St Cloud Attorneys

What is an “Uninsured Motor Vehicle”?

Minn. Stat. §65B.43, subdivision 16 defines it as “a motor vehicle or motorcycle for which a plan of reparation security meeting the requirements of sections 65B.41 to65B.71 is not in effect.”

Since Minnesota law requires liability limits of not less than $30,000 for one person and not less than $60,000 for two or more persons in any one accident, a motor vehicle with less than this coverage is considered uninsured.

What is an “Underinsured Motor Vehicle”?

Minn. Stat. §65B.43, subdivision 17 defines it as “a motor vehicle or motorcycle to which a bodily injury liability policy applies at the time of the accident but its limits for bodily injury is less than the amount needed to compensate the insured for actual damages.”

What are actual damages?

Actual damages refers to the net claim that an injured party would have against a tortfeasor, after the court makes the applicable deductions for collateral-source payments, no-fault benefits paid, and comparative fault.  Richards v. Milwaukee Ins. Co., 518 N.W.2d 26 (Minn. 1994).

Note: For both UM and UIM, motorcycles are explicitly added to the definitions of uninsured and underinsured motor vehicles.   BUT: A person who owns and operates an insured motorcycle is going to be limited to those optional UM coverages which have been purchased for the motorcycle.  Minn. Stat. §65B.49, subd. 3a(8).

Is UM/UIM coverage mandatory?

Yes, Minn. Stat. §65B.49, subdivision 3a requires limits of “$25,000 because of injury to or death of one person in any accident and $50,000 because of injury to or the death of two or more persons in any accident. “

Is UM coverage part of UIM coverage?

No, separate UM and UIM coverages must be purchased.

What happens when the vehicle has no insurance?

A UM claim arises when the at-fault vehicle is not covered by any policy of liability insurance.  However, if the driver of the at-fault vehicle is covered by a personal policy of liability insurance of $30,000 or more, there is no uninsured motorist claim even though the vehicle itself is uninsured.

What happens when the insurance company denies the claim or becomes insolvent?

A UM claim generally exists.  Gudvangen v. Austin Mut. Ins. Co., 284 N.W.2d 813 (Minn. 1978).

What happens in a hit-and-run?

Minn. Stat. §65B.43, subdivision 18 explicitly includes hit and run vehicles in the definition of uninsured motorist coverage.  However, a hit and run accident does not include every accident in which the injured person fails to get identifying information about the at-fault driver.  Lhotka v. Ill. Farmers Ins. Co., 572 N.W.2d 772 (Minn. Ct. App. 1998) (since tortfeasor did not flea from the scene, the accident did not qualify as a hit and run, so there was no UM claim).

What happens when there is a phantom vehicle?

When the injured person brings a UM claim based on the negligence of a phantom vehicle, the claimant has the burden of proving: 1) the existence of the phantom vehicle; and 2) the negligence of the driver of that vehicle.

Which company pays the UM/UIM benefits?

If the injured person was not occupying a motor vehicle at the time of the injury, then the injured person can go to any policy under which the injured person is insured.

If the injured person was occupying a motor vehicle at the time of the accident, then the injured person should first seek UM coverage from the occupied vehicle.  If the injured person is an insured on the occupied vehicle’s policy, then there is no additional coverage available from any other policy.  If the injured person is not an insured on the occupied vehicle’s policy, then additional coverage can be sought if there is another policy providing excess coverage.

What is the amount of excess coverage if it is available?

If the personal policy has limits equal to or lower than those available from the occupied vehicle, there will be no excess coverage.  LaFave v. State Farm Mut. Auto Ins. Co., 510 N.W.2d 16, 19 (Minn. Ct. App. 1993).  If the injured party’s personal policy has limits greater than those on the occupied vehicle, the injured party potentially has available to him/her the difference between the two limits.  Lahr v. Am. Family Mut. Ins. Co., 528 N.W.2d 257 (Minn. Ct. App. 1995).

What is “add-on” coverage?

Since 1989, UIM has been an “add on” coverage, meaning that UIM coverage will be available in addition to any applicable liability insurance coverage.  A “limits-less-paid” approach is used to determine the amount of a UIM claim.  The UIM carrier’s maximum liability for benefits is determined by calculating the difference between the limits of the UIM coverage and what the tortfeasor paid to the insured.  Broton v. Western Nat. Mut. Ins., 428 N.W.2d 85, 90 (Minn. 1988).  The UIM carrier has the responsibility for the gap between the tortfeasor’s bodily injury limits and the actual settlement amount. Dohney v. Allstate Ins. Co., 632 N.W.2d 598 (Minn. 2001).

What is a Myers exclusion?

The Myers exclusion is valid and is found in most policies.  The Myers exclusion applies to UIM claims.  In Myers, the UIM endorsement for the occupied vehicle had an exclusion saying that the vehicle insured in the policy was excluded from the policy definition of an “underinsured motor vehicle.”  Myers v. State Farm Mut. Auto Ins. Co., 336 N.W.2d 288 (Minn. 1983).

What is a family exclusion?

UM and UIM endorsements usually contain language that an uninsured or underinsured vehicle will not include any vehicle owned by or furnished for the regular use of the named insured or any resident family member.

What is a Pierringer release?

A Pierringer release preserves the UM claim against both the uninsured tortfeasor and the UM insurer.  The release limits the remaining damage claim to the percentage of fault attributable to the remaining uninsured defendants.  State Farm Mut. Auto. Ins. Co. v. Galloway, 373 N.W.2d 301 (Minn. 1985).

What happens when the injured party settles the tort claim against the negligent driver?

If the injured person wants to preserve his/her option of pursuing a UIM claim after the tort-settlement, a written notice of the proposed settlement must be sent to the UIM insurer at least 30 days prior to concluding the settlement.  Schmidt v. Clothier, 338 N.W.2d 256 (Minn. 1983).

What must be contained in a Schmidt v. Clothier notice?

Under Am. Family Mut. Ins. Co. v. Baumann, 459 N.W.2d 923 (Minn. 1990), the notice shall identify: 1) the insured; 2) the tortfeasor; 3) the tortfeasor’s insurer; 4) the limits of the tortfeasor’s automobile liability insurance; and 5) the agreed upon amount of settlement.

When does the statute of limitations begin to run on a UIM claim?

An UIM claim accrues and the statute of limitations begins to run on the date that the insured plaintiff in an action to recover damages caused by an automobile accident receives notice from the insured plaintiff’s UIM insurer that the UIM insurer will not substitute its check for that of the tortfeasor’s insurer to preserve the UIM insurer’s subrogation rights against the tortfeasor under Schmidt v. Clothier.  Stroop v. Farmers Ins. Exch., 764 N.W.2d 384 (Minn. Ct. App. 2009).

Does Minnesota permit stacking of policies for UM/UIM coverage?

Minn. Stat. §65B.49, subdivision 3(a)(6) prohibits stacking.   Despite the statutory language, stacking will be permitted if it is required by applicable contract language.  Crapson v. Home Ins., 495 N.W.2d 457 (Minn. Ct. App. 1993).

In Johnson v. Progressive Northern Ins. Co., No. A08-0559 (Minn. Ct. App. February 24, 2009), the appellant argued he did not actually receive UIM benefits because they were given to an ERISA insurer who had provided medical benefits to him.  The Minnesota Court of Appeals rejected this argument, holding that the tender of insurance benefits was sufficient to make coverage “available” to the appellant as excess UIM coverage.

Are any payments deducted from the jury’s award?

Minnesota Statute §548.36 provides for the deduction of certain collateral source payments after the entry of a verdict.  There should be no reduction for collateral sources unless the offset of the collateral source payments is necessary to prevent a double recovery for the injured person.  Imlay v. City of Lake Crystal, 453 N.W.2d 326 (Minn. 1990).

Amounts paid by no-fault will be deducted in determining the net amount owed in a UIM claim.  If comparative fault is assessed, the basic economic loss is deducted first.

In a UM or UIM claim, there is no right of subrogation by a workers’ compensation carrier.  The UM or UIM insurer does not have to reimburse the workers’ compensation carrier for payments made to the injured person.  As a general rule, workers’ compensation payments are to be deducted from damages awarded in a UM/UIM verdict.  Western Nat. Mut. Ins. Co. v. Casper, 549 N.W.2d 914 (Minn. 1996).

What is the effect of the jury’s award?

A UIM claimant is estopped from pursuing a UIM claim when a jury, in the underlying bodily injury liability claim, awards damages that are less than the bodily injury liability insurance coverage limit, because there is no “underinsured motorist.” Costello v. Aetna Cas. Co., 472 N.W.2d 324 (Minn. 1991).

An injured claimant must recover her auto accident tort claim before bringing an arbitration claim for UIM benefits. Employers Mut. Cos. v. Nordstrom, 495 N.W.2d 855 (Minn. 1993).