Having A ‘Cowboy Attitude’ About No-Fault Insurance Limits Could Cost You – Personal Injury

Country Music Hall of Famer Willie Nelson’s 90^th
birthday party was recently on TV. And I found myself singing one
of his tunes today. You know, the one about moms and liability
insurance – “Mamas don’t let your babies choose
their own insurance.”

Well, I think that’s how it goes. Regardless of the
“correct” lyrics, that is the version the Michigan Court
of Appeals was singing in its recently published decision of
Newton v Progressive Marathon Insurance Company, et
al.

The Newton case stemmed from an accident whereby Eric, a minor
at the time, crashed his Honda Accord into Newton’s motorcycle
and injuries resulted. Eric was the sole owner of the Accord, which
Progressive insured through a No-Fault policy purchased by
Eric’s mother, Nykie.

With respect to the Accord, Nykie elected bodily injury
liability limits of $50,000 per person and $100,000 per occurrence
rather than the statutory default of $250,000 per person and
$500,000 per occurrence. Nykie did not consult Eric when electing
lower liability coverage. In fact, Eric was not involved in
obtaining the policy from Progressive.

Newton filed a lawsuit seeking a declaratory judgment, arguing
that Nykie’s election of lower liability limits for Eric’s
vehicle exposed him to greater liability. As part of the relief,
Newton requested the trial court to reform the Progressive policy
to include the higher default liability limits established by
law.

The court granted summary disposition in favor of Progressive,
stating that Nykie had the legal authority to elect lower insurance
policies for Eric’s vehicle. Newton appealed.

The Michigan Court of Appeals affirmed the trial court’s
decision. Essentially, Newton had three arguments, all of which
failed: (1) that Nykie did not have the authority to elect lower
liability limits for Eric’s vehicle without his authorization;
(2) that the owner of the vehicle should make the election or the
term “applicant” should be expansively construed to
require authorization from the vehicle owner; and (3) that that
Nykie, as Eric’s parent, lacked agency authority, citing Woodman v Kera LLC.

Regarding the first argument, the appellate court stated that
the plain language of MCL 500.3009(5) permits the “applicant
for or named insured” to choose lesser limits. Because Nykie
was both the “applicant” and “named insured,”
she was permitted to elect lower limits for Eric.

Regarding the second argument, the appellate court found that
the language of MCL 500.3009(5) was clear and unambiguous –
it did not contain the word “owner” or have any
implications on the owner.

Lastly, regarding the third argument, the appellate court
distinguished this matter from Woodman. The Michigan
Supreme Court, in Woodman, held that parents have no
authority to waive, release or compromise a claim belonging to
their child. The ruling arose out of a situation where a father
signed a liability waiver for his son at an indoor play area.

The appellate court found that Nykie did not seek to waive,
release or compromise a claim or defense belonging to Eric. By
choosing the lower liability limits, Nykie did not limit the
defenses available to Eric. Although this had the potential to
expose Eric to more liability in the event of a collision, that was
a risk that was allowed by the plain language of MCL 500.3009.

By publishing this decision, the appellate court makes the
Newton case the current state of the law in Michigan. Simply put,
parents can elect lesser-than-statutory liability limits for their
children – even if this exposes the children to greater
risks. But is that the most prudent thing to do?

The Red Headed Stranger warned mamas that their babies
shouldn’t grow up to be cowboys. Maybe in a different universe
he would warn them about too little liability limits in their
No-Fault policy.

Originally published 01 January 2024

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