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"Family joy-riding" exception is applied to named-excluded insured husband

Many years ago, the Michigan Supreme Court adopted a no fault rule that became a firm exception to an insurer's right to void its coverage after a collision. The court held that if a child of the insured took the family car without permission, the family's coverage would not be invalidated, as would normally occur in the event of an unlawful "taking" of an insured vehicle.  The Court concluded that this is the type of circumstance where the family and the joy-riding child should still receive the benefit of the coverage the parents purchased.  Over they years, Michigan Courts have expanded this coverage exception to include situations where an ADULT child takes an insured vehicle without permission.  In Progressive Marathon Insurance Company v. Ryan DeYoung, a 2011 Court of Appeals panel felt compelled to apply this line of cases to a situation where an adult spouse took his wife's car without permission.

The spouse was a "named excluded driver" whom Progressive Marathon had refused to underwrite or insure, probably because of his driving record.  He took his wife's car without permission and suffered injuries when he caused a wreck while intoxicated.  The Court of Appeals panel stated that it would not allow coverag under these facts if it were not bound by the prior precedents of the Supreme Court and the Court of Appeals.

This extension of the family joy-riding exception to an insurer's right to void coverage will probably be shot down on appeal to the current Supreme Court.  There is probably logic in maintaining the exception, because it forces carriers who insure the spouse of a poor driver to pay higher premiums for coverage on a car which may become "available" to the excluded driver.   In essence, the rule requires the underwriting insurer to make a reasonable evaluation of the risk of use of the vehicle by the very-risky driver, rather than simply excluding him or her and voiding coverage after a [not unlikely] loss. 

Nevertheless, insurers don't lose these battles before the current Michigan Supreme Court; regardless of whether there is an underlying logic and public policy foundation for the decision.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
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