Court rejects Farmers Insurance claim that it does not owe PIP benefits for occupant of car rented by son of out-of-state insured

Yu Ju Chen, Bronson Healthcare, and Mary Free Bed Hospital were forced to sue Farmers Insurance Group after Chen suffered paralysis in a Michigan car accident.  Chen was traveling in a car rented in Illinois by her boyfriend, on their way to their hometown in Canada.  The car was owned and insured by Hertz, which has never been certified as an insurer in Michigan.  Chen's attorneys sought PIP benefits from the insurer of her boyfriend's parents, Farmers, since the boyfriend was a resident of their home and Farmers was certified in Michigan.  Farmers argued that its obligation under the Michigan no fault law was limited to paying PIP benefits for its "named insureds" and did not include the occupant of an uninsured car driven by a family member.  In the alternative, it argued that its duty to pay medical benefits was limited by statute to $500,000.00.

The trial judge rejected Farmers' coverage position but agreed that it was subject to the half-million dollar medical limit.  The insurer appealed.  The Court of Appeals pointed to similar decisions previously decided which clearly obligated Farmers to pay all PIP benefits required by law.  It noted that under those decisions, coverage for no fault benefits follows the person, not the vehicle, and therefore if the boyfriend had coverage, Farmers was obligated to pay PIP benefits even if the covered event occurred in a rented or "unowned" and uninsured vehicle.  The high court also affirmed the limitation on PIP benefits owed to an out-of-state resident.