Case Name: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. RUUSKA
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1982-01-08
Citations: 412 Mich. 321
Docket Number: Docket No. 63553
Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v RUUSKA
Judges: Fitzgerald and Blair Moody, Jr., JJ., concurred with Williams, J.
Reporter: Michigan Reports
Volume: 412
Pages: 321–354

Head Matter:
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v RUUSKA
Docket No. 63553.
Argued June 3, 1980
(Calendar No. 3).
Decided January 8, 1982.
State Farm Mutual Automobile Insurance Company brought an action against Dale Ruuska, Gloria Carlson, Arvid Carlson, and Kenneth Kemp, the parties in an automobile negligence action, for a declaratory judgment that it was not liable to the parties for residual liability coverage on a no-fault policy of automobile insurance it had issued to Gloria Carlson. Gloria Carlson, who lived with her father, Arvid, was in an accident while driving Arvid’s car. Dale Ruuska was seriously injured, and brought an action against the Carlsons and Kemp, the owner of a tavern. State Farm admitted liability under a policy issued to Arvid Carlson, but denied any liability under the policy issued to Gloria because the policy provided coverage while she was driving a non-owned automobile, but excluded from the definition of non-owned automobile one owned by a relative residing in the same household. The Marquette Circuit Court, Edward A. Quinnell, J., granted summary judgment for Ruuska, holding that the exclusion is contrary to the provisions of the no-fault act and therefore invalid. The Court of Apepals, D. E. Holbrook, Jr., and Cynar, JJ. (D. E. Holbrook, P.J., concurring in result), affirmed, but on the ground that while the exclusion is permissible it was not plainly set out in the policy and was therefore unenforceable (Docket No. 78-820). State Farm appeals.
References for Points in Headnotes
[1, 3, 5, 11, 12, 14-16] 7 Am Jur 2d, Automobile Insurance §§ 238, 241, 242, 356.
Validity and construction of "no-fault” automobile insurance plans. 42 ALR3d 229.
Exclusion from "drive other cars” provision of automobile liability insurance policy of other automobile owned, hired, or regularly used by insured or member of his household. 86 ALR2d 937.
[2, 8] 7 Am Jur 2d, Automobile Insurance § 348.
[3, 5, 10, 14] 7 Am Jur 2d, Automobile Insurance § 351.
What is a "non-owned” automobile within the meaning of the coverage clause of an automobile liability policy. 83 ALR2d 926.
[4] 7 Am Jur 2d, Automobile Insurance §§ 34, 356.
[6-9] 7 Am Jur 2d, Automobile Insurance § 351.
[8] 7 Am Jur 2d, Automobile Insurance § 23.
[9] 7 Am Jur 2d, Automobile Insurance § 367.
[13] 7 Am Jur 2d, Automobile Insurance § 126.
In separate opinions by Justice Williams, by Justice Levin, and by Chief Justice Coleman, the Supreme Court held:
In this case, the insurer is liable to the parties under the residual liability coverage of Gloria Carlson’s policy. However, the no-fault act does not require residual liability insurance covering all vehicles a person may drive.
Justice Williams, joined by Justices Fitzgerald and Moody, wrote that the no-fault act requires an insurer to provide its insured with residual liability coverage for certain losses caused by the use of a motor vehicle, and precludes an exclusion of liability coverage where the accident involves the insured’s use of a vehicle owned by or registered in the name of a relative residing in the same household or a vehicle that was furnished or available for the frequent or regular use of the named insured.
1. The applicable sections of the no-fault act, when construed together, make it plain that the Legislature intended that a person using a motor vehicle that causes certain kinds of damages shall remain liable in tort, that an insurance policy in this state shall afford coverage for such liability, and that an owner or registrant of a motor vehicle shall purchase such a policy.
