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How mixing your professional life with your personal life could leave you — and your teen drivers — unprotected after a car accident

Michigan insurance attorneys say dreaded ‘business-use’ exclusion in personal auto insurance policies may deny liability coverage if you or family member cause work-related crash

It may not seem like a big deal for you to use your personal car or truck on the job. Or to let your teen driver use the family car every day after-school or to drive to and from a summer job.

But if you or your teen driver causes an accident in either event, it may be a huge problem.

Depending on whether your personal auto insurance policy contains a “business-use” exclusion, your liability insurance may not cover the car accident and you may be personally liable for damages to anyone who was injured in the crash.

The reason is because “business-use” exclusions — which are included in most personal auto insurance policies in Michigan, and in many other states now as well — allow the insurance company to deny liability coverage for accidents caused by the insured person while using her personal car or truck for business purposes.

As such, the failure to be aware of and comply with the provisions of a “business-use” exclusion can be financially devastating for you, personally, and/or as the responsible parent of a teen-driver who mistakenly thinks it would be “no big deal” to use your family’s personal car for non-family, income-generating business.

Business-use exclusion for Michigan auto insurance

Under Michigan law, an automobile insurance company can set its premium rates based on whether an insured person intends to use her vehicle for business purposes, i.e., “for transportation of passengers for hire, for rental purposes, or commercial purposes.” (MCL 500.2118(2)(f))

If an insured person reveals that she plans to or may use her vehicle for “business purposes,” then her insurer may charge a higher premium on her personal auto insurance policy:

“It is reasonable to conclude that a commercial vehicle would command a higher insurance premium because it would likely accumulate more mileage and be used in circumstances more likely to result in accidents.” (Amerisure Insurance Company v. Graff Chevrolet, Inc., et al., Michigan Court of Appeals, July 22, 2003 (published))

On the other hand, if an insured person states she plans to use her personal car only for personal matters, then her auto insurance premium will likely be lower, reflecting the insured person’s anticipated, limited use.

How the ‘business-use’ exclusion ‘at work’ has hurt insured drivers

Below are three examples of how Michigan courts have interpreted the “business-use” exclusion to deny liability coverage to otherwise properly insured drivers.

The rulings provide a jarring illustration of how “business-use” exclusions operate and how clear-cut their effect is:

o The “business-use” exclusion in Henry Dobbs personal auto policy denied him liability coverage when he, while driving his employer’s uninsured truck, killed motorcyclist Richard Husted Jr.. (Husted v. Dobbs, et al., Michigan Supreme Court, April 27, 1999)

o The “business-use” exclusion in a rental car contract denied liability coverage to Richard Threehouse after he collided with another car while he was delivering pizzas for his employer, Hungry Howie’s. (Amerisure Insurance Company v. Graff Chevrolet, Inc., et al., Michigan Court of Appeals, July 22, 2003 (published))

o The “business-use” exclusion in Anthony Nicholas Alcini’s mother’s personal auto insurance policy denied liability coverage to Mr. Alcini after he struck and injured Don Edwin Lease while he was delivering pizzas for his employer, Pizza Czars. (Amerisure Mutual Insurance Company, et al. v. Farmers Insurance Exchange, et al., Michigan Court of Appeals, May 4, 2004 (unpublished))

What to look for in your auto insurance policy to protect yourself from ‘business-use’ exclusions

To give you some idea of what you are looking for when you begin examining your personal auto insurance policy to determine if it contains a “business-use” exclusion, examples are provided below.

Typically, “business-use” exclusions will provide that liability coverage is excluded when the car or truck in question is used:

o “[I]n a business or occupation of the named insured, spouse or relative …” (Husted v. Dobbs, et al., Michigan Supreme Court, April 27, 1999)

o “To carry passengers or property for consideration, express or implied.” (Amerisure Insurance Company v. Graff Chevrolet, Inc., et al., Michigan Court of Appeals, July 22, 2003 (published))

o “[To] carry persons or property for a charge.” (Amerisure Mutual Insurance Company, et al. v. Farmers Insurance Exchange, et al., Michigan Court of Appeals, May 4, 2004 (unpublished))

Steve Gursten is one of the nation’s top insurance attorneys handling auto accident lawsuits. He is head of Michigan Auto Law and president of the Motor Vehicle Trial Lawyers Association. Steve has received the highest verdict in the state for a car accident or truck accident victim in 2008, 2009, 2010 and 2011, according to Michigan Lawyers Weekly.


Related information to protect yourselves:

The best auto insurance coverage for teen drivers in Michigan

No-Fault and your car accident

Your 3 potential cases after a car crash

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights. Call (800) 777-0028 for help from one of our Michigan insurance attorneys.

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