Summary
holding where UM statute required that persons insured under liability coverage also be insured under UM coverage, court would extend UM coverage to person insured under liability provisions despite exclusion of such person from UM definition of insured
Summary of this case from Lee v. Grinnell Mut. Reins. Co.Opinion
Docket No. 57582.
Argued October 6, 1976 (Calendar No. 9).
Decided July 18, 1977.
Eggenberger, Eggenberger, McKinney Weber for defendant Central National Insurance Group of Omaha.
Harvey, Kruse Westen, P.C. (by Phillip G. Alber), for defendant Farmers Insurance Group.
There are two issues in this case. They are: 1) whether, when an automobile liability insurance policy is issued in this state which contains a provision for uninsured motorist coverage, the class of persons covered under the uninsured motorist coverage may be narrower than the class covered under the liability coverage provision and, 2) whether, in this case, the plaintiff is within the protected class under the liability coverage.
As indeed it must, unless such coverage has been rejected by the insured. MCLA 500.3010; MSA 24.13010.
On January 25, 1972 Zoe Pappas was a passenger on a motorcycle operated by its owner. The motorcycle was struck by an uninsured automobile and plaintiff sustained serious injuries. Appellee Central National Insurance Group of Omaha (Central) insured the motorcycle under a policy issued to its owner. Appellant Farmers Insurance Group (Farmers) insured an automobile owned by appellee Pappas' father. Pappas filed suit against Central seeking recovery under the uninsured motorist coverage provision of its liability policy on the motorcycle. Farmers was joined as a defendant.
The trial court granted summary judgments in favor of Central and against Farmers. The latter was ordered to proceed to arbitration pursuant to the terms of the uninsured motorist clause of the policy issued to Pappas' father.
Both judgments were appealed to the Court of Appeals which affirmed, holding:
Pappas v Central National Insurance Group of Omaha, 64 Mich. App. 611; 236 N.W.2d 158 (1975).
a) that, as determined by another panel of that Court in Roach v Central National Insurance Co of Omaha, 60 Mich. App. 40; 230 N.W.2d 297 (1975), uninsured motorist coverage must be provided to the same persons included as insureds in the liability portion of the policy, and
b) that passengers are not "person insured" under the liability provision of Central's policy.
Resolution of the first issue requires our determination whether the so-called uninsured motorist statute defines a category of persons who must be protected by uninsured motorist coverage. Central contends that the Legislature expressed an intention to allow the insurer and the insured freedom to define contractually the class of persons to whom protection would be extended under the uninsured motorist clause of an automobile liability policy issued in this state.
We disagree.
At the time of the accident in this case, MCLA 500.3010; MSA 24.13010 provided:
MCLA 500.3010; MSA 24.13010 was repealed by 1972 PA 345, eff. October 1, 1973.
"No automobile liability or motor vehicle liability policy insuring against loss * * * shall be delivered or issued for delivery * * * unless coverage is provided therein or supplemental thereto * * * for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles * * * unless the named insured rejects such coverage in writing as provided herein." (Emphasis supplied.)
We conclude that when the Legislature provided for coverage to be provided "therein" or supplemental "thereto" for the protection of persons insured "thereunder", it was making consistent reference to the liability coverage portion of the policy. As we said in Blakeslee v Farm Bureau Mutual Insurance Co of Michigan, 388 Mich. 464; 201 N.W.2d 786 (1972) in which we found "other insurance" clauses to be in violation of the policy of the uninsured motorist statute:
Blakeslee, Rowland v Detroit Automobile Inter-Insurance Exchange, 388 Mich. 476; 201 N.W.2d 792 (1972), and Boettner v State Farm Mutual Ins Co, 388 Mich. 482; 201 N.W.2d 795 (1972), comprised a trilogy of cases which considered the validity of "other insurance" and "exclusions" clauses limiting recovery under uninsured motorist insurance both prior to and after the passage of MCLA 500.3010; MSA 24.13010.
"The language of the statute is plain, unambiguous and mandatory.
"It unequivocally requires that `[n]o * * * policy * * * be delivered * * * unless coverage is provided therein'. Stated in the affirmative, every policy must have this coverage. Only after the mandatory offer is made can the insured reject it in writing.
