Court addresses issue of priority for PIP benefits when owner of business attempts to insure private vehicles
Auto Owners and Progressive Michigan ended up in the Michigan Court of Appeals this month, arguing over who should provide PIP benefits to Jeffrey Cramar. Cramar, whose father owns C & M Excavating, was hurt while driving a car listed under C & M's commercial insurance contract with Progressive. Progressive argued that Cramar's father was listed as a named insured on the insurance contract, but only for liability claims. Therefore, it argued, it did not owe any PIP benefits to the son.
AutoOwners argued that when Progressive listed the Cramar's two personal automobiles on the Progressive policy, it converted the policy to a personal, rather than a commercial, policy, leaving Progressive responsible for PIP benefits payable to resident family members of the named insured, Cramar, Sr.
The Court of Appeals over-looked the fact that Progressive Marathon had approved the inclusion of personal vehicles in a commercial policy (and received premium payments calculated to include those vehicles) and rejected AutoOwners' analysis. As a result, Progressive will suffer no penalty for it's underwriting misbehavior in partially insuring the personal vehicles. It will be under-charging small business insureds such as the Cramars for insurance, with the illusion that they are purchasing full coverage at a discount: as soon as a motor vehicle collision occurs to an insured where there is no secondary insurer, the insureds will be denied legal benefits due to the fine print in the Progressive policy. The Eaton County Circuit Court got this one right when it refused to enforce the restrictive language in the Progressive policy; the insurer should not be allowed to benefit from slippery or sloppy underwriting practices.