A Michigan appeals court has ruled city insurers must cover PIP claims for injuries on public transit, clarifying liability for municipal insurance providers.
On September 16, 2025, the Michigan Court of Appeals delivered a decision that will be closely watched by insurers working with municipal clients and public transportation programs. The court affirmed that the Michigan Municipal League Liability & Property Pool – the insurer for the City of Niles – is responsible for personal injury protection (PIP) benefits after a passenger was injured while boarding a city-owned Dial-A-Ride Transportation (DART) vehicle.
The dispute began when Onlee Clemans, who did not have her own applicable insurance for PIP benefits, was injured while boarding a DART vehicle. The DART program, operated by the City of Niles in southwest Michigan, is designed to help residents without reliable transportation reach shopping centers, medical facilities, and other destinations. The vehicles are owned and insured by the city, and city employees serve as drivers.
After the accident, the city’s insurer, Michigan Municipal League Liability & Property Pool (the Pool), initially paid some benefits to Clemans. However, the Pool then advised her to seek coverage from the Michigan Assigned Claims Plan (MACP), which provides PIP benefits to individuals injured in auto accidents who do not have other applicable insurance. MACP ultimately denied responsibility, which led to the Pool filing a lawsuit seeking a declaration that MACP, not the Pool, should pay Clemans’s claim. MACP assigned the claim to Farmers Insurance Exchange, and the Pool amended its complaint to substitute Farmers for MACP.
The legal issue at the heart of the case was the interpretation of Michigan’s no-fault insurance statute, specifically MCL 500.3114(2). This provision generally requires the insurer of a vehicle “operated in the business of transporting passengers” to provide PIP benefits. However, the statute contains a carveout for “a bus operating under a government sponsored transportation program.” The Pool argued that its responsibility was only incidental to the city’s broader governmental purpose and that the priority should shift to MACP. Farmers Insurance Exchange, now defending the claim, argued that the DART vehicle fit the statutory carveout and that the Pool was responsible.
The appellate court closely examined the statutory language and relevant case law. It concluded that the DART vehicle was indeed part of a government-sponsored transportation program and qualified as a “bus” under the statute. The court found that the carveout in MCL 500.3114(2)(c) applied, meaning the Pool, as the city’s insurer, was first in priority for providing PIP benefits to Clemans. The court affirmed the trial court’s grant of summary disposition in favor of Farmers Insurance Exchange.
Throughout the decision, the court focused on the statutory framework and the priority of insurers under Michigan’s no-fault act. There was no discussion of specific insurance policy clauses; the outcome hinged entirely on statutory interpretation and the facts surrounding the city’s DART program.
For insurance professionals, especially those working with municipalities or public sector clients, this ruling provides clear guidance on how Michigan’s no-fault priority rules apply to government-sponsored transportation programs. The decision clarifies that municipal insurers cannot shift responsibility for PIP benefits to the Michigan Assigned Claims Plan when injuries occur on city-run transit services.
The ruling is expected to influence how municipal insurance providers assess their coverage obligations and risk exposure for public transportation programs. It underscores the importance of understanding statutory carveouts and their practical impact on claims handling and insurer liability.
As the insurance industry continues to navigate the complexities of public sector coverage, this case serves as a reminder that statutory interpretation can have direct and significant consequences for insurers and their municipal clients.
