OPINION BLATZ, Chief Justice. Appellant Mark Kiess appeals from a decision by the court of appeals holding that under Minn. Stat. § 65B.54, subd. 1 (2004), respondent American Family Insurance Group (American Family) was obligated to pay interest on a no-fault claim 30 days after American Family received actual notice of the claim, which occurred in this case when Kiess filed a petition for arbitration. Because American Family had notified him that it was discontinuing payment of future claims, Kiess argues that case law and public policy dictate that interest began to accrue 30 days after he received the medical care underlying the claim, approximately 52 months before he filed his arbitration petition. We affirm. Kiess was injured in a two-vehicle automobile accident in February 1996. At the time of the accident, Kiess had no-fault automobile insurance coverage through American Family, which paid Kiess’s no-fault claims for several months following the accident. In August 1996, American Family notified Kiess it was discontinuing his no-fault benefits because, pursuant to an independent medical examination, American Family had determined that Kiess no longer required medical care for injuries related to the accident. In its letter discontinuing no-fault benefits, American Family stated: Given the results of the Independent Medical Examination, we must respectfully deny any further claims or pay*ment for diagnostic testing, chiropractic and/or medical care. All no-fault benefits from your auto policy for this accident will be discontinued at this time. You may wish to forward any future medical billings to your health insurance carrier for consideration of payment. In the same letter, American Family advised Kiess that he had the statutory “right to' demand arbitration of this claim if the amount claimed is $10,000.00 or less.” Kiess continued to experience neck and back pain, and in June 1997 he underwent surgery to address these problems at a cost of $12,597.76. Kiess did not submit this additional no-fault claim to American Family or notify the insurer of his surgery at that time. Instead, Kiess submitted his medical bills to his health insurer, Blue Cross & Blue Shield of Minnesota (Blue Cross), which paid the bills in full. In March 1999, Blue Cross notified Kiess that, under the subrogation-recovery provision of his health insurance policy, Blue Cross was entitled to recover the claims it had paid if Kiess collected benefits from a third party. Kiess, in fact, did file a claim against the other driver in the accident and received a settlement offer of $25,000.1 Kiess’s attorney notified Blue Cross of this settlement offer by telephone and Blue Cross then sent a letter to Kiess’s attorney dated September 2001. The letter stated that Blue Cross was waiving its subrogation interest in the matter as a result of the telephone conversation with Kiess’s attorney, which caused Blue Cross to conclude that Kiess’s accident had “significant causation and liability issues.” In November 2001 — two months after Blue Cross waived its subrogation rights— *619Kiess filed an arbitration petition against American Family, asserting that the insurer was liable for no-fault benefits covering the cost of the surgery paid for by Blue Cross. To bring the $12,597.76 claim within the $10,000 statutory limit for arbitration, Kiess waived $2,597.76 of his claim. See Minn. Stat. § 65B.525, subd. 1 (2004). In May 2002, Kiess amended his arbitration petition, claiming that American Family was liable for an additional $7,125 of interest. This amount represented interest for non-payment of the no-fault claim, calculated pursuant to Minn. Stat. § 65B.54, subds. 1 and 2 (2004). When calculating the interest due, Kiess included the 52 months that passed from 30 days after his surgery in June 1997 to the time he filed his petition for arbitration in November 2001. He then added the five months that had passed while arbitration was pending. In all, the interest Kiess demanded covered a total of 57 months. The arbitrator awarded Kiess $17,125, the full amount of his claim. After the arbitrator denied American Family’s mo: tion to reduce the award, American Family moved to vacate the award in district court. The court denied the motion and issued an order confirming the award. American Family then appealed to the court of appeals. American Family raised four issues at the court of appeals, including whether Kiess was entitled to interest under Minn. Stat. § 65B.54, subd. 1, from the time he incurred his losses or only from the time he provided American Family with actual notice of the losses.2 In resolving this issue, the court of appeals reversed the district court and held that American Family’s interest liability did not begin when Kiess received the care underlying his no-fault claim. Am. Family Ins. Group v. Kiess, 680 N.W.2d 552, 558 (Minn.App.2004). Rather, the court of appeals concluded that American Family’s interest liability began 30 days after Kiess provided the insurer with actual notice of his losses, which in this case occurred when Kiess filed his arbitration petition. Id. Both Kiess and American Family sought review by this court. We granted Kiess’s petition, limiting our review to the court of appeals’ interpretation of Minn. Stat. § 65B.54, subd. 1. The Minnesota No-Fault Automobile Insurance Act (Act) is set forth in Minn. Stat. §§ 65B.41-.71 (2004). The section at issue here states in relevant part: Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as * * * expense is incurred. Benefits are overdue if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized * * *. Minn. Stat. § 65B.54, subd. 1. Once overdue, payments bear simple interest at the rate of 15% per year. Id., subd. 2. The issue presented is whether, under section 65B.54, subd. 1, an insured is obligated to provide a no-fault carrier with actual notice of a loss incurred in order to be eligible for mandatory interest when the insurer had previously discontinued the insured’s no-fault benefits pursuant to an independent medical examination. We review questions of statutory construction de novo. Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 *620(Minn.2000). “The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature.” Minn. Stat. § 645.16 (2004). “When the language of a statute is plain and unambiguous, that plain language must be followed.” Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W.2d 672, 679 (Minn.2004). We construe words and phrases “according to rules of grammar and according to their most natural and obvious usage unless it would be inconsistent with the manifest intent of the legislature.” Id. Kiess asserts that by discontinuing his no-fault benefits, American Family constructively denied all of Kiess’s future claims and thereby waived its right to receive notice under section 65B.54, subd. 1. According to Kiess, it would have been “futile” for him to continue to submit bills to American Family after his benefits had been discontinued. Thus, even though American Family had paid all submitted claims prior to the discontinuation of Kiess’s no-fault benefits and had received no notice that Kiess had incurred subsequent losses related to injuries sustained in the car accident, Kiess contends he is entitled to interest from 30 days after his back surgery in June 1997. Notwithstanding the plain language of the statute requiring reasonable proof of the fact and amount of loss realized, Kiess appeals to “principles of fundaméntal fairness” and argues that “imposing constructive notice on [American Family] is not inequitable.” American Family responds that the discontinuation letter sent to Kiess did not constitute a waiver of its statutory right to receive notice of ongoing medical claims, and that the plain language of the statute dictates that Kiess’s benefits should not be considered “overdue” until 30 days after American Family received actual notice of Kiess’s additional losses. We have previously interpreted Minn. Stat. § 65B.54, subd. 1, in other contexts. See, e.g., Pederson v. All Nation Ins. Co., 294 N.W.2d 693, 696 (Minn.1980); Haagenson v. Nat’l Farmers Union Prop. & Cas. Co., 277 N.W.2d 648, 653 (Minn.1979). The precise facts of this case present a question of first impression for this court, however. The statute in question expressly provides that benefits are overdue 30 days after an insurer has received “reasonable proof of the fact and amount of loss realized.” Minn. Stat. § 65B.54, subd. 1. We conclude that when these words are interpreted according to their most natural and obvious usage, the statute requires insureds to provide insurers with actual notice of additional losses. Concluding otherwise would require us to read the words “proof’ and “fact” out of the statute entirely. The parties do not dispute the fact that Kiess did not provide American Family with any notice of the losses he incurred after the discontinuation of his benefits until he filed his arbitration petition. Therefore, Kiess’s no-fault benefits were not “overdue” until 30 days after he filed the arbitration petition. . In arguing that we should interpret section 65B.54, subd. 1, to provide for constructive notice, Kiess relies heavily on Perry v. State Farm Mutual Automobile Insurance Co., 506 F.Supp. 130 (D.Minn.1980). In that case, the federal district court held that an insured’s widow was entitled to- interest under section 65B.54, subd. 1, from the time her claim was constructively denied. 506 F.Supp. at 134. However, unlike the case at hand, Perry involved a contract dispute and focused on the resolution of liability issues. Moreover, the court in Perry neither cited nor discussed the requirement in section 65B.54 that interest be calculated from the time an insurer receives “reasonable proof of the fact and amount of loss realized.” Because Perry did not acknowledge the *621statute’s notice requirement or discuss how that requirement could be reconciled with a theory of constructive notice, the case provides no guidance in resolving the question at hand. We are also not persuaded by Kiess’s argument that interpreting the statute to allow for constructive notice serves the purposes of the No-Fault Act. See Minn. Stat. § 65B.42(l)-(5) (2004). The Act expressly seeks to relieve the “severe economic distress” of automobile accident victims and to assure that accident victims receive “prompt payment” for necessary treatment. Minn. Stat. § 65B.42(1), (3). Interpreting the interest statute to require actual notice promotes prompt payment in two ways. First, because no-fault insurers can only pay claims they know about, the interest statute’s notice requirement gives insureds an incentive to submit their claims promptly. Second, insurers are motivated to promptly pay upon notice in order to avoid a 15% interest surcharge. The notice requirement also promotes the relief of the economic distress of accident victims by assuring that once insureds provide insurers with actual notice of any loss, the victims will be compensated for the use of their money if the insurer fails to pay within 30 days. See Burniece v. Ill. Farmers Ins. Co., 398 N.W.2d 542, 544 (Minn.1987) (stating that the interest statute is intended to compensate insureds for the use of their funds and encourage prompt payment of benefits). Here, Kiess delayed notifying American Family of his losses for over four years.3 We do not believe that such a delay is encouraged or supported by the Act’s express policy objectives. See Minn. Stat. § 65B.42(1)-(5). While Kiess urges the court to recognize his theory of constructive notice and hold that such notice furthers the policies undergirding the Act, we leave it to the legislature to weigh the implications of amending the statute to allow for constructive notice. In doing so, we acknowledge that the responsibility of evaluating the direct or collateral benefits and consequences of such proposed statutory changes are best addressed by the legislature. On a final note, we disagree with the concurrence’s focus on the possible collateral consequences of interpreting the statute in accordance with its plain language and our need to prevent those consequences by applying principles of equitable estoppel.4 Specifically, the concurrence addresses the hardships imposed on insureds who have no health insurance when no-fault benefits are discontinued. Although we acknowledge the hardship faced by all such situated individuals, the fact that some insureds do not have health insurance does not dictate a different conclusion in this case. The issue is “What does an insured have to do to obtain additional no-fault coverage when the insured disagrees with the insurer’s decision that no further testing or care is needed?” Whether an individual has health insur-*622anee does not change the requirement that the insured must bring an arbitration petition in order to determine if additional no-fault coverage is warranted. In recognition of this, the statute is written to encourage prompt resolution of such disputes by requiring both notice to the insurer of an insured’s additional claims and payment of interest by the insurer if meritorious claims are not paid within 30 days. Accordingly, we affirm the court of appeals’ decision and hold that Kiess is entitled to collect interest beginning 30 days after he filed his arbitration petition in November 2001. We remand to the district court for proceedings in accordance with this opinion. Affirmed. MEYER, J., files concurring opinion joined by PAGE, J.