2. Gloria Carlson purchased a policy which specifically provided that she was covered when she used a "non-owned automobile”, but excluded from the definition of non-owned automobile an automobile owned by a relative residing in the same household. Such an exclusion is repugnant to the clear directive of the no-fault act that a policy provide residual liability coverage for the use of a motor vehicle, and nowhere in the act is provision made for it.
3. Since the exclusionary clause in Gloria Carlson’s policy is in conflict with the liability coverage required by the no-fault act, the statute must prevail and the policy must be read so as to provide the required coverage.
4. State Farm also alleged that coverage was precluded because the definition of a "non-owned automobile” excluded an automobile "furnished or available for the frequent or regular use of the named insured”. Whether or not as a matter of fact Gloria Carlson’s access to and use of her father’s car may be so characterized, as a matter of law this particular phrase of the exclusionary clause is repugnant to the no-fault act for the same reason that the "owned by a relative residing in the same household” phrase is repugnant, and is also invalid.
Justice Levin concurred in the result reached by Justice Williams, but not in the reason. The no-fault act does not require residual liability insurance covering all vehicles a person may drive. However, the exclusion in this case is unenforceable because it is unconscionable and contrary to the reasonable expectations of an insured where the insured, driving an automobile not owned or leased by him, has not been offered and has declined to purchase a rider deleting the exclusion or a specific exception from the exclusion or coverage for "frequent”, "regular”, or other atypical use of non-owned automobiles.
1. The obligation to obtain residual liability coverage is imposed by the no-fault act on an owner or registrant of a motor vehicle, but not on a licensed driver who does not own a vehicle. The no-fault act should be construed with deference to the policy judgment implicit in that legislative decision. Since the obligation to insure arises from the obligation to register rather than from the operation of a vehicle, it is reasonable to conclude that the obligation to insure does not extend to another vehicle for which the residual liability required by the no-fault act has been provided.
2. Residual liability coverage must be in force with respect to the vehicle for which it is purchased without regard to whether the owner or some other driver uses it. It does not follow that the act requires residual liability coverage when the owner uses a vehicle owned by someone else. The purpose in requiring residual liability coverage is to assure some minimum insurance for injuries for which there is residual tort liability. The legislative implementation of that purpose is limited to the requirement that there be a certain minimum coverage for each vehicle involved in an accident. To read the no-fault act as requiring an owner of one vehicle to carry residual liability coverage when operating another owner’s vehicle, on which an independent obligation to carry residual liability coverage has been imposed, is to read the statute as requiring in that situation double the coverage it says is required. The no-fault act was amended retroactively to clarify that the required residual liability coverage is limited to the minimum residual liability coverage per vehicle. To read the statute nonetheless as requiring stacked coverage in the adventitious circumstance of one owner driving another’s vehicle is to read it in a manner contrary to the intent of the amendment and the purpose of the act to provide a minimum fund to pay for residual tort liability retained by the no-fault act.
3. The no-fault act has a policy of limiting the amount of required protection, except for medical care, to provide a minimum of coverage for all injured persons and their survivors at an affordable cost. The legislative purpose in this is not consistent with, and does not require, residual liability coverage varying in amount depending upon the circumstances of who is driving whose automobile and how many automobiles the driver owns. Many owners of motor vehicles choose to purchase non-owned automobile coverage in an amount they think they need and can afford. The issue here is the amount of residual liability insurance required by the no-fault act without regard to the insured’s collectibility or ability to pay premiums. The Legislature did not require residual liability coverage varying in amount depending on chance.
4. Gloria Carlson’s automobile insurance policy stated that it covered her when she drove a "non-owned automobile”, which has the obvious and clear meaning of a vehicle not owned by the insured. The average consumer would rightfully assume that it referred to such instances as when he drove a rental car, or, perhaps more commonly, when he borrowed an automobile from a family member. The statement of exclusions does not mention the exclusion of this common instance but the apparently unambiguous term is given a definition which ascribes to it a special meaning. It cannot be assumed that the average consumer, coming upon a term in his policy which has an obvious and easily understood meaning, will nonetheless look up the definition, because it would not occur to the average person that the function of a definition is to change the meaning of a word so that it means something other than what it says. There is no evidence that Gloria Carlson knew of the exclusion, and it was embedded in the definition of a term which the average consumer would probably consider clear on its face without recourse to a separate definition.
