, maintenance, or use of the Corvette.

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