Minnesota Session Laws - 1985, Regular Session

  

                         Laws of Minnesota 1985 

                        CHAPTER 168-H.F.No. 345 
           An act relating to insurance; no-fault automobile; 
          providing mandatory underinsured motorist coverage; 
          clarifying legislative intent concerning stacking of 
          insurance policies; coordinating the priority of 
          applicability of security for the payment of certain 
          benefits; removing bonding requirements for 
          self-insuring political subdivisions; providing for 
          mandatory arbitration of certain insurance claims; 
          amending Minnesota Statutes 1984, sections 65B.43, by 
          adding subdivisions; 65B.44, subdivisions 1 and 3; 
          65B.47, by adding a subdivision; 65B.48, subdivision 
          3a; 65B.49, subdivisions 3, 4, and by adding a 
          subdivision; and 65B.525, subdivision 1.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 65B.43, is 
amended by adding a subdivision to read: 
    Subd. 16.  "Uninsured motor vehicle" means a motor vehicle 
or motorcycle for which a plan of reparation security meeting 
the requirements of sections 65B.41 to 65B.71 is not in effect.  
    Sec. 2.  Minnesota Statutes 1984, section 65B.43, is 
amended by adding a subdivision to read: 
    Subd. 17.  "Underinsured motor vehicle" means a motor 
vehicle or motorcycle to which a bodily injury liability policy 
applies at the time of the accident but its limit for bodily 
injury liability is less than the amount needed to compensate 
the insured for his or her actual damages. 
    Sec. 3.  Minnesota Statutes 1984, section 65B.43, is 
amended by adding a subdivision to read: 
    Subd. 18.  "Uninsured motorist coverage" means coverage for 
the protection of persons insured under that coverage who are 
legally entitled to recover damages for bodily injury from 
owners or operators of uninsured motor vehicles. 
    Sec. 4.  Minnesota Statutes 1984, section 65B.43, is 
amended by adding a subdivision to read: 
    Subd. 19.  "Underinsured motorist coverage" means coverage 
for the protection of persons insured under that coverage who 
are legally entitled to recover damages for bodily injury from 
owners or operators of underinsured motor vehicles.  
    Sec. 5.  Minnesota Statutes 1984, section 65B.43, is 
amended by adding a subdivision to read: 
    Subd. 20.  "Political subdivision" means any statutory or 
home rule charter city; county; town; school district; or 
metropolitan council, board or commission operating under 
chapter 473. 
    Sec. 6.  Minnesota Statutes 1984, section 65B.44, 
subdivision 1, is amended to read:  
    Subdivision 1.  [INCLUSIONS.] Basic economic loss benefits 
shall provide reimbursement for all loss suffered through injury 
arising out of the maintenance or use of a motor vehicle, 
subject to any applicable deductibles, exclusions, 
disqualifications, and other conditions, and shall provide a 
maximum of $30,000 $40,000 for loss arising out of the injury of 
any one person, consisting of: 
    (a) $20,000 for medical expense loss arising out of injury 
to any one person; and 
    (b) A total of $10,000 $20,000 for income loss, replacement 
services loss, funeral expense loss, survivor's economic loss, 
and survivor's replacement services loss arising out of the 
injury to any one person. 
    Sec. 7.  Minnesota Statutes 1984, section 65B.44, 
subdivision 3, is amended to read: 
    Subd. 3.  [DISABILITY AND INCOME LOSS BENEFITS.] Disability 
and income loss benefits shall provide compensation for 85 
percent of the injured person's loss of present and future gross 
income from inability to work proximately caused by the nonfatal 
injury subject to a maximum of $200 $250 per week.  Loss of 
income includes the costs incurred by a self-employed person to 
hire substitute employees to perform tasks which are necessary 
to maintain his income, which he normally performs himself, and 
which he cannot perform because of his injury.  
    If the injured person is unemployed at the time of injury 
and is receiving or is eligible to receive unemployment benefits 
under chapter 268, but the injured person loses his eligibility 
for those benefits because of inability to work caused by the 
injury, disability and income loss benefits shall provide 
compensation for the lost benefits in an amount equal to the 
unemployment benefits which otherwise would have been payable, 
subject to a maximum of $200 $250 per week.  
    Compensation under this subdivision shall be reduced by any 
income from substitute work actually performed by the injured 
person or by income the injured person would have earned in 
available appropriate substitute work which he was capable of 
performing but unreasonably failed to undertake. 
