Out-of-State Insurers Responsible for Paying Minnesota No-Fault Benefits

For years, insurers who chose not to do business in Minnesota did not need to conform their polices to Minnesota's No-Fault Act, even when their insureds and their insured vehicles were involved in accidents within the state.

This week, in Founders Ins. Co. v. Yates, A15-1174, the Minnesota Supreme Court changed this rule.  Based on a plain language reading of the statute, the court held that an out-of-state insurer is required to provide benefits “when its insured is in an accident in Minnesota and the insured vehicle is in Minnesota, even though the insurer is not licensed by the State of Minnesota to issue motor vehicle insurance.” Minn. Stat. Section 65B.50, Subd 2.  The statute specifically states that “every” policy “wherever issued” must provide the benefits.  Out-of-state insurers who chose not to be licensed to issue policies in Minnesota are not exempted.

This decision raises questions about the breadth of the analysis, such as whether this applies to liability limits, etc.  For now, this ruling represents a significant change for those carriers that have foregone licensure in this state.  If an insured person and vehicle are in the State of Minnesota and the insured is injured in a motor vehicle accident, the policy must provide Minnesota's No-Fault benefits.

If you have questions regarding the supreme court's decision or other liability related issues, please contact a member of our Liability Practice Group at (952- 831-6544).  To read the full text of the case, click here.