Court Opinion

ID: 9722023
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:14:46.326268+00
Date Added: 2024-06-11T13:05:31.714100
License: Public Domain

Riley, J.
(dissenting). I agree with the conclusion of the majority that the no-fault insurance policy between Williams and Allstate remained in effect at the time of the accident involving plaintiff and Preece. No policy provision provided for cancellation upon transfer of the vehicle, and the policy requirements for cancellation were not satisfied by Williams until after the accident. The existence of a policy between Williams and Allstate, however, *663does not determine the issue whether the policy provides coverage for Preece, the vehicle’s new owner. Because I do not believe that the policy requires Allstate to defend or indemnify Mr. Preece, I respectfully dissent.
I
The no-fault insurance policy between Allstate and Williams provides that payment be made "for an insured” for all damages that "the insured shall be legally obligated to pay because of . . . bodily injury sustained by any person . . . arising out of the ownership, maintenance or use ... of the owned automobile or a non-owned automobile.” The crux of coverage is whether Mr. Preece is "an insured,” not whether the automobile is an "owned automobile” under the general definitions of the policy. Even assuming that the automobile continued to be an "owned automobile” because it was described in the declarations, if Mr. Preece is not considered "an insured,” the policy does not apply to his use of the vehicle.
With respéct to the "owned vehicle,” the policy defines persons who are insured under the residual liability provision as the named insured, a resident of the named insured’s household, or any permissive user within the scope of that permission. I am persuaded that when a person, here Williams, makes a bona fide transfer of ownership to another, Preece, the seller no longer retains the ability to give permission to use the vehicle. Plaintiff argues that "owned automobile” has a distinct meaning as defined by the policy, therefore the policy still covers the sold vehicle. Plaintiff then argues that because the automobile is considered "owned,” Williams may give permission to use it. I do not believe that "owned” should be given two *664distinct meanings. The "owned automobile” is the one described in the declarations, it does not connote the ordinary meaning of "own:” "To have a good legal title; to hold as property; to have a legal or rightful title to; to have; to possess.” Black’s Law Dictionary (6th ed), p 1105. Upon the sale to Preece, Williams ceded title and possession of the vehicle. Upon the sale, Preece no longer required, and Williams could not grant, permission to use the vehicle.
The difference between a permissive driver and a transferee is also apparent from the risk of liability retained by the transferor. As noted by the majority, ante at 657, an owner may be held liable for the negligent driving of a permissive user. If the vehicle is sold, however, the former owner is immune from tort liability. MCL 257.240; MSA 9.1940. An owner might therefore sell the vehicle to someone to whom she would not give permission if ownership were retained.
On the basis of the contract language, I would find that Preece is not an insured, because he is not a named insured, a resident of the Williams’ household, and he did not have or need permission of a named insured to use the vehicle. The terms of the policy therefore do not require Allstate to indemnify or defend Preece in any lawsuit arising out of the use of the owned automobile.
II
Moreover, I do not believe that a different result is required by statute. The Insurance Code requires an owner or registrant of a motor vehicle to maintain residual liability insurance, and operation of a vehicle without such security is a misde*665meanor.1 That a registrant is required to insure the registered vehicle does not necessarily compel a finding that the registrant’s residual liability coverage applies to a new owner. Although case authority provides for coverage of a registrant’s pip insurance regardless of ownership, I disagree with the majority that residual liability coverage is also required. Cases finding pip coverage rely primarily on statutory sections that are applicable only to pip benefits, and the no-fault act does not provide similar coverage and priority rules for residual liability insurers.2
In Lee v DAIIE, 412 Mich 505; 315 NW2d 413 (1982), this Court held that an insured may be entitled to pip benefits under his own policy even if he was injured in an accident involving a vehicle not required to be registered in Michigan. After discussing the legislative purpose of the no-fault act, the Court found that MCL 500.3114; MSA 24.13114 and MCL 500.3115; MSA 24.13115 require an injured person’s personal no-fault insurer to stand primarily liable for pip benefits when the person is involved in a motor vehicle accident. Sections 3114 and 3115 regulate pip benefits only, *666identifying persons entitled thereto and the priority of insurers.
Several decisions of the Court of Appeals similarly hold that an injured party may recover pip benefits pursuant to the no-fault policy of a seller who has made a valid transfer of ownership. In Madar v League General Ins Co, 152 Mich App 734; 394 NW2d 90 (1986), the seller transferred the vehicle before the expiration of his no-fault insurance policy.3 The Court characterized pip benefits as being "in the nature of personal accident policies which are independent of the insured’s ownership of an automobile.” Id. at 742. Following Madar, the Court of Appeals, in Cason v Auto-Owners Ins Co, 181 Mich App 600; 450 NW2d 6 (1989), determined that, absent a higher priority insurer, the insurer of the registrant of the vehicle that injured plaintiff was liable for payment of pip benefits.
While liability insurance coverage and motor vehicle damage insurance coverage are based upon ownership or maintenance or use of the covered automobile, pip benefits are not conditioned on the ownership of an insured automobile. [Id. at 608.][4]
These decisions and the specific no-fault provisions highlight the distinction between the statutory treatment of pip coverage and other types of coverage. I would find no statutorily mandated residual liability coverage where the insurance policy does *667not provide such coverage for a purchaser of the covered vehicle.
III
The terms of the insurance policy in effect between Williams and Allstate do not require the provision of residual liability benefits to Preece. In the absence of such policy coverage, I am not persuaded that the no-fault act requires provision of these benefits by Allstate. I would affirm the decision of the Court of Appeals, finding that Allstate is not required to defend or indemnify Preece in the underlying tort action involving plaintiff.
Brickley, J., took no part in the decision of this case.

 MCL 500.3101; MSA 24.13101 and MCL 500.3102; MSA 24.13102.

 Most statutory provisions in the no-fault act specifically apply only to pip benefits. See MCL 500.3105; MSA 24.13105 (pip coverage for bodily injury arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle; due without regard to fault); MCL 500.3107; MSA 24.13107 (allowable expenses for pip benefits); MCL 500.3108; MSA 24.13108 (survivor’s loss, pip benefits); MCL 500.3109; MSA 24.13109 (deductions from pip benefits for governmental benefits); MCL 500.3109a; MSA 24.13109(1) (coordination of pip benefits with other health and accident coverage on the insured); MCL 500.3111; MSA 24.13111 (pip benefits for out-of-state accidents); MCL 500.3112; MSA 24.13112 (payees of pip benefits); MCL 500.3113; MSA 24.13113 (persons not entitled to pip benefits); MCL 500.3114; MSA 24.13114 (persons entitled to pip benefits); MCL 500.3115; MSA 24.13115 (priority of pip providers); MCL 500.3116; MSA 24.13116 (reimbursement and indemnification among pip insurers, and tort claims); MCL 500.3142; MSA 24.13142 (time limits for pip payments); MCL 500.3172; MSA 24.13172 (assigned claims plan for persons entitled to claim pip benefits).

 It should be noted that in Madar the issue of registration did not arise. The Court of Appeals determined the insurance pip coverage was applicable on the basis that the policy had not been canceled, despite the sale of the insured vehicle and the transfer of the registration.

 See also Allstate Ins Co v Sentry Ins Co, 191 Mich App 66; 477 NW2d 422 (1991), in which the Court determined that because the insured’s registration had expired, pip coverage was not applicable under MCL 500.3115(1); MSA 24.13115(1).