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The Value of Indemnity for the Self-Insured Under the No-Fault Act: The Michigan Supreme Court Holds an Agreement Between an Insurer and Vendor for Indemnity is Not Contrary to the No-Fault Act

Motor Vehicle Litigation / June 23, 2021

Bronner v Detroit recognized GFL’s argument that the City should not be treated differently than traditional insurers but noted its decision did not have this effect. Rather, it merely recognized the City has far more opportunities to negotiate indemnity provisions than traditional insurers who are in the actual business of offering insurance as opposed to the City who is only incidentally involved as an insurer.

Justice Vivano concurred in the result but wrote separately because he believed the majority failed to examine whether the analytical framework for addressing this issue was appropriate. While agreeing the indemnification provision at issue did not violate the No-Fault Act and was enforceable, he did not believe total reliance on the “statute’s abstract goals as defined by [the] Court.”

The takeaway is this: If an indemnity provision shifts the burden of providing PIP benefits where the insurer was obligated to pay as a result of the vendor’s negligence or tortious acts/omissions, that may not violate the public policy objectives of the No-Fault Act. Drafted correctly, this may well provide businesses with a great option to obtain indemnification for the past and security for the future.

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