Public Transit and No-Fault Law: Court of Appeals Clarifies Who Pays

A Closer Look at Priority in Bus-Related Claims

In September 2025, the Michigan Court of Appeals issued a published opinion in Michigan Municipal League Liability & Property Pool v Farmers Insurance Exchange. The case asked a straightforward but important question: when an uninsured passenger is injured while boarding a city-operated bus, which insurer is responsible for paying personal injury protection (PIP) benefits?

The Case in Brief

The City of Niles operates Dial-A-Ride Transportation (DART), a municipal bus service. A passenger without her own auto insurance was hurt while boarding. The city’s insurer, the Michigan Municipal League Liability & Property Pool (MMLLPP), paid some benefits but argued that the Michigan Assigned Claims Plan (MACP) should take over. Litigation followed, and both the trial court and Court of Appeals ruled that the city’s insurer was responsible.

The Court’s Ruling

The Court held that DART is exactly the type of government-run program the Legislature had in mind when drafting the no-fault statute’s bus provision. The Court rejected the MMLLPP’s argument that the DART bus was not in the business of transporting passengers because the City’s business was larger that transporting these passengers, it was to protect the health and safety of its constituents. The Court agreed with Farmers’ argument that the Michigan Legislature pre-determined that a vehicle being operated in a government funded transportation program was necessarily in the business of transporting passengers so as to require the MMLLPP to be the highest priority insurer because the legislature specifically listed it in MCL 500.3114(2)(c).

What This Means for Claims Professionals

This ruling reinforces that municipal insurers will sit first in line when public transit passengers are injured without their own coverage. For adjusters and claims managers, the message is clear:

• Priority is set. When accidents involve city-run buses, insurers for the municipality should expect responsibility if the injured person has no personal insurance. Shifting liability to MACP is impossible.

• Private vs. public matters. Tests used in private business contexts, such as determining whether transportation is a “primary” or “incidental” purpose, do not apply to municipalities operating government funded transportation programs. Insurers should avoid relying on those arguments.

• Plan for exposure. Municipal insurers must be prepared for claims involving riders who often lack personal coverage, especially in transit programs designed for low-income or vulnerable populations.

• MACP’s role is limited. The Assigned Claims Plan remains a last-resort payer, but this decision eliminated the last situation in which it could be invoked when public buses are involved.

  
  

The Bottom Line

The Court of Appeals has confirmed that city-operated bus programs fall into their own category under Michigan’s No-Fault Act. For insurers, this means claims involving public transportation services should be handled with the expectation that the municipality’s insurer will be responsible.

For insurers, the practical takeaway is to approach these cases differently from private shuttle or business-related transportation claims. The path of liability is more direct, and municipalities and their insurers should plan accordingly. It may be necessary to change underwriting guidelines for municipalities with public transportation programs based on the number of riders that use these programs on a daily basis.

For more information on no-fault priority disputes and how this decision may impact municipalities and insurers, contact the experienced insurance defense attorneys of Slater Seibert.