    For the purposes of this section "inability to work" means 
disability which prevents the injured person from engaging in 
any substantial gainful occupation or employment on a regular 
basis, for wage or profit, for which he is or may by training 
become reasonably qualified.  If the injured person returns to 
his employment and is unable by reason of his injury to work 
continuously, compensation for lost income shall be reduced by 
the income received while he is actually able to work.  The 
weekly maximums may not be prorated to arrive at a daily 
maximum, even if the injured person does not incur loss of 
income for a full week.  
    Sec. 8.  Minnesota Statutes 1984, section 65B.47, is 
amended by adding a subdivision to read: 
    Subd. 7.  Unless a policyholder makes a specific election 
to have two or more policies added together the limit of 
liability for basic economic loss benefits for two or more motor 
vehicles may not be added together to determine the limit of 
insurance coverage available to an injured person for any one 
accident.  An insurer shall notify policyholders that they may 
elect to have two or more policies added together.  
    Sec. 9.  Minnesota Statutes 1984, section 65B.48, 
subdivision 3a, is amended to read: 
    Subd. 3a.  To carry out the purposes of subdivision 3, the 
commissioner may adopt rules pursuant to chapter 14, including 
emergency rules.  These rules may:  
    (a) establish reporting requirements;  
    (b) establish standards or guidelines to assure the 
adequacy of the financing and administration of self-insurance 
plans;  
    (c) establish bonding requirements or other provisions 
assuring the financial integrity of entities that self-insure 
other than bonding requirements for self-insuring political 
subdivisions; and 
    (d) establish other reasonable requirements to further the 
purposes of this section.  
    Sec. 10.  Minnesota Statutes 1984, section 65B.49, 
subdivision 3, is amended to read: 
    Subd. 3.  [RESIDUAL LIABILITY INSURANCE.] (1) Each plan of 
reparation security shall also contain stated limits of 
liability, exclusive of interest and costs, with respect to each 
vehicle for which coverage is thereby granted, of not less than 
$25,000 $30,000 because of bodily injury to one person in any 
one accident and, subject to said limit for one person, of not 
less than $50,000 $60,000 because of injury to two or more 
persons in any one accident, and, if the accident has resulted 
in injury to or destruction of property, of not less than 
$10,000 because of such injury to or destruction of property of 
others in any one accident. 
    (2) Under residual liability insurance the reparation 
obligor shall be liable to pay, on behalf of the insured, sums 
which the insured is legally obligated to pay as damages because 
of bodily injury and property damage arising out of the 
ownership, maintenance or use of a motor vehicle if the injury 
or damage occurs within this state, the United States of 
America, its territories or possessions, or Canada.  A 
reparation obligor shall also be liable to pay sums which 
another reparation obligor is entitled to recover under the 
indemnity provisions of section 65B.53, subdivision 1. 
    (3) Every plan of reparation security shall be subject to 
the following provisions which need not be contained therein: 
    (a) The liability of the reparation obligor with respect to 
the residual liability coverage required by this clause shall 
become absolute whenever injury or damage occurs; such liability 
may not be cancelled or annulled by any agreement between the 
reparation obligor and the insured after the occurrence of the 
injury or damage; no statement made by the insured or on his 
behalf and no violation of said policy shall defeat or void said 
policy. 
    (b) The satisfaction by the insured of a judgment for such 
injury or damage shall not be a condition precedent to the right 
or duty of the reparation obligor to make payment on account of 
such injury or damage. 
    (c) The reparation obligor shall have the right to settle 
any claim covered by the residual liability insurance policy, 
and if such settlement is made in good faith, the amount thereof 
shall be deductible from the limits of liability for the 
accident out of which such claim arose. 
    Sec. 11.  Minnesota Statutes 1984, section 65B.49, 
subdivision 4, is amended to read: 
    Subd. 4.  [UNINSURED OR HIT-AND-RUN MOTOR VEHICLE 
COVERAGE AND UNDERINSURED MOTORIST COVERAGES.] (1) No plan of 
reparation security may be renewed, delivered or issued for 
delivery, or executed in this state with respect to any motor 
vehicle registered or principally garaged in this state 
unless coverage is uninsured and underinsured motorist coverages 
are provided therein or supplemental thereto, in the amounts. 
The coverages combined, at a minimum, must provide limits of 
$25,000 because of injury to or the death of one person in any 
accident, and subject to the said limit for one person, $50,000 
because of bodily injury to or the death of two or more persons 
in any one accident, for the protection of persons insured 
thereunder who are legally entitled to recover damages from 
owners or operators of uninsured motor vehicles and hit-and-run 
motor vehicles because of injury.  In the case of injury to, or 
the death of, two or more persons in any accident, the amount 
available to any one person must not exceed the coverage limit 
provided for injury to, or the death of, one person in any 
accident.  For purposes of this subdivision, uninsured motorist 
coverage and underinsured motorist coverage shall be a single 
coverage. 
