Michigan Court of Appeals Rules that Auto Insurance Exclusion Where Driver Being Paid Valid

In an important ruling for anyone with a particular, common automotive insurance policy exclusion, the Michigan Court of Appeals held that Farm Bureau Mutual Insurance Co. was not liable in an automotive accident case because the insured was being paid for delivering pizzas when the accident occurred.

The insured was working as a pizza delivery driver when he hit another car. The driver’s car, owned by his father, was insured by Farm Bureau, and the policy contained an exclusion for “for liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee.” The Court of Appeals held that this provision was not ambiguous and ruled for Farm Bureau – because the driver was carrying property (pizza) for a fee at the time of the accident, Farm Bureau could not be held liable for a risk it did not assume.

This case represents is an significant consideration for all individuals in Michigan, especially those who drive their own cars in a delivery capacity (or who allow others to drive their own cars in a delivery capacity). This exclusion is a very common exclusion in insurance policies and many policy holders do not carefully recognize the implications of provisions such as this one.

For more information about this case, here is a link to a summary from the State Bar of Michigan, along with access to the full opinion by the Michigan Court of Appeals.