Coverage for the auto policy holder's daughter was at stake in Morrison v. Secura Ins., No. 286936, 2009 Mich. App. LEXIS 2694 (Mich. Ct. App. Dec. 29, 2009).
In April 2006, the insured's daughter struck plaintiffs' motorcycle with her Chevrolet Cavalier, causing serious injury to the plaintiffs. The auto policy listed the mother as the named insured, but both mother and daughter were listed as drivers of three vehicles, including the Cavalier. Only the daughter drove the Cavalier, however. The mother paid the policy premiums for the entire year. Mother and daughter lived at the same residence. In March 2006, the mother transferred title to the Cavalier to the daughter, who obtained a new title and registered the Cavalier in her own name.
Secura Insurance denied coverage, claiming the mother did not have an insurable interest in the Cavalier at the time of the accident, making the policy void. After the trial court granted summary judgment to the mother, Secura appealed.
The appellate court noted that an insured must have a "insurable interest" to support the existence of a valid automobile liability insurance policy. Here, the mother had an insurable interest in the Cavalier at the time she purchased the policy and paid the entire year's premiums. Although public policy forbid the issuance of a policy where the insured lacked an insurable interest, it did not require an otherwise valid policy to become void automatically. This was particularly true where the actual risk never changed and was fully known by the insurer (i.e., the daughter was always the only driver of the Cavalier). Further, public policy did not favor terminating what amounted to a family insurance policy upon an an intra-family vehicle transfer. Therefore, the trial court was affirmed.
