Title ownership of a car isn’t the same as ownership of a car under the no-fault act


When you think of who owns a car, you typically think of whose name is on the title. But when you’re talking about ownership for purposes of Michigan’s no-fault act, you have to think more broadly.

That’s the thrust of the Court of Appeals’ recent decision in Savage v State Farm Mutual Automobile Insurance Company. The Court held that, although the plaintiff was not the title owner of the car, he was an “owner” of that car under the no-fault act. As a result, the plaintiff could not recover benefits under the no-fault act because he had not obtained insurance for the car he was driving when he was injured.

Michigan’s no-fault act is compulsory, meaning that it requires car owners to purchase no-fault insurance. The act generally allows anyone injured in an automobile accident to receive benefits, whether from a company that insured a vehicle involved in the accident or one assigned under the act. To compel compliance, the act prohibits a person from recovering no-fault benefits if he or she was an owner of a car involved in the accident but had not purchased no-fault insurance. Consequently, the central question is often this: who owned the car involved in the accident?

That was the question in Savage. The plaintiff had been given keys to a car that his girlfriend’s mother had given to his girlfriend. He was allowed to use the car at will for approximately six months before the accident. But the car was uninsured. After the plaintiff was injured while driving the car, he submitted a claim for no-fault benefits and filed a lawsuit after his claim was denied.

The no-fault act does not limit the term “owner” to the person whose name is on the title. Instead, it broadly defines the term “owner” to include anyone “having the use” of a car “for a period that is greater than 30 days.” The purpose of the broader definition is to prevent drivers from taking advantage of loopholes, such as titling a vehicle in a family member’s name. Accordingly, the phrase “having the use” is interpreted as “using the vehicle in ways that comport with concepts of ownership” and the focus is on “the nature of the person’s right to use the vehicle.”

There was no dispute that the plaintiff in Savage could use the car at will like any other owner. It followed that he was an owner for purpose of the no-fault act, regardless whether his name was on the title or he actually drove the car on a regular basis. Because he had not purchased no-fault insurance for the car, he could not recover no-fault benefits and the Savage Court affirmed summary disposition for the defendant insurer.

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