A recent defense that is being raised by Michigan No-fault insurers in many first party no-fault claims concerns the defense of constructive ownership of an uninsured vehicle. It often occurs in motor vehicle accidents that occupants of an uninsured motor vehicle may have borrowed a friend's or family member's vehicle which happens to be uninsured and the borrower of the vehicle has the misfortune of being involved in a serious accident. Under the recent decision of Twichel v MIC Gen. Ins. Corp., 469 Mich 524 (2004), insurance companies are arguing that if a person had the legal right to use a vehicle for more than thirty days at the time of the accident, that that injured person should be deemed the constructive owner of the vehicle. Any owner of an uninsured vehicle is excluded from no-fault coverage. This type of argument could have serious consequences for an unsuspecting operator of a motor vehicle. For example, a friend or family member could go on an extended vacation or trip and allow a friend or family member to use their vehicle in their absence. The person using the vehicle in theory may have the right to use the vehicle for more than thirty days and when using the vehicle, is involved in an accident. If the insurance on the vehicle happened to lapse or is cancelled, the unsuspecting user of the vehicle could be deemed the owner and excluded from no-fault benefits including lifetime medical benefits.
No-Fault insurers are raising this argument even where the borrower of the vehicle does not hold legal title to the involved car. A recent example of this issue involves the case of DeShon Kelly v State Farm Mutual Automobile Ins. Co. Ms. Kelly had borrowed a vehicle from her friend to use to drive to her place of employment. Unknown to Ms. Kelly, the insurance with the Auto Club Insurance Association was cancelled and she had the misfortune of being struck by a drunk driver in Troy, Michigan while a passenger in the vehicle. Ms. Kelly suffered a serious closed head injury as a result of the accident and needed rehabilitation treatment. Because the vehicle was uninsured, a no-fault application was made with the Michigan Assigned Claims Facility which assigned State Farm Mutual Automobile Insurance Company. After interviewing DeShon Kelly and learning that she had the keys to the vehicle and had occasionally used the vehicle to drive to work, State Farm took the position that Ms. Kelly was the constructive owner of the vehicle and denied her claim. The case proceeded to a jury trial in the Wayne County Circuit Court and a jury disagreed with State Farm and found that Ms. Kelly was not the constructive owner of the vehicle and awarded her no-fault benefits. Attached hereto is a summary from the Michigan Trial Reporter concerning this verdict in favor of Ms. Kelly. Unfortunately, Ms. Kelly was unable to receive much of the needed rehabilitation after this accident since she did not have medical insurance.
BE CAREFUL!
This defense has become very common in the insurance world. No-fault insurers are scrutinizing any claims involving uninsured vehicles to see if this legal argument can be raised. In the Twitchel case, the Michigan Supreme Court held that the operator of the uninsured vehicle was the owner where the person had only used the vehicle for a few days before the accident occurred relying upon the legal argument that since the person had the legal right to use the vehicle for more than thirty days, the operator of the vehicle was the constructive owner and disallowing the injured person's claim for no-fault benefits. In any situation involving an uninsured vehicle, the injured party should be very careful before making any statements to the investigating no-fault insurer and it would be wise to obtain legal counsel before blindly giving statements or being led down a path by an insurance investigator that leads to a denial of benefits and a long legal battle.