Lawyer's Corner: Pedestrian Accident in Home Owners Ins Co v AllState Ins Co

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What happens when an out-of-state resident gets injured in a pedestrian accident? Are they covered? Which no-fault auto insurance company pays the bill?

The Michigan Court of Appeals recently issued an unpublished opinion in Home Owners Insurance Company v AllState Insurance Company that addresses who pays in a visitor pedestrian accident.

At first blush, the decision appears to leave an injured child without compensation. But Czap was paid more than $60,000 by the driver’s no-fault auto insurance company. The question is which parent’s insurance company is responsible to cover that cost.

In 2008, Czap, a minor, lived with her mother and grandparents in Pennsylvania. She was in Michigan visiting her father when she was crossing a road and was hit by a car. Czap’s mother was insured by AllState. Dad was insured by Home Owners. So whose company pays?

Because Czap’s permanent residence was in Pennsylvania with her mother, AllState would ordinarily be the company on the hook as a resident relative’s insurer. The fact that Czap was visiting her father doesn’t change where she resides. However, in this case the driver’s insurance company had already received compensation from the father’s insurance company in a separate lawsuit. So unless Home Owners could collect from AllState, it would be stuck with the bill.

The court applied MCL 500.3163 to the case. In section (1) the statute requires auto insurance companies licensed in the state to cover the injuries and property damage of their out-of-state policy holders if it is “arising from the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle by an out-of-state resident.” However, if the resident was not an occupant of a motor vehicle at the time of the accident, section (4) limits the amount the company would pay to $500,000, and then only are there is no other benefits available to cover the injury.

Because Czap was a pedestrian, and not a passenger, the court applied section (4). Although the court did not say so, it appears it considered AllState to be another source for the benefits. It denied the father’s insurance company’s claim that AllState should have to pay for the child’s injuries.

It is important for attorneys wrestling with these complex priority issues to fight first for the injured party. Where there is a question over which insurance company should pay benefits, Michigan no-fault law requires that the defendant insurance company pay first, and then seek compensation afterward. That way, the victim of the pedestrian accident isn’t waiting years to receive the benefits they need. A lack of priority is not a defense to payment.

However, when auto accident lawyers are representing out-of-state visitors in pedestrian accidents, this case shows they need to exhaust all other options for benefits before turning to the auto insurance provider.

David Christensen is a pedestrian accident attorney at Christensen Law in Southfield, Michigan. He has been dealing with complex legal and insurance issues for over 20 years. If your clients are stuck in a tricky situation, contact Christensen Law today for a referral.