5. Non-owned automobile liability insurance is purchased to protect against residual liability in tort when someone else’s automobile is driven. The reasonable expectation of the purchaser is that there would be coverage regardless of whose car is being driven. The risks which lead to the purchase of residual liability insurance for non-owned automobiles are no less when the purchaser drives an automobile owned by a family member. Non-owned automobile liability protection pro vides the amount of liability coverage the purchaser considers appropriate for himself while he drives vehicles other than his own. A person does not expect that although the amount of liability coverage he considers appropriate for himself is in effect when he drives some non-owned vehicles, it will not be in effect when he drives a family member’s automobile.
6. The exclusion from coverage is apparently designed to guard against a person having coverage on one vehicle and less coverage on another vehicle owned by him or regularly used by him. It seeks to protect the insurer against a policyholder failing to buy coverage on another vehicle he owns. To be effective, the provision must exclude an uninsured vehicle registered in the name of another that the insured regularly uses — a leased automobile. The exclusion is to this extent clearly reasonable and conscionable. It is written so broadly, however, that it encompasses situations beyond the evil it is designed to guard against. In seeking to protect itself against overreaching by the insured, the insurer has gone beyond reason and good conscience to exclude liability beyond the need for the exclusion. The power of the insurer to draft the policy is restricted by the doctrines of unconscionability and reasonable expectations.
7. Non-owned vehicle protection only needs to cover the risk above the amount of residual liability insured by the owner of virtually every automobile and is thus, in a sense, umbrella coverage. However, few consumers are aware that they may purchase a separate umbrella policy to protect themselves against the obscurant drafting of the no-fault insurance policy. This is not a case of a person owning two ór more automobiles, buying insurance on one, and driving, or allowing another person to drive, an uninsured vehicle. Nor does it appear that Gloria Carlson frequently or regularly uses another person’s automobile nor that she declined to purchase insurance for atypical use of non-owned automobiles.
The summary judgment of the trial court for Ruuska is affirmed, and the judgment of the Court of Appeals is affirmed.
Chief Justice Coleman, joined by Justices Kavanagh and Ryan, agreed with Justice Levin that the no-fault act does not require residual liability insurance covering all vehicles a person may drive, but did not agree that the exclusion in this case is unenforceable. It is inappropriate to guess what the reasonable expectations of Gloria Carlson may have been; she does not allege that she was uninformed of the exclusion or of the opportunity to purchase additional coverage. The Court of Appeals apparently reasoned that because some people do not read the contracts they sign, even if the exclusions are unambiguous, the contracts are, in effect, void as to some parts. That reasoning is unpersuasive. The exclusion in this case is neither ambiguous nor contrary to the no-fault act.
90 Mich App 767; 282 NW2d 472 (1979) affirmed.
Separate Opinion by Williams, J.
1. Automobiles — Insurance — Residual Liability — Exclusions.
The no-fault act requires an insurer to provide Us insured with residual liability coverage for certain losses caused by the use of a motor vehicle, and precludes an exclusion of coverage where an accident involves the insured’s use of a vehicle owned by or registered in the name of a relative residing in the same household or a vehicle furnished or available for the frequent or regular use of the named insured.
2. Automobiles — Insurance — Residual Liability •— Legislative Intent.
The relevant sections of the no-fault act, when construed together, make it plain that the Legislature intended that a person using a motor vehicle that causes certain kinds of damages shall remain liable in tort, that an insurance policy in this state shall afford coverage for such liability, and that an owner or registrant of a motor vehicle shall purchase such a policy (MCL 500.3101, 500.3131, 500.3135; MSA 24.13101, 24.13131, 24.13135).
