Auto Coverage: Minnesota No-Fault Act Does not Apply to Out-of-State Insurers?

thIAFM15N9By Greg Johnson, Esq. In Founders Insurance Company v. Yates, A15-1174 (Minn. Ct. App. Feb. 29, 2016), the Minnesota Court of Appeals recently held that an auto insurer that is not licensed to write motor vehicle insurance in Minnesota (“out-of-state insurer”) is not required to provide minimum basic economic-loss and residual liability coverage to its named insured policyholder when involved in an accident in Minnesota. Although the Court of Appeals noted that the No-Fault Act “could be interpreted as applying to all insurers regardless of licensure, and the result would be consistent with the purposes of the no-fault act,” it ultimately held it was “bound by” its decision in Burgie v. League Gen. Ins. Co., 355 N.W.2d 466, 469-70 (Minn.Ct.App.1984), review denied (Minn. Feb. 16, 1985), where the court said that subdivisions 1 and 2 of Minn. Stat. 65B.50 must be read together such that they apply only to licensed insurers.

I have recently been retained to appeal the case to the Minnesota Supreme Court. Review with the Supreme Court is discretionary, but the case satisfies the requirements for further review. It presents the issue the Supreme Court specifically left unaddressed over 35 years ago in Petty v. Allstate Ins. Co., 290 N.W.2d 763, 765, n. 1 (Minn.1980) (“[w]e are not confronted with the problem of a … motor vehicle insured by a company not licensed to do business in Minnesota and do not pass on this issue”), has statewide impact (the Burgie rule followed in Yates creates a significant gap in Minnesota’s otherwise comprehensive auto insurance system) and will continue to recur until resolved by the Supreme Court as Minnesota’s minimum mandatory coverages exceed those of the vast majority of jurisdictions, including each of its surrounding states. So, stay tuned for (hopefully) further developments in this case.

This blog is for informational purposes only. By reading it, no attorney-client relationship is formed. The law is constantly changing and if you want legal advice, please consult an attorney licensed in your jurisdiction. Gregory J. Johnson © All rights reserved. 2016.

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