+ 1 more citation in this opinion.

Illinois Farmers Insurance Co. v. Glass Service Co. · 2004 1 citation

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Turner v. Mutual Service Casualty Insurance Co. · 2004 1 citation

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Kelly v. State Farm Mutual Automobile Insurance Co. · 2003 2 citations

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Mutual Service Casualty Insurance Co. v. League of Minnesota Cities Insurance Trust · 2003 1 citation

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Nelson v. American Family Insurance Group · 2002 1 citation

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Stout v. AMCO Insurance Co. · 2002 1 citation

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Pususta v. State Farm Insurance Companies · 2001 2 citations

Great West, 548 N.W.2d at 281 (emphasis added). The majority opinion also charts new legal ground in determining no-fault medical expense benefits by using common law tort principles to modify the No-Fault Act. It supports its rationale by citing Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271 (Minn.1995), which decided what general and special damages were in the context of an age and disability claim, Leubner v. Sterner, 493 N.W.2d 119 (Minn.1992), which was a medical malpractice claim, and Nelson v. Twin City Motor Bus Co., 239 Minn. 276, 58 N.W.2d 561 (1953). The majority then summarily distinguishes medical expenses from those caused by previous nonauto accidents from those caused by the more recent auto accident even though it is undisputed that the auto accident aggravated a chronic preexisting condition and the insured suffered a compensable loss. To shore up its reasoning, the majority opinion then gives an example of two separate injuries, one to one's foot caused by a horse-riding accident and another to one's shoulder caused by an auto accident. However, that example is not helpful because it obviously does not involve an aggravation of a preexisting injury, nor does it support a distinction between auto and nonauto-related accidents when the later injury was a compensable loss under the No-Fault Act. In this case, the record indicates that we do not have two different injuries but rather *560 the aggravation of a preexisting injury resulting from an auto accident.[10] As in Great West, the entire responsibility for the insured's disability caused by the accident occurred while State Farm was on the policy. State Farm accepted Pususta as an insured with whatever physical condition she may have had at the time and it is not for State Farm now to either refuse payments of benefits for that portion of disability caused by the previous injury or to seek subrogation. See Great West, 548 N.W.2d at 281. Importantly, once a compensable loss occurs, the No-Fault Act does not contain equitable apportionment of medical expense benefits nor have we previously recognized a common-law right to seek apportionment of medical expenses based on a preexisting condition in the no-fault context. If we disallow subrogation of medical expense benefits between two insurance companies based on the one-accident principle, (that is, the last accident for purposes of the No-Fault Act), that is all the more reason to apply that same legal principle to prohibit insurers from attempting to offset, allocate or seek apportionment of medical expense benefits from their insureds. The No-Fault Act was not designed to pit an insurer against its insured for these basic medical benefits but rather to encourage swift, inexpensive rights to claim the benefits, without regard to fault or apportionment. Minn. Stat. § 658.42. The majority opinion will require more expert testimony of all the parties whenever a preexisting condition exists. This will only lead to more expenses, delays and disputes over these basic benefits. The No-Fault Act was designed to remove these subjective disputes to insure PIP coverage in exchange for removing the injured's right or necessity to have to sue for those types of benefits prior to no-fault coverage. See Minn. Stat. § 65B.51, subds. 1, 3 (2000). In that the legislature did not provide for apportionment, it is not for this court to make up an additional distinction for entitlement to PIP benefits, based on injuries "within the no-fault system and some medical expenses arising outside that system." The No-Fault Act has already provided a standard to determine medical expense benefits: " * * * all reasonable expenses for necessary * * * medical, * * * and rehabilitative services * * *." Minn. Stat. § 65B.44, subd. 2. We should continue to abide by this standard and our "one accident" precedent rather than create judicial modifications of the No-Fault Act. The legislature is the policy-making branch better suited to make these fine distinctions. I would therefore affirm. NOTES [1] Minn. Stat. §§ 65B.41-.71 (2000). [2] The