3. Automobiles — Insurance — Residual Liability — Exclusions.
Exclusion from the defínition of "non-owned automobile” of an automobile owned by any relative residing in the same household in a no-fault insurance policy generally providing residual liability coverage while the insured is operating a non-owned automobile is repugnant to the clear directive of the no-fault act that a policy provide residual liability coverage for the use of a motor vehicle (MCL 500.3101, 500.3131, 500.3135; MSA 24.13101, 24.13131, 24.13135).
4. Automobiles — Insurance — Exclusions — Construction of Policy.
A no-fault insurance policy with an exclusionary clause which is invalid because it conñicts with the requirement of liability coverage of the no-fault act must be read so as to provide the required coverage.
5. Automobiles — Insurance — Residual Liability — Exclusions.
Exclusion from the deñnition of "non-owned automobile” of an automobile furnished or available for the frequent and regular use of the named insured in a no-fault insurance policy generally providing residual liability coverage while the insured is operating a non-owned automobile is repugnant to the requirement of the no-fault act that a policy provide residual liability coverage for the use of a motor vehicle (MCL 500.3101, 500.3131, 500.3135; MSA 24.13101, 24.13131, 24.13135).
Separate Opinion by Levin, J.
6. Automobiles — Insurance — Residual Liability — No-Fault Insurance.
The obligation to obtain residual liability coverage is imposed by the no-fault act on an owner or registrant of a motor vehicle, but not on a licensed driver who does not own a vehicle (MCL 500.3101; MSA 24.13101).
7. Automobiles — Insurance — Residual Liability — No-Fault Insurance.
The obligation to obtain residual liability coverage does not extend to one driving the vehicle of another for which the residual liability required by the no-fault act has been provided (MCL 500.3101; MSA 24.13101).
8. Automobiles — Insurance — Residual Liability — No-Fault Insurance — Legislative Intent.
It is contrary to the legislative intent of the no-fault act, to provide a minimum insurance fund at low cost for residual tort liability retained by the act, to construe the act as requiring an owner of one vehicle to carry residual liability coverage when operating another owner’s vehicle, on which an independent obligation to provide the coverage has been imposed (MCL 500.3131; MSA 24.13131).
9. Automobiles — Insurance — Residual Liability — No-Fault Insurance.
The policy of the no-fault act of providing fixed limits on the amount of required coverage, except for medical care, for all injured persons and their survivors at an affordable cost does not require residual liability coverage varying in amount depending upon the circumstances of who is driving whose automobiles and how many automobiles the driver owns.
10. Automobiles — Insurance — Residual Liability — Exclusions.
Defínition of "non-owned automobile” in a no-fault insurance policy providing residual liability coverage so as to exclude an automobile furnished or available for the frequent and regular use of the named insured ascribes a special meaning to a term which has an obvious and easily understood meaning, and is unenforceable where there is no evidence that the insured knew of the exclusion and where it was embedded in a separate deñnition of the apparently unambiguous term, rather than mentioned in the statement of exclusions (MCL 500.3101, 500.3135; MSA 24.13101, 24.13135).
11. Automobiles — Insurance — Residual Liability — Exclusions.
The reasonable expectation of the purchaser of non-owned automobile liability insurance is that there would be coverage regardless of whose car the purchaser is driving, and not that although it is in effect when he drives some non-owned vehicles, it will not be in effect when he drives a family member’s automobile.
12. Automobiles — Insurance — Residual Liability — Exclusions.
Exclusion of an automobile furnished or available for the frequent and regular use of the named insured in a no-fault insurance policy providing residual liability coverage goes beyond reason and good conscience to exclude liability beyond the need for the exclusion, which is to protect the insurer against a policyholder failing to buy coverage on another vehicle he owns or a regularly used leased automobile (MCL 500.3101, 500.3135; MSA 24.13101, 24.13135).
