Purpose

The bill updates Minnesota automobile insurance rules to raise and clarify residual liability coverage requirements. It sets higher minimum limits for bodily injury and property damage, defines how residual liability payments work, and explains how coverage interacts with nonowned vehicles and settlements. It also aims to ensure protections remain in place even if the insured faces statements, policy violations, or judgments.

Main Provisions

• Minimum residual liability limits (per accident):

  • Bodily injury to one person: at least $30,000 (exclusive of interest and costs).
  • Bodily injury to two or more persons: at least $60,000 (exclusive of interest and costs).
  • Property damage: at least $30,000 (exclusive of interest and costs).

• Scope of coverage:

  • Applies to injuries or damages arising from ownership, maintenance, or use of a motor vehicle, including vehicles permissively operated by the insured, with coverage in Minnesota, the United States (and its territories/possessions), or Canada.

• Absolute liability and non-voidability:

  • The reparation obligor’s liability becomes absolute and cannot be canceled or voided by any agreement after the injury or damage occurs. Statements by the insured or violations of the policy do not defeat coverage.

• Payment and judgment considerations:

  • Payment by the reparation obligor is required regardless of whether the insured has satisfied a judgment.
  • The insured’s satisfaction of a judgment is not a prerequisite for payment by the reparation obligor.

• Settlement rights:

  • The reparation obligor may settle claims in good faith, and the settlement amount can be deducted from the limits of liability for the related accident.

• Excess over nonowned vehicles:

  • Residual liability coverage is the excess of a nonowned vehicle policy. A nonowned vehicle is one not used or provided on a regular basis.

• Interaction with other coverage and indemnity:

  • The reparation obligor can pay amounts another reparation obligor is entitled to recover under indemnity provisions if applicable.

Significant Changes to Existing Law

• Raises the mandatory residual liability coverage limits to higher specified amounts.
• Establishes noncancelable, unconditional liability after an accident and clarifies that certain statements or violations do not void coverage.
• Clarifies that settlements can reduce the available liability limits and that residual liability sits atop (is excess of) nonowned vehicle coverage.
• Provides explicit rules for when and how payments are made and how settlements affect the policy limits.

Relevant Terms residual liability insurance, reparation security, reparation obligor, limits of liability, bodily injury, property damage, per person, per accident, nonowned vehicle, excess, settlement, deductible, indemnity, absolute liability, noncancelable, policy, Minnesota Statutes 65B.49, section 65B.43, section 65B.53