United States: No Insurable Interest In Vehicle Required For PIP

In Universal Underwriters v. Allstate, - Mich App - (2001), Cherry Broadway went car shopping with her friend and Allstate agent, Kevin Edmonds. Ms. Broadway picked out a LeSabre at Prestige Motors and applied for financing. Mr. Edmonds issued a certificate of no fault insurance on behalf of Allstate, and Ms. Broadway signed an agreement with Prestige that her insurer would be the primary insurer. Prestige gave her use of the LeSabre while her financing was being approved. After being involved in an accident with the LeSabre before the sale was finalized, Ms. Broadway ultimately purchased a Cavalier instead of the LeSabre.

Prestige’s insurer, Universal Underwriters, paid Ms. Broadway’s PIP benefits and sued Allstate for reimbursement as the primary insurer. Allstate argued that Ms. Broadway never had an insurable interest in the LeSabre, therefore, her purported coverage was not in effect.

The Court of Appeals held that, unlike liability coverage which requires an insurable interest in the vehicle, PIP benefits are not conditioned on the ownership of an insured automobile. Moreover, "a person obviously has an insurable interest in his own health and well-being. This is the insurable interest which entitles persons to personal protection benefits regardless of whether a covered vehicle is involved." Therefore, Ms. Broadway had valid PIP benefits from Allstate at the time of her accident.