13. Insurance — Exclusions — Unconscionability — Reasonable Expectations.
The power of the insurer to draft the policy is restricted by the doctrines of unconscionability and reasonable expectations.
14. Automobiles — Insurance — Residual Liability — Exclusions.
Deñnition of "non-owned automobile” in a no-fault insurance policy providing residual liability coverage so as to exclude an automobile furnished or available for the frequent and regular use of the named insured is unenforceable, because it is unconscionable and contrary to the reasonable expectations of an insured where the insured, driving a family member’s automobile not owned or leased by him, has not been offered, and has not declined to purchase, coverage for "frequent”, "regular”, or other atypical use of non-owned automobiles (MCL 500.3101, 500.3135; MSA 24.13101, 24.13135).
Separate Opinion by Coleman, C.J.
See headnotes 6-9.
15. Automobiles — Insurance — Residual Liability — Exclusions — Construction — Reasonable Expectations.
An unambiguous exclusion in a no-fault insurance policy providing residual liability coverage is not unenforceable as contrary to the reasonable expectations of the insured where there is no allegation that the insured was uninformed of the exclusion or of the opportunity to purchase additional coverage.
16. Automobiles — Insurance — Residual Liability — Exclusions.
Exclusion from the defínition of "non-owned automobile’’ of an automobile furnished or available for the frequent and regular use of the named insured in a no-fault insurance policy providing residual liability coverage is neither ambiguous nor contrary to the no-fault act (MCL 500.3101, 500.3135; MSA 24.13101, 24.13135).
Fraser, Trebilcock, Davis & Foster, P.C., for State Farm Mutual Automobile Insurance Company.
Robins, Davis & Lyons, by Terry L. Wade (William R. Smith, of counsel), for Dale Ruuska.
Amicus Curiae:
William H. Morman for Detroit Automobile Inter-Insurance Exchange.

Opinion:
Williams, J.
This case tests the validity of an "owned vehicle" exclusion to residual liability coverage required under the no-fault act. The automobile insurance policy in question provides coverage for the named insured while driving a "non-owned" vehicle; however, a subsequent definition of the term "non-owned automobile", as rele vant to the facts of this case, provides that a car owned by or registered in the name of a relative residing in the same household as the named insured or a car furnished or available for the frequent or regular use of the named insured is excluded from the category of a "non-owned automobile".
The appellant insurer sold insurance policies on the cars of both a father and a daughter living in the same household. The daughter drove the father's car with his permission and got into an accident. The insurer admits liability under the father's policy since it was being driven with his permission, but seeks a declaratory judgment to establish that the so-called "owned vehicle" exclusion lawfully precludes coverage under the daughter's policy.
Michigan's no-fault act requires an insurer to provide its insured with residual liability coverage for certain losses caused by "the use of a motor vehicle". Therefore, we interpret the no-fault act to preclude an insurer from denying liability coverage to its insured on the basis that the accident involved the insured's use of a vehicle owned by or registered in the name of a relative residing in the same household or on the basis that the vehicle was furnished or available for the frequent or regular use of the named insured.
We affirm the Court of Appeals but for different reasons and the circuit court for similar reasons.
I. Facts
On June 19, 1975, Gloria Carlson, while driving an automobile owned by her father, Arvid Carlson, with whom she then resided, collided with a motorcycle being driven by appellee Dale Ruuska, which resulted in serious injury to him. Appellee Ruuska later filed a negligence suit against Gloria Carlson, her father, Arvid, who had given his consent to Gloria's use of the car, and a bar owner at whose establishment Gloria Carlson had allegedly become intoxicated earlier.
