Opinion
No. 105435.
December 10, 1996.
Leave to Appeal Denied December 10, 1996:
Court of Appeals No. 170924.
I concur with Justice LEVIN and would grant leave to appeal.
MALLETT, J.
I would grant leave to appeal.
I would grant leave to appeal.
The principal question presented is whether the no-fault automobile liability act requires residual liability coverage when the insured drives another vehicle that is not insured.
In State Farm Mutual Automobile Ins Co v Ruuska, 412 Mich. 321 (1982), this Court, in two opinions, held that an exclusion from non-owned automobile coverage for an automobile owned by any relative residing in the same household was unenforceable. Three justices would have construed the no-fault act as precluding an insurer from denying liability on the basis that the non-owned vehicle was owned by a relative residing in the same household or on the basis that the vehicle was furnished or available for the frequent or regular use of the named insured.
In a separate opinion in Ruuska, I concurred in the result, stating that the no-fault act does not require residual liability coverage on all non-owned vehicles a person may drive, but that a different result might be required when the insured drives an uninsured non-owned vehicle.
The no-fault act does not require residual liability insurance covering all vehicles a person may drive. Residual liability insurance is required for residual tort liability arising out of the ownership, maintenance or use of the vehicle in respect to which a policy is required to be maintained and in effect. An insurer is not required by the no-fault act to provide portable coverage when the owner drives another insured vehicle.[8]
[8] Other provisions and policies of the act are implicated where a person insured or covered by a no-fault policy drives an uninsured vehicle. No opinion is intimated in that regard.
The instant exclusion is, however, unenforceable, because it is unconscionable and contrary to the reasonable expectations of an insured, where the insured, driving an automobile not owned or leased by him, has not been offered by the insurer (or his agent) and has declined to purchase a rider deleting or a specific exception from the exclusion or coverage for "frequent" or "regular" or other atypical use of non-owned automobiles. [ State Farm v Ruuska, supra, pp 342-343 (emphasis in original).]
Three justices in Ruuska agreed that the no-fault act did not require portable liability coverage when the owner drives another insured vehicle, and would have held that the clause was enforceable.
Two years later, in DAIIE v Widling, 420 Mich. 549 (1984), this Court declined to answer the "question reserved in Ruuska" because it had not been determined that the vehicle being driven was uninsured. The Court described the question as one of "considerable importance in the application of the no-fault act."
The question reserved in Ruuska — whether portable residual liability coverage is required by the no-fault act when the insured drives another vehicle that is uninsured — should not be addressed unless it is determined that the Todd vehicle was uninsured. [ Id., p 552.]
This suggests that whether there are limitations on residual liability coverage when the insured is driving an uninsured vehicle and when an insured vehicle is being driven by a person other than the insured are questions of considerable importance in the application of the no-fault act. [ Id., p 553.]
In the instant case of Husted, the Court of Appeals resolved the "question reserved in Ruuska," holding that portable coverage was not required, relying on this Court's decision in Citizens Ins Co of America v Federated Mutual Ins Co, 448 Mich. 225, 235-236 (1995), and the following language in the opinion in that case:
As this Court has previously held, one who uses another's vehicle generally is not required to provide residual liability coverage for injuries or death arising from use of that other vehicle. State Farm v Ruuska, supra at 343 (opinion of LEVIN, J.), and 353 (opinion of COLEMAN, C.J.). Because such coverage is optional, the extent of [the insurance companies'] obligations is governed by the terms of their respective policies.
The Court of Appeals did not recognize that this Court in Widling, in an unanimous opinion, had stated that the question was "reserved in Ruuska," and that the other automobile in Citizens v Federated was insured. (The dispute in Citizens v Federated was between two insurance companies as it is in the instant case of Citizens v State Farm.) But in Husted, the other vehicle was not insured.
The question whether an insured who has purchased $50,000 residual liability coverage, as did Henry Dobbs in Husted, should be protected to that extent when he in good faith drives his employer's automobile is of considerable importance to employees who have no way of knowing whether their employer's vehicle is insured or, if at one time insured, is no longer covered because, e.g., the employer failed to pay premiums.
I would grant leave to appeal to consider whether the exclusion from non-owned automobile coverage when an employee is in good faith driving his employer's uninsured automobile is valid under the no-fault act, to the extent of the $20,000/$40,000 coverage required by the act, and also to consider whether the provision is conscionable as to an employee who acted in good faith.
In this regard, I again note the following:
The exclusion from coverage is apparently designed to guard against a person having coverage on one vehicle and no coverage, or less coverage, on another vehicle owned by him or regularly used by him. The exclusion seeks to protect the insurer against a policyholder failing to buy coverage on another vehicle he owns. To be effective, the provision must exclude an uninsured vehicle registered in the name of another that the insured regularly uses — a leased automobile. The exclusion is to this extent clearly reasonable and conscionable. [Emphasis in original.]
The exclusion is written so broadly, however, that it encompasses situations beyond the evil it is designed to guard against. In seeking to protect itself against overreaching by the insured, the insurer has overwritten the exclusion and failed to protect the insured who acts in good faith. The exclusion is aimed at a particular evil; it goes beyond reason and good conscience to exclude liability beyond the need for the exclusion. [Emphasis added.]
When a court limits such an exclusion, it is subject to the charge that it is rewriting the policy. Implicit in the charge is the assumption that the insurer can draft the policy as it sees fit. Its power to do so is, however, restricted by the doctrines of unconscionability and reasonable expectations. [ State Farm v Ruuska, supra, p 351.]
The reasonable expectations of most employees requires invalidating the exclusion from non-owned coverage when the employer's vehicle is uninsured, at least where the employee is not on notice that he is driving an uninsured vehicle.