other two factors are whether an act of independent significance broke the causal link between the vehicle use and the injuries, and what type of use of the auto was involved. Klug, 415 N.W.2d at 878. [3] The dissent acknowledges that there was conflicting medical testimony regarding the nature of Pususta's injuries. Our practice in no-fault arbitration cases is to defer to the factfinder's resolution of such conflicts. See Johnson v. Am. Family Mut. Ins. Co., 426 N.W.2d 419, 422 (Minn.1988). Here the arbitrator found, "The particular facts of this current arbitration would call for apportionment, based upon the prior accident, the prior and very recent chiropractic care * * *." While we do not agree with the arbitrator's use of the term `apportionment,' (see infra note 4) the implicit factual determination that some of Pususta's medical expenses were attributable to the earlier horse-riding accident is a factual determination within the arbitrator's factfinding powers. Johnson, 426 N.W.2d at 422. [4] We further stated that through this ruling "we cast a long shadow over the court of appeals' decision in Rodgers v. Progressive Specialty Ins. Co., 499 N.W.2d 61 (Minn.App.1993) [, rev. denied (Minn. Jun. 22, 1993) ]." In Rodgers, the claimant was still receiving medical care from an April 1990 auto accident when she was injured in a second, February 1991 accident. Her treating physician attributed 50 percent of Rodgers' injuries to the 1990 accident. The arbitrator awarded Rodgers the full amount of her medical expenses, but the district court reduced the award by half, stating that, "the insurer should pay only for those expenses that relate to the accident at hand." 499 N.W.2d at 62. The court of appeals affirmed, relying on use of the singular "the accident" causing injury in the definition of "loss" to exclude losses resulting from prior accidents. Id. at 63. [5] Thus, the dissent is correct that we have rejected subrogation claims under the No-Fault Act in the past. The dissent claims that the decision in this case is based on "equitable apportionment, which is an approach that we have specifically rejected for subrogation claims * * *." As noted herein, however, neither Great West nor Scheibel addressed the situation presented here, where the previous accident is not an automobile accident. The dissent's charge that we apply equitable apportionment also is not accurate, as "apportionment" in the automobile insurance context refers to a situation where several automobile insurance policies arguably cover the loss. See generally 16 Couch on Insurance 2d § 62:32 (1983). Here, there is just one automobile insurance policy that covers the loss, and the question presented is a threshold question of whether the claimed medical expenses are losses "resulting from the accident causing the injury," as the legislature required before imposing liability on the insurer. Minn. Stat. § 65B.43, subd. 7. Contrary to the conclusion reached by the dissent, we do not tread on the legislative domain by curtailing recovery of injured persons; rather, we give effect to the clear statutory language that medical expense reimbursement be "for all loss suffered through injury arising out of the maintenance or use of a motor vehicle * * *." Minn. Stat. § 65B.44, subd. 1. [6] In Scheibel we chose not to apply the undisputed attribution of 35 percent of Scheibel's medical expenses to the first accident/policy and 65 percent of Scheibel's medical expenses to the second accident/policy. However, we did limit Scheibel's recovery under the first policy to only that unreimbursed portion of his total medical expenses attributable to the first accident, acknowledging that to do so relied to some extent on apportionment. 615 N.W.2d at 39 & n. 3. Likewise, attribution of expenses is appropriate here to give effect to the statutory language that losses arise out of the use of an automobile. Minn. Stat. § 65B.44, subd. 1. While we have acknowledged that attributing expenses to a particular injury is appropriate in these contexts, the factual posture of this case does not require us to reach the question whether the "long shadow" over Rodgers remains. See Great West, 548 N.W.2d at 281 n. 4. [7] The dissent relies on subdivision 2 of Minn. Stat. § 65B.44, which describes medical expense benefits available under the no-fault system as "all reasonable expenses for necessary" services. The dissent ignores the context in which subdivision 2 arises, specifically that "medical expense loss" is described in subdivision 1 as a type of loss "suffered through injury arising out of the maintenance or use of a motor vehicle * * *." Minn. Stat. § 65B.44, subd. 1 (emphasis added). The dissent's construction of the statute provides a limitless standard that would allow recovery under the no-fault system for injuries wholly unrelated to use of a motor vehicle, contrary to the intent of the legislature.