Arvid Carlson and Gloria Carlson each owned automobiles covered by separate policies of insurance with State Farm Mutual Automobile Insurance Company ("State Farm"). Each policy contained a liability limit of $25,000 respecting the bodily injury claims of any one person. State Farm does not dispute coverage of Gloria Carlson under her father's policy, as she was driving his car with his consent at the time of the accident. Rather, the present controversy centers on the question of the applicability to this accident of the added coverage of Gloria Carlson's separate policy of insurance with State Farm covering her own non-involved automobile.
Appellee Ruuska bases his contention that Gloria Carlson's own automobile insurance policy is applicable on a provision in that policy extending liability coverage to the use of a "non-owned automobile". Specifically, the policy provides:
"Use of Non-Owned Automobiles:
" [S]uch insurance as is afforded by this policy with respect to the owned motor vehicle under:
"(1) Coverages A [bodily injury liability] and B [property damage liability] applies to the use of a non-owned automobile by:
"(a) the first person named in the declarations" (emphasis in original).
Thus since Gloria Carlson was the named insured, liability coverage would seem to be indicated.
Appellant State Farm, on the other hand, points to the policy's definition of a "non-owned automobile" as the premise for its denial of coverage under Gloria Carlson's policy with respect to her use of her father's car. This definition provides as follows:
"Non-Owned Automobile — means an automobile, trailer, or detachable living quarters unit, not (1) owned by, (2) registered in the name of, or (3) furnished or available for the frequent or regular use of the named insured, his spouse, or any relative of either residing in the same household, other than a temporary substitute automobile, " (emphasis in original).
"Reside", when used with reference to the named insured's household, is defined in the policy to mean bodily presence in such household and an intention to continue to dwell therein. Thus since it is undisputed that Gloria Carlson, at the time of the accident, was driving an automobile owned by her father, with whom she had lived all her life, the exclusionary clause in Gloria Carlson's policy would ostensibly seem to deny coverage in this instance.
Due to this dispute and because it appeared that any judgment for Ruuska in the negligence suit might exceed the limits of Arvid Carlson's policy, State Farm sought a declaratory judgment to determine its liability for any residual amount under the policy issued to Gloria Carlson.
The circuit court granted appellee Ruuska's motion for summary judgment holding that while the definition of a "non-owned automobile" was not ambiguous, it did contravene the provisions of the no-fault act and was therefore void and of no effect.
The Court of Appeals unanimously affirmed the trial court's result, but it did so on different and divided reasoning. The majority of that panel determined that based on Michigan's financial responsibility act, MCL 257.501 et seq.; MSA 9.2201 et seq., an exclusion to liability coverage of the type provided was theoretically valid. It found, however, that while the language creating the exclusion was not ambiguous, the limitation on the otherwise applicable coverage of "non-owned automobiles" was not designated explicitly enough— indeed the majority felt it was hidden among the policy provisions — and was therefore unenforceable as written.
The other member of the panel agreed with the rationale of the trial court, as well as opining that the instant exclusion was void because unauthorized by MCL 500.3009(2); MSA 24.13009(2) which provides for only one exclusion from liability coverage not here applicable.
We granted leave to appeal in both this case and Raska v Farm Bureau Mutual Ins Co of Michigan (Docket No. 63507), ordering that they be argued and submitted together, one immediately following the other.
II. Discussion
The no-fault act states that the owner or registrant of a motor vehicle required to be registered in this state
"shall maintain security for payment of beneñts under personal protection insurance, property protection insurance, and residual liability insurance. " (Emphasis supplied.) MCL 500.3101(1); MSA 24.13101(1).
Under the terms of § 3131 such residual liability insurance
"shall cover bodily injury and property damage which occurs within the United States, its territories and possessions, or in Canada. In this state this insurance shall afford coverage for automobile liability retained by section 3135." (Emphasis supplied.) MCL 500.3131; MSA 24.13131.
