Chrysler Insurance Company No Fault policy is voided and reformed by court due to illegal attempt to shift PIP obligations
John and Vera-Anne Corwin were badly hurt in a motor vehicle collision while occupying a vehicle insured with Chrysler Insurance Company. John was a Chrysler retiree and leased the vehicle from his former employer. Chrysler self-insures these lease vehicles and charged John $300.00 per month to lease the vehicle, fully insured. The policy issued by the "front insurer" lists Chrysler LLC as a "Named Insured" of the vehicle and provides that it owes no Personal Injury Protection [PIP] benefits to any party who is entitled to collect PIP benefits from another insurer.
It so happens that John and Vera also had PIP coverage through a second auto and through a motor home they owned. The Auto Club insured the other auto and provided PIP benefits; it and the Corwins sued Chrysler to reform the policy language on PIP benefits to conform with Michigan law. The trial judge granted summary judgment, but the Court of Appeals unanimously overturned: the higher court noted that under the no fault statute, the legislature dictated the priority of auto insurers' liability and expressed a public policy that PIP benefits should first be payable by the personal insurer of the involved injured persons. Relying on prior precedents holding that an insurer cannot shift the priority of liabilities imposed under Michigan no faullt law, the court ruled that the Chrysler insurance coverage must be reformed to comply with Michigan law. It noted that without proper reformation, Chrysler's policy was void because the "named insured" actually had no insurable interest to protect.