Citizens Insurance Co. of America v. Federated Mutual Insurance ( 1993 )

Griffin, P.J.

Like our dissenting colleague, we are troubled by the decision in State Farm Mutual Automobile Ins Co v Snappy Car Rental, Inc, 196 Mich App 143; 492 NW2d 500 (1992). Unlike our colleague, however, we do not believe that Snappy controls the outcome of this appeal. Rather, we believe that the escape clause in defendant’s policy is void because it violates the requirement of the financial responsibility act, MCL 257.501 et seq.; MSA 9.2201 et seq., that coverage be provided for permissive users. Tahash v Flint Dodge Co, 115 Mich App 471, 476; 321 NW2d 698 (1982).

In our view, the case at bar is distinguishable from Snappy. The operative distinction is that in Snappy, supra at 149-150, it was the permissive user, not the insurer, who made the election that resulted in the prioritization of coverage:

We resolve this case in accordance with State Farm [Mutual Automobile Ins Co] v Auto-Owners [Ins Co], [173 Mich App 51, 54; 433 NW2d 323 (1988)], rejecting the argument that an automobile insurance policy may not contain an exclusion not specifically authorized by the Legislature. Although defendant is not permitted to contract away its statutory obligation to provide residual liability insurance as the owner of a vehicle, or its statutory obligation to provide insurance coverage for permissive users, neither the no-fault act nor the financial responsibility act specifically require [sic] that an owner provide primary residual liability insurance for permissive users. Rather, as in State Farm v Auto-Owners, supra, the coverage requirements may be met by the policies of more than one insurer. Id., 54-55.

In this case, we read the clause in defendant’s policy not as an attempt to limit the residual liability insurance or first-party benefits, because defendant is obligated to provide coverage consistent with the no-fault act and the financial responsibility act. Rather, we read the clause only as an attempt to establish the priority of coverage as contracted for by Ms. Davis. We therefore hold that the provision of defendant’s rental agreement in question is not void as violative of the no-fault act. [Emphasis added.]

In the present case, defendant has through its own policy provisions attempted to exclude from coverage a class of permissive users who have their own coverage in excess of the legal financial responsibility requirements. For the reasons stated in Tahash, defendant’s attempt to dictate the coverage issue in this fashion is void because it contravenes MCL 257.520(b)(2); MSA 9.2220(b)(2), which mandates coverage of permissive users. We agree with the dissent that defendant is liable only up to the $20,000/$40,000 requirement of the statute. Accordingly, we affirm the decision of the circuit court.

Affirmed.

Corrigan, J., concurred.