Delivering newspapers voids your auto coverage in Michigan
Acting pursuant to an earlier decision by the Michigan Supreme Court, the Court of Appeals yesterday held that a woman who used her car to deliver newspapers could not avail herself of the auto liability insurance she had purchased. In addition, the woman she had seriously injured in a car accident could not avail herself of the coverage. In Bristol West v. Butzbach, the three Court of Appeals' judges felt constrained by a prior Supreme Court decision to invalidate Butzbach's coverage, because her auto policy contained a standard exclusion for "business pursuits."
In Michigan, no fault insurance is mandatory, and the coverage the carrier must provide is mandatory: on that basis, prior court decisions had held that insurers are in a better position to evaluate and underwrite risks that include incidental money-making or "business" pursuits, and have required coverage of these activities that fall short of an actual commercial venture. For example, a number of years ago, we prevailed against the insurer in Rossman v. State Farm, when it attempted to invalidate a volunteer fireman's coverage because he received a small per diem for fire runs.
This issue arises regularly because many unsophisticated insureds use their vehicle for incidental money-making activities (for example, teens delivering pizza, newspapers or other materials for an employer) that aren't normally considered to be a "business". Even if an insured were to read his or her entire policy when it comes in the mail a month after buying it, most people wouldn't recognize this exclusion from coverage as applying to them. And, under other activist rulings of our Supreme Court, the insured's agent owes no duty to explain the exclusion to the insured.
Before the activist Engler Justices assumed control of the Supreme Court, these incidental income-generating activities were included in mandatory coverage, and an insured's agent owed a general duty to inform the insured: under this Court, though, many naive or uneducated Michigan consumers who are unaware of this constraint will be purchasing illusory coverage for these poorly-compensated activities. None of them will likely come from the neighborhood of these Republican activist jurists, however, so their concerns are ignored.