1.1                          A bill for an act 
  1.2             relating to insurance; no-fault auto; regulating 
  1.3             residual liability insurance on nonowned vehicles; 
  1.4             amending Minnesota Statutes 1996, section 65B.49, 
  1.5             subdivision 3. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1996, section 65B.49, 
  1.8   subdivision 3, is amended to read: 
  1.9      Subd. 3.  [RESIDUAL LIABILITY INSURANCE.] (1) Each plan of 
  1.10  reparation security shall also contain stated limits of 
  1.11  liability, exclusive of interest and costs, with respect to each 
  1.12  vehicle for which coverage is thereby granted, of not less than 
  1.13  $30,000 because of bodily injury to one person in any one 
  1.14  accident and, subject to said limit for one person, of not less 
  1.15  than $60,000 because of injury to two or more persons in any one 
  1.16  accident, and, if the accident has resulted in injury to or 
  1.17  destruction of property, of not less than $10,000 because of 
  1.18  such injury to or destruction of property of others in any one 
  1.19  accident. 
  1.20     (2) Under residual liability insurance the reparation 
  1.21  obligor shall be liable to pay, on behalf of the insured, sums 
  1.22  which the insured is legally obligated to pay as damages because 
  1.23  of bodily injury and property damage arising out of the 
  1.24  ownership, maintenance or use of a motor vehicle if the injury 
  1.25  or damage occurs within this state, the United States of 
  2.1   America, its territories or possessions, or Canada.  A 
  2.2   reparation obligor shall also be liable to pay sums which 
  2.3   another reparation obligor is entitled to recover under the 
  2.4   indemnity provisions of section 65B.53, subdivision 1. 
  2.5      (3) Every plan of reparation security shall be subject to 
  2.6   the following provisions which need not be contained therein: 
  2.7      (a) The liability of the reparation obligor with respect to 
  2.8   the residual liability coverage required by this clause shall 
  2.9   become absolute whenever injury or damage occurs; such liability 
  2.10  may not be canceled or annulled by any agreement between the 
  2.11  reparation obligor and the insured after the occurrence of the 
  2.12  injury or damage; no statement made by the insured or on the 
  2.13  insured's behalf and no violation of said policy shall defeat or 
  2.14  void said policy. 
  2.15     (b) The satisfaction by the insured of a judgment for such 
  2.16  injury or damage shall not be a condition precedent to the right 
  2.17  or duty of the reparation obligor to make payment on account of 
  2.18  such injury or damage. 
  2.19     (c) The reparation obligor shall have the right to settle 
  2.20  any claim covered by the residual liability insurance policy, 
  2.21  and if such settlement is made in good faith, the amount thereof 
  2.22  shall be deductible from the limits of liability for the 
  2.23  accident out of which such claim arose. 
  2.24     (d) Except as provided in subdivision 5a, a residual 
  2.25  liability insurance policy shall be excess of a nonowned vehicle 
  2.26  policy whether the nonowned vehicle is borrowed or rented, or 
  2.27  used for business or pleasure, unless the owner and operator or 
  2.28  lessor and lessee have provided otherwise in a written 
  2.29  agreement.  A nonowned vehicle is one not used or provided on a 
  2.30  regular basis. 
  2.31     Sec. 2.  [EFFECTIVE DATE.] 
  2.32     Section 1 is effective the day following final enactment.