The Michigan state Court of Appeals has reversed a lower court decision in a dispute over which insurer bears responsibility for covering injuries sustained in a dealership shuttle van accident.
The case, Smith v. Farm Bureau Mutual Insurance Company of Michigan, centers on Keith Smith, who was injured while riding as a passenger in a courtesy shuttle provided by George Matick Chevrolet in Redford Township. The accident raised key questions about insurer obligations under Michigan’s complex no-fault system - specifically, whether the dealership’s shuttle qualifies as a vehicle “operated in the business of transporting passengers.”
The incident occurred in April 2020, when Mr. Smith’s vehicle was being serviced at the dealership. A dealership employee offered to drive him home in the shuttle, a white Chevrolet Express van prominently marked with the dealership’s name and address. On the way, the shuttle rear-ended another vehicle at an intersection. Though no injuries were reported at the scene, Mr. Smith later sought medical treatment and ultimately required surgery.
At the time, the dealership’s shuttle was insured by Motorists Commercial Mutual Insurance Company. Smith lived with his then-wife, whose vehicle was insured by Farm Bureau, making him eligible for resident-relative coverage under her policy. Lacking personal auto insurance, Mr. Smith also filed for benefits through the Michigan Automobile Insurance Placement Facility, which provides coverage when no other insurer is responsible.
In the trial court, MAIPF successfully argued for dismissal, contending that both Farm Bureau and Motorists could provide coverage. Farm Bureau countered that Motorists, as the shuttle’s insurer, held priority under Michigan’s no-fault statute, while Motorists argued that the dealership’s shuttle service was merely incidental to its primary business of selling and servicing vehicles.
The trial court ruled in favor of Motorists, determining that the shuttle service was ancillary to the dealership’s operations, thus leaving Farm Bureau on the hook for benefits.
The appellate panel disagreed. Writing for the court, Judges Young, O'Brien, and Swartzle found that while it was undisputed the shuttle van’s primary purpose was to transport passengers, there remained a factual question over whether such transportation was central or incidental to the dealership’s business.
Farm Bureau had introduced Google reviews and other evidence indicating the dealership promoted and regularly offered the shuttle service, suggesting it played a significant role. Motorists, in contrast, provided testimony that the service was a courtesy feature, not a revenue driver.
Given the conflicting evidence, the appellate court ruled that a fact-finder must determine whether the shuttle service qualifies under MCL 500.3114(2) - the statute governing priority in cases involving vehicles operated “in the business of transporting passengers.”
Judge Adrienne Young, concurring, raised broader concerns about the test traditionally used to evaluate such cases. Known as the "primary purpose/incidental nature" test, it examines not only the purpose of the vehicle but also the role transportation plays in the operator’s overall business.
Judge Young questioned whether this judicially created standard aligns with the plain wording of Michigan’s no-fault statute, which focuses on the function of the vehicle itself. She urged the Michigan Supreme Court to revisit the issue, suggesting that focusing solely on the vehicle’s use could simplify litigation and avoid unnecessary analysis of business models and profit margins.
The appellate court reversed the trial court’s decision and remanded the case for further proceedings. The outcome will likely influence how courtesy services offered by non-transportation businesses - such as car dealerships and hotels - are treated under Michigan’s no-fault system.
The case highlights how seemingly routine amenities, like a complimentary ride, can give rise to complex legal battles over insurance obligations.
Case: Keith Smith v. Farm Bureau Mutual Insurance Company of Michigan et al.
Court: Michigan Court of Appeals (Wayne Circuit Court, LC No. 21-003289-NF)
Judges: Adrienne N. Young, Colleen A. O'Brien, and Michael J. Swartzle