Subsections 3135(1) and (2) of the no-fault act, which concern the circumstances under which a person remains subject to tort liability, provided as follows at the time of the accident:
"A person remains subject to tort liability for non-economic loss caused by his ownership, maintenance, or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement" (emphasis supplied);
and that
"[notwithstanding any other provision of law, tort liability arising from the ownership, maintenance or use within this state of a motor vehicle with respect to which the security required by subsections (3) and (4) of section 3101 was in effect is abolished except as to:
"(a) Intentionally caused harm to persons or property. Even though a person knows that harm to persons or property is substantially certain to be caused by his act or omission, he does not cause or suffer such harm intentionally if he acts or refrains from acting for the purpose of averting injury to any person, including himself, or for the purpose of averting damage to tangible property.
"(b) Damages for noneconomic loss as provided and limited in subsection (1).
"(c) Damages for allowable expenses, work loss, and survivor's loss as defined in sections 3107 to 3110 in excess of the daily, monthly, and 3 year limitations contained in those sections. The party liable for damages is entitled to an exemption reducing his liability by the amount of taxes that would have been payable on account of income the injured person would have received if he had not been injured." (Emphasis supplied.) MCL 500.3135(1), (2); MSA 24.13135(1), (2).
Sections 3101, 3131 and 3135 of the no-fault act, when construed together, make, it plain that at the time of the accident the Legislature intended that
1. A person using a motor vehicle that causes certain types of damages shall remain liable in tort (§ 3135);
2. An insurance policy in this state shall afford coverage for such liability (§ 3131);
3. An owner or registrant of a motor vehicle shall purchase such a policy (§ 3101).
In this case, Gloria Carlson purchased an insurance policy which specifically provided that she was covered when she used a "non-owned automobile", which, of course, she did. However, in its motion for summary judgment in the trial court, appellant State Farm contended solely that since her policy defined "non-owned automobile" to exclude "an automobile owned by any relative residing in the same household", which exclusion her father's car unquestionably met, Gloria Carlson could not recover under her own insurance policy (emphasis in original).
We find such an exclusion repugnant to the clear directive of the no-fault act requiring that a policy purchased pursuant to that act provide residual liability coverage for the use of a motor vehicle. Nowhere in the no-fault act is provision made for the exclusion sought to be enforced by appellant State Farm in its motion for summary judgment. Section 3131 provides that liability insurance "shall afford coverage for automobile liability retained in section 3135", to wit, tort liability for certain enumerated types of loss caused by or arising from the "use of a motor vehicle". In a word, the Legislature has by section 3101(1) required the maintenance of insurance covering the type pf liability here incurred, whereas the insurer has specifically sought by policy exclusion to thwart the,Legislature's prescription. This it cannot lawfully do. Therefore, since the exclusionary clause in Gloria Carlson's policy is in conflict with the liability coverage required by the no-fault act, the language of the statute must prevail with the result that the attempted exclusion is invalidated and the policy must be read so as to provide the required coverage. See MCL 500.3101(3); MSA 24.13101(3); cf. Boettner v State Farm Mutual Ins Co, 388 Mich 482, 487; 201 NW2d 795 (1972); Allstate Ins Co v DeFrain, 81 Mich App 503, 506; 265 NW2d 392 (1978).
Appellant State Farm also alleged in its complaint that coverage was precluded in this instance due to the additional fact that the exclusionary clause eliminated from the definition of a "non-owned automobile" an automobile "furnished or available for the frequent or regular use of the named insured". Although as a factual matter Gloria Carlson's access to and use of her father's car may or may not have been sufficient to be characterized as "furnished or available for [her] frequent or regular use", we find that as a matter of law this particular phrase of the exclusionary clause is repugnant to the no-fault act and that summary judgment was properly granted to appellee Ruuska. The same reasoning that served to invalidate the "owned by a relative residing in the same household" phrase of the exclusionary clause also compels us to render the "frequent or regular use" phrase invalid. The Legislature chose to speak in broad language when it enunciated the circumstances under which a person remained subject to tort liability. It said simply, as here relevant, that the use of a motor vehicle, not either the infrequent or irregular use, or the frequent or regular use of a motor vehicle, could subject a person to tort liability under certain circumstances which would require a policy of insurance meeting certain standards. See § 3131. Thus this part of the exclusionary clause must also fall because it seeks to raise limitations on automobile use not sanctioned by the statute.
