The Michigan Court of Appeals ruled last week that state law permits the parent of a minor to elect lower than default liability limits for their child’s auto insurance coverage.
A three-judge panel unanimously affirmed a trial court’s decision that the mother of a 17-year-old driver was within her rights to choose lower no-fault coverage for her son without seeking his authority.
Eric Moyer was 17 when in November 2020 he crashed his 2005 Honda Accord into Samantha Newton and her motorcycle in Grand Ledge, Michigan. Two months prior to the crash, Eric’s mother, Nykie, purchased no-fault coverage for the vehicle from Progressive, electing for bodily injury liability of $50,000 per person and $100,000 per occurrence.
Though Eric was the sole owner and title-holder of the Accord, Nykie was listed on the application as the “Applicant/Named Insured.” The policy declarations identified Nykie, Eric, and her other minor son as individuals covered by the policy.
Michigan’s 2019 no-fault auto insurance reforms allow an insured to elect for lower than default liability limits, with at-fault drivers potentially opening themselves up to enormous liability. Nykie acknowledged the “potentially severe risks” to her son when she selected lower liability coverage.
In April 2022, Newton sued Progressive, Nykie, and Eric seeking declaratory relief to reform the insurance policy on Eric’s vehicle to include the default limits established by law – $250,000 per person and $500,000 per occurrence.
Newton alleged that Nykie’s election of the lower liability coverage was “legally defective” because Nykie possessed no liability risk with respect to Eric’s vehicle and she had “no legally sufficient agency authority” to make the election. In a countermotion, Progressive argued that Newton lacked standing to sue unless she first obtained a judgment against Nykie. Further, Progressive argued that Nykie, as the applicant and named insured, properly elected the lower liability coverage and it was not necessary for Eric to make the election.
A trial court ruled in Progressive’s favor, noting that Nykie followed the “legal choices that are allowed.” The trial court concluded that Newton could bring the declaratory action to reform the insurance policy but that it was misguided.
The appellate court took up the case, Samantha A. Newton v. Progressive Marathon Insurance Company, Eric Moyer, and Nykie Moyer, stating that Newton did indeed have standing to sue.
The court’s Jan. 4 opinion firmly supported Progressive’s position, however, arguing that Nykie as applicant and named insured had the right to elect lower levels of no-fault coverage for Eric’s vehicle. Because Eric was a minor at the time Nykie elected coverage, Eric could not purchase his own no-fault insurance.
Minors occupy a “unique and awkward space in contract and tort” the court said, noting that minors as young as seven-years-old can be sued for negligence and intentional torts. Minors broadly lack the capacity to contract, including an inability to enter contracts for no-fault insurance. Parents can contract for their minor children, and they have an insurable interest in their children’s no-fault coverage, the court said.
Granting Newton’s requested relief would yield an “absurd result,” the court wrote, allowing “minor drivers to constrain their parent’s ability to contract for their own insurable interests.”
Topics Auto Personal Auto Michigan
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