"Nowhere in the statute does the Legislature attempt to fix any maximum amount of recovery less than the amount of the loss." 388 Mich. 473.
Similarly, the Legislature has prescribed the class of persons to which uninsured motorist coverage must apply. It must be provided for the protection of persons "insured thereunder", that is, persons insured under the liability coverage portion of the policy. Nowhere does the Legislature attempt to fix a part of the class covered by the liability policy as the minimum number of persons to be covered. The statute is clear in requiring that the offer of coverage apply to whomever is insured under the liability coverage of the policy. That the plaintiff in Blakeslee was a named insured responsible for paying premiums whereas Pappas was not does not undermine the authority of that case. The critical fact in Blakeslee was that statutorily required coverage was being limited.
The principal purpose of § 3010 was to reduce claims against the motor vehicle accident claims fund. Central's contention that the Legislature intended that the insurer and the insured should have the ability to narrowly define the class of persons protected is inconsistent with that purpose, as well as with the plain meaning of the statute. Central's argument that a decision in its favor will not defeat the Legislature's intent because Pappas may recover against another insurer misses the mark. The legislative policy expressed in the statute is not affected by circumstances peculiar to the situation of a particular plaintiff. As we pointed out in Blakeslee, the injured party may suffer losses exceeding the amount recoverable from another insurer. Moreover, we do not believe that granting the named insured the right to reject uninsured motorist coverage compels the conclusion that the Legislature did not intend to prescribe the class to be covered in the statutorily required offer of protection. We hold, therefore, that the required offer must extend protection in the statutory minimum to persons insured under the liability portion of the policy.
II
Pappas is not protected from the acts of uninsured motorists under the terms of the uninsured motorist clause in the policy issued by Central.
The uninsured motorist clause of the policy issued to the owner of the motorcycle by Central extends coverage to:
"[T]he named insured as stated in the policy (hereto also referred to as the `principal named insured'), his spouse and children if residents of the same household."
The liability coverage of that policy, however, defines the "insured" as including " any person while using with the permission of the named insured * * * a motorcycle to which this insurance applies". (Emphasis supplied.) It declares an obligation to pay on behalf of the insured all sums which the insured shall become legally obligated to pay caused by accident and arising out of the ownership, maintenance, or use of the vehicle.
Central concedes that Pappas was using the insured motorcycle when riding as a guest passenger, but argues that it cannot be determined whether she is "insured" until it is shown that a negligent act was committed involving use of the vehicle. This contention is without merit. The terms of the policy confer insured status on persons while they are using the insured vehicle. Proof of the facts Central demands triggers the insurer's liability, but we do not believe it has any effect on a passenger's status as an insured under the terms of the policy. Kangas v Aetna Casualty Surety Co, 64 Mich. App. 1; 235 N.W.2d 42 (1975), is inapposite. That case concerned the question of the insurer's liability where the injury arose out of an assault and battery committed along a highway but outside of and without the use of the insured vehicle.
We conclude that Pappas was a person insured under the liability policy when she was injured.
It is apparent that the uninsured motorist clause of the policy issued by Central does not expressly extend coverage to the entire class of persons required to be insured by the uninsured motorist statute, that is, persons while using the insured motorcycle with permission of the insured. Where a policy of insurance does not offer statutorily required uninsured motorist coverage, conforming language must be read into the terms of the policy. Blakeslee, supra. Pappas is therefore insured under the uninsured motorist coverage of the Central policy.
Central does not allege that statutorily required coverage was offered to the owner and rejected in favor of the narrower coverage contained in the policy.
See MCLA 500.3012; MSA 24.13012 which formed a basis for the result in Blakeslee and Boettner and which provides in pertinent part:
"Such a liability insurance policy issued in violation of sections 3004 through 3012 shall, nevertheless, be held valid but be deemed to include the provisions required by such sections * * *." (Emphasis added.)
Reversed and remanded.
KAVANAGH, C.J., and WILLIAMS, LEVIN, COLEMAN, and FITZGERALD, JJ., concurred with RYAN, J.
BLAIR MOODY, JR., J., took no part in the decision of this case.