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American Family Insurance Group v. Schroedl · 2000 1 citation

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Scheibel v. Illinois Farmers Insurance Co. · 2000 1 citation

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Weaver v. State Farm Insurance Companies · 2000 1 citation

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American National Property & Casualty Co. v. Loren · 1999 1 citation

. See Minn. Stat. §§ 65B.41-.71 (1998).

Norwest Bank Minnesota, N.A. v. State Farm Mutual Automobile Insurance Co. · 1999 1 citation

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Ka Ying Vue v. State Farm Insurance Companies · 1998 2 citations

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Lobeck v. State Farm Mutual Automobile Insurance Co. · 1998 1 citation

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Hertz Corp. v. State Farm Mutual Insurance Co. · 1998 2 citations

OPINION GARDEBRING, Justice. This case involves the application of the Minnesota No-Fault Act in the context of rental cars. Specifically, we are asked to determine whether a self-insured rental car agency may meet its obligations under the Minnesota No-Fault Automobile Insurance Act, Minn. Stat. §§ 65B.41-.71(1996) ("No-Fault Act"), by providing liability coverage only in the event that the renter or operator of the rented vehicle does not have other liability coverage arising from his or her own automobile policy. Jeffrey Powers rented an automobile from Hertz in August 1994. While driving the rental car, he was involved in an accident, which gave rise to negligence claims against him for property damage and personal injury. At the time of rental, Powers declined to purchase the Liability Insurance Supplement (LIS), which, for an additional fee, provided full liability coverage for automobile renters. The rental agreement provided that: If you do not purchase liability insurance supplement (LIS) * * * at the commencement of the rental and an accident results from the use of the car, your insurance and the insurance of the operator of the car will be primary. This means that Hertz will not grant any defense or indemnity protection under this paragraph if either you or the operator of the car are covered by any valid and collectible automobile liability insurance, whether primary, excess or contingent, with limits at least equal to the minimum required by the applicable state financial responsibility law. If neither you nor the operator of the car have such insurance, Hertz will grant you and any authorized operator of the car limited protection under the terms and conditions stated in subparagraphs 10(a) above and 10(c) below. The intended import of this provision was apparently to make the Hertz self-insurance coverage effective only if the renter or operator of the rented vehicle had no automobile liability insurance. *688 Powers had personal automobile liability insurance through State Farm for coverage on his 1985 Ford Bronco II. Powers renewed his State Farm policy on March 22, 1994, for a six-month term and the policy was in effect at the time of the accident. The State Farm policy, which has liability coverage with limits at $50,000 per person and $100,000 per occurrence, provided: "The liability coverage extends to the use, by an insured, of a * * * non-owned car." