Michigan Court of Appeals; Docket #354502; Unpublished
Judges Stephens, Sawyer, and Servitto; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Underinsured Motorist Coverage: Setoffs Applicable to Underinsured Motorist Cases
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order in favor of Defendant Citizens Insurance Company of America (“Citizens”) in its dispute with Plaintiff James River Insurance Company (“James River”) over which insurer had priority responsibility for payment of Joseph Bolton’s underinsured motorist benefits. The Court of Appeals held that Citizens’ homeowners’ policy was a “true” excess insurance policy, in that it only extended coverage once all other applicable insurance coverage had been exhausted, whereas the James River policy was an excess “other insurance” policy, in that it offered excess coverage when triggered by certain circumstances—e.g. a motor vehicle collision caused by an underinsured driver. Relying on Supreme Court precedent in Bosco v Bauermeister, 456 Mich 279 (1997), the Court of Appeals held that excess “other insurance” policies are primary over “true” excess insurance policies, and thus the James River policy was primary in this case.
Joseph Bolton was injured in a motor vehicle collision while driving his personal vehicle as a rideshare driver for Uber. The collision was caused by Tristan Goodwin, who was driving a truck owned by Dale Goodwin at the time. Dale’s truck was covered by an automobile liability insurance policy issued by Progressive Insurance Company, with liability coverage limits of $100,000 per person. Dale also had a homeowners’ policy with Citizens—under which Tristan was also covered—which included a “Personal Umbrella Liability Supplement” that provided liability coverage as “ ‘excess insurance over any other insurance available to an insured.’ ” Bolton, meanwhile, was covered under Uber’s James River “business auto” policy, which provided for up to $1,000,000 in underinsured coverage if “ ‘the limit of any applicable liability bond or policies ha[d] been exhausted by payment of judgments or settlements.’ ” A priority dispute ensued between James River and Citizens as to which insurer was liable for Bolton’s damages over $250,000, and in James River’s resultant declaratory judgment action against Citizens, the trial court ruled in Citizens’ favor, without providing an explanation.
The Court of Appeals affirmed the trial court’s summary disposition order in favor of Citizens, observing, preliminarily, that “[n]either party’s policy is strictly first in priority, because Progressive’s policy is liable for the first $100,000 . . . [and] [w]e presume, although we do not decide, that James River is liable for the next $150,000.” As to which policy would be primarily responsible for Bolton’s damages in excess of $250,000, the Court of Appeals relied on the Supreme Court’s analysis of a similar situation in Bosco. The Bosco decision provides:
“a distinct difference exists between ‘true’ excess insurance coverage and excess “other insurance” on the basis of the difference in policy types within the insurance industry, the premiums charged for and risks assumed by the policies, the language of the policies, and the reasonable expectations of all the contracting parties. This difference requires an excess ‘other insurance’ policy to be exhausted before “true” excess insurance policies are required to contribute to a loss.”
The Court of Appeals, in this case, elaborated on the above distinction, explaining:
“The distinction is whether a policy is written with the expectation that some other primary policy will provide all coverage until its limits are exhausted, or whether a policy offers excess coverage when triggered by limited circumstances. Id. at 294-295. Our Supreme Court further explained that ‘the fact that a policy is issued as an umbrella policy at rates reflecting the reduced risk insured indicates the intent that the policy is excess over other excess policies.’ ”
The Court of Appeals held that the James River policy qualified as an excess “other insurance” policy, because it provided “excess coverage when triggered by limited circumstances”—e.g. an underinsured driver causing a motor vehicle collision. The Citizens policy, on the other hand, qualified as a “true” excess insurance policy, in that it truly was intended to be a “last-resort policy” which would only kick in when the coverage limits available under policies such as the James River policy were exhausted. Thus, the Court of Appeals held that the James River policy was primarily responsible for paying Bolton’s damages above $250,000, up to $1,000,000.
“When the two policy clauses here are read in context, it is clear that the James River underinsured-motorist policy is intended to be a primary policy that provides excess coverage under limited circumstances, whereas the Citizens umbrella policy is intended to be a truly last-resort policy. The James River policy was clearly intended as a primary policy in general. It is intended to provide underinsured motorist coverage under certain circumstances. It is similar to the policy in Bosco that provided coverage for injuries for injuries caused by motor vehicles, with an excess clause under which, if the insurer caused injury through use of a nonowned automobile, then the insurer’s coverage would be ‘excess over any other valid and collectible insurance.’ Bosco, 456 Mich at 285-286, 296. The Citizens policy is a homeowners policy, not an automobile policy, that includes an umbrella policy explicitly stating that its coverage is ‘excess.’ It is similar to the umbrella policies in Bosco that would provide liability coverage only after certain primary insurance limits had been exceeded. Id. at 286. Our Supreme Court considered only the latter to be ‘ ‘true’ excess coverage’ policies, even if the other policy was only available under certain circumstances. Id. at 291-296.
From Bosco, it follows that James River’s policy provides excess ‘other insurance’ coverage and Citizens’s policy provides ‘ ‘true’ excess coverage.’ Just as the automobile policy in Bosco provided excess coverage only under certain circumstances, so too does James River’s policy here. James River’s policy does not state it is excess over any underlying coverage; it is excess only if a vehicle is underinsured—rather than uninsured—or if ‘other collectible uninsured motorist insurance’ applies. In contrast, Citizens’s policy provided coverage over any of the underlying policies listed on its declaration page, and it is expressly an umbrella policy. Indeed, if Dale did not have liability coverage with Progressive, there is no question James River’s policy would have been primary. Also, like the automobile policy in Bosco, under James River’s policy, James River’s liability attached on the occurrence of an insured event: bodily injury caused by an accident with a driver of an uninsured or underinsured motor vehicle. Like the umbrella policies in Bosco, under Citizen’s policy, Citizens’s liability did not arise because of the occurrence of any insured event. Citizens’s liability arose only after Dale had exhausted the limits of his underlying insurance.”