    (2) Every owner of a motor vehicle registered or 
principally garaged in this state shall maintain uninsured motor 
vehicle coverage and underinsured motorist coverages as provided 
in this subdivision. 
    (3) "Uninsured motor vehicle" means any motor vehicle or 
motorcycle for which a plan of reparation security meeting the 
requirements of sections 65B.41 to 65B.71 is not in effect No 
reparation obligor is required to provide limits of uninsured 
and underinsured motorist coverages in excess of the bodily 
injury limit provided by the applicable plan of reparation 
security. 
    (4) No recovery shall be permitted under the uninsured 
motor vehicle provisions and underinsured motorist coverages of 
this section for basic economic loss benefits paid or payable, 
or which would be payable but for any applicable deductible.  
    (5) Unless the language of the policy provides otherwise, 
if at the time of the accident the injured person is occupying a 
motor vehicle, the limit of liability for uninsured and 
underinsured motorist coverages available to the injured person 
is the limit specified for that motor vehicle.  However, if the 
injured person is occupying a motor vehicle of which the injured 
person is not a named insured, the injured person may be 
entitled to excess insurance protection afforded by a policy in 
which the injured party is a named insured.  The excess 
insurance protection is limited to the extent of covered damages 
sustained, and further is available only to the extent by which 
the limit of liability for like coverage applicable to any one 
motor vehicle listed on the automobile insurance policy of which 
the injured person is named insured exceeds the limit of 
liability of the coverage available to the injured person from 
the occupied motor vehicle. 
    If at the time of the accident the injured person is not 
occupying a motor vehicle, the injured person is entitled to 
select any one limit of liability for any one vehicle afforded 
by a policy under which the injured person is named insured. 
    (6) Regardless of the number of policies involved, vehicles 
involved, persons covered, claims made, vehicles or premiums 
shown on the policy, or premiums paid, in no event shall the 
limit of liability for uninsured and underinsured motorist 
coverages for two or more motor vehicles be added together to 
determine the limit of insurance coverage available to an 
injured person for any one accident. 
    (7) The uninsured and underinsured motorist coverages 
required by this subdivision do not apply to bodily injury of 
the insured while occupying a motor vehicle owned by the 
insured, unless the occupied vehicle is an insured motor vehicle.
    (8) The uninsured and underinsured motorist coverages 
required by this subdivision do not apply to any bodily injury 
until the limits of bodily injury liability policies applicable 
to all insured motor vehicles causing the injury have been 
exhausted by payment of judgments or settlements and proof of 
such is submitted to the insurer providing the uninsured and 
underinsured motorist coverages. 
    Sec. 12.  Minnesota Statutes 1984, section 65B.49, is 
amended by adding a subdivision to read:  
    Subd. 4a.  [LIABILITY ON UNDERINSURED MOTOR VEHICLES.] With 
respect to underinsured motor vehicles, the maximum liability of 
an insurer is the lesser of the difference between the limit of 
underinsured motorist coverage and the amount paid to the 
insured by or for any person or organization who may be held 
legally liable for the bodily injury; or the amount of damages 
sustained but not recovered.  
    Sec. 13.  Minnesota Statutes 1984, section 65B.525, 
subdivision 1, is amended to read: 
    Subdivision 1.  The supreme court and the several courts of 
general trial jurisdiction of this state may, on or before 
January 1, 1975, shall by rules of court or other 
constitutionally allowable device, provide for the mandatory 
submission to arbitration, upon mutual consent of all parties to 
the action, of all cases at issue where a claim in an amount of 
$5,000 or less is made by a motor vehicle accident victim, 
whether in an action to recover economic loss or non-economic 
detriment for the allegedly negligent operation, maintenance, or 
use of a motor vehicle within this state, or against any 
reparation obligor for benefits as provided in sections 65B.41 
to 65B.71.  
    Sec. 14.  [EFFECTIVE DATE.] 
    Sections 1 to 4, 8, 11, and 12 are effective July 1, 1985, 
and apply to all insurance policies providing benefits for 
injuries arising out of the maintenance or use of a motor 
vehicle or motorcycle that are executed, issued, issued for 
delivery, delivered, continued, or renewed in this state after 
June 30, 1985.  Sections 5 and 9 are effective the day following 
final enactment. 
    Approved May 21, 1985