Our decision today is limited to the facts of this case. We do not consider, for example, whether an insurer, consistent with the terms of the no-fault act, may exclude the owner of an insured automobile from liability coverage during his or her use of an uninsured automobile he or she also owns. Cf. § 3101, 31130b). Additionally, because we have invalidated the exclusionary clause as contrary to the public policy of the no-fault act, we need not reach the issues of whether the clause was ambiguous or hidden within the policy.
III. Conclusion
Gloria Carlson paid a premium on her own automobile for statutorily required residual liability coverage. Her insurer State Farm has attempted to circumscribe this liability coverage as to her use of non-owned automobiles through a restrictive definition of the term "non-owned automobile". This definitional limitation, however, is contrary to the plain meaning of the no-fault act that requires residual liability coverage as to certain damages stemming from "use of a motor vehicle" and must be voided. Accordingly, we affirm the trial court's grant of summary judgment to appellee Ruuska. The Court of Appeals is also affirmed, but for different reasons.
Fitzgerald and Blair Moody, Jr., JJ., concurred with Williams, J.
Although in our order of December 21, 1979, granting leave to appeal in this case, 407 Mich 948, we referred to the particular exclusion as a "non-owned automobile" exclusion, such exclusion is for all relevant purposes identical in form and purport to that which we refer to here, as well as in our order of the same date granting leave to appeal in Raska v Farm Bureau Mutual Ins Co of Michigan, 407 Mich 946, as an "owned automobile" exclusion.
1972 PA 294; MCL 500.3101 et seq.; MSA 24.13101 et seq.
A "temporary substitute automobile" is defined in the policy as an automobile "not owned by the named insured or his spouse while temporarily used with the permission of the owner as a substitute for the described motor vehicle when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction". The situation envisaged by this definition is inapplicable to the case at bar since Gloria Carlson stated in her deposition that on the date of the accident her car was used by her father and mother.
90 Mich App 767; 282 NW2d 472 (1979).
This section provides in full as follows:
"When authorized by the insured, automobile liability or motor vehicle liability coverage may be excluded when a vehicle is operated by a named person. Such exclusion shall not be valid unless the following notice is on the face of the policy or the declaration page or certificate of the policy and on the certificate of insurance referred to in subsection (3) of section 4 of Act No. 198 of the Public Acts of 1965, as amended, being section 257.1104 of the Compiled Laws of 1948: Warning — when a named excluded person operates a vehicle all liability coverage is void — no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable."
A fourth instance of retained tort liability pertaining to damages of up to $400 to motor vehicles was added to § 3135 in 1979 and made effective July 1, 1980. MCL 500.3135(2)(d), (6); MSA 24.13135(2)(d), (6).
Had the Legislature wanted to limit the portability of liability coverage it could easily have done so by less broad language, as it did, for example, in § 520(b) of the financial responsibility act. MCL 257.520(b); MSA 9.2220(b). There, in discussing the requisites for an automobile liability policy issued as proof of future financial responsibility, the Legislature, after requiring an owner's policy to designate by explicit description or appropriate reference all covered motor vehicles, limited the liability coverage to only those automobiles listed in the policy by speaking in terms of the use of "such" vehicle(s)..
Although we have not explicitly considered subpart two of the "non-owned automobile" definition, supra, which would purport to limit liability coverage in this case because the non-owned automobile was "registered in the name of * any relative residing in the same household", i.e., it was registered to Gloria Carlson's father, such a limitation is so close in purpose and effect to the "owned by any relative residing in the same household" language that it too must be invalidated.