In Lashbrook v State Farm Automobile Mutual Insurance Company,the Michigan Court of Appeals held that insurance policies must be read as meeting the no-fault act’s minimum requirements, even if those policies purport to provide less coverage than mandated by the act. Applying this principle, the Lashbrook court held that a bobtail insurance policy — which, by definition, covers a tractor when used without a trailer — should be construed as covering a tractor when used with a trailer. An individual’s insurance policy, according to the Court of Appeals, covers that individual, not his or her automobiles.
The insured in Lashbrook owned a Ford Ranger and a Peterbilt tractor. Her Ford was covered by her no-fault policy and she purchased a bobtail policy–one that covered the tractor when it was not hauling a trailer–for her Peterbilt. She leased the tractor to a company and was driving it for that company when she was involved in an accident.
When she sought first-party benefits, her insurer denied coverage, arguing that the bobtail policy was not applicable because she was hauling a trailer at the time of her accident. The Michigan Court of Appeals rejected this argument, relying in large part on its 1982 opinion in Lee v Detroit Auto Inter-Ins Exch.There, the Court held that “it is the policy of the no-fault act that persons, not motor vehicles, are insured against loss.” Accordingly, the insurer could not refuse coverage to its insured based on what the insured happened to be driving at the time of her accident. Consequently, the Court of Appeals concluded that the insurer was wrong to deny coverage on this basis.
The insurer also argued that its insured did not comply with the no-fault act’s security requirements. The act provides that the “owner” of a motor vehicle must “maintain security for payment of benefits under personal protection insurance, property protection insurance, and residual liability insurance.” If a person does not satisfy this security requirement, he or she is not entitled to payment of personal protection benefits. There was a question of fact as to whether the insured was the “owner” of the tractor (and thus subject to the security requirement), given that she had leased the vehicle to a tractor. The Court of Appeals therefore remanded the case for further proceedings on this issue.