Purpose

• Clarify and raise the required minimums for residual liability insurance (a part of auto insurance) and related uninsured/underinsured motorist coverage. The bill amends Minnesota law to specify higher limits and to outline how the remaining coverage (reparation security) works when accidents happen, including how payments are made and who pays first.

Main provisions (What the bill does)

• Sets minimum residual liability limits for bodily injury and property damage:
  • Bodily injury: at least $30,000 per person and $100,000 per accident for one person; at least $60,000 per person and $200,000 per accident for two or more people.
  • Property damage: at least $10,000 per accident (with an additional corresponding higher figure shown in the bill text, reflecting a paired per-person/per-accident style used for bodily injury; the exact per-accident property damage minimum is presented as $10,000/$30,000 in the bill).
• Establishes how the reparation obligation works:
  • The liability of the reparation obligor (the insurer responsible for residual liability) becomes absolute once injury or damage occurs; it cannot be canceled or voided by the insurer or insured after the incident.
  • Payment is not conditioned on the insured obtaining a judgment; the insurer must pay regardless.
  • If the insurer settles a claim in good faith, the settlement amount can be deducted from the limits of liability for the related accident.
  • The residual liability insurance is the excess coverage above any nonowned vehicle policy.
  • A nonowned vehicle is defined as one not used or provided on a regular basis; the residual liability policy applies as excess to the nonowned vehicle policy, even if the vehicle is borrowed, rented, or used for business or pleasure.
• Defines scope and interactions:
  • Coverage applies to injuries or property damage occurring within Minnesota, the United States (and its territories or possessions), or Canada.
  • The reparation obligor may be liable to pay sums that another reparation obligor would be entitled to recover under the indemnity provisions of the cited statute.
• Clarifies terminology and roles:
  • Uses terms such as plan of reparation security, reparation obligor, residual liability insurance, nonowned vehicle policy, excess coverage, good faith settlement, and indemnity provisions.

Significant changes to existing law

• Raises the minimum required limits for bodily injury under residual liability to higher per-person and per-accident levels, including higher limits for accidents with more than one injured person.
• Increases the minimum property damage limit tied to residual liability (property damage coverage).
• Strengthens protections around when and how the insurer’s residual liability must pay (absolute liability, not contingent on judgments or insured statements).
• Clarifies that residual liability coverage sits on top of (is excess to) any nonowned vehicle policy.
• Adds explicit rules about settlements and deductions from liability limits.
• Expands the geographic applicability of the coverage to include Canada in addition to Minnesota and the U.S.

Terms and concepts to know (for quick reference)

• residual liability insurance
• plan of reparation security
• reparation obligor
• nonowned vehicle policy
• excess of a nonowned vehicle policy
• good-faith settlement
• indemnity provisions
• bodily injury per person / per accident
• property damage per accident
• uninsured and underinsured motorist coverage
• Minnesota Statutes 2024 section 65B.49 (subdivisions 3 and 3a)
• territorial scope: Minnesota, United States, Canada

Relevant Terms residual liability insurance, plan of reparation security, reparation obligor, nonowned vehicle policy, excess coverage, good-faith settlement, indemnity provisions, bodily injury, per person, per accident, property damage, uninsured motorist coverage, underinsured motorist coverage, Minnesota Statutes 65B.49, nonowned vehicle, accident limits, absolute liability