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Latterell v Progressive -- Invalidating UIM Business Use Exclusion Print E-mail

On August 31, 2011, the Minnesota Supreme Court decided that a business-use exclusion in a UIM policy violates the requirements of the Minnesota No-Fault Automobile Insurance Act. The court based its decision on the fact that the Act is silent as to whether insurance companies can include exclusions to the statutorily-mandated coverage. And then the court concluded that because the legislature did not mention any permissible coverage exclusions, exclusions should not be permitted. The only coverage that is explicitly approved by the court is the "coverage conversion" exclusion--the exclusion in cases where the policy has already paid a party under liability coverage and then faces the claim for UIM benefits. The court's holding alone is significant enough, but the court's rationale puts at risk and likely invalidates ALL UIM exclusions other than the “coverage conversion” exclusion.

The decision has no effect on the enforceability of business use exclusions with respect to third-party liability coverages. But the court even said this: “. . . we express no opinion about whether a similar business-use exclusion to third-party coverage would be enforceable.” (at page 10, footnote 1) .

The case only drew one dissenter, Justice Dietzen, and was authored by Justice Stras, Governor Pawlenty's last appointment to the court.

This obviously has significant implications in all UIM and PIP cases. If you have any questions, please feel free to contact Kenneth H. Bayliss at Quinlivan & Hughes, P.A. Phone: 320-258-7840.
 
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