Berger Chevrolet, Inc. - Page 8

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            Realistically, however, the sale of credit insurance is part of                             
            the dealership's function.  Dealerships perform a variety of                                
            services, including selling cars, arranging financing, and                                  
            fulfilling warranty obligations as defined in service contracts.                            
            Among these services, offering credit insurance is a subservice                             
            of arranging financing.                                                                     
                  Credit insurance is offered on the installment sale purchase                          
            agreement filled out by employees of the dealerships.  Since the                            
            installment agreement offers credit insurance, the dealerships,                             
            through their employees, must be able to explain the purpose of                             
            credit insurance and calculate its cost.  Moreover, the dealers                             
            collect payment for credit insurance when the dealer-arranged                               
            financing is completed.  Although the commissions paid by the                               
            insurance companies are paid to the dealer-related agencies, it                             
            is clear from the record that the dealerships earn such                                     
            commissions.  And those commissions are paid to the dealer-                                 
            related agencies only because Michigan law mandates that result.                            
            However, the agencies have no employees and take no initiative in                           
            selling the credit insurance.  The only role the dealer-related                             
            agencies play is as repositories of commissions paid by the                                 
            insurance companies.  There is nothing in the record to indicate                            
            that the agencies played any part whatsoever in earning the                                 
            commissions paid to them.  The agencies are owned (directly or                              
            indirectly, e.g., through a corporation) by relatives of the                                
            dealerships' owners with the result that the dealerships'                                   

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Last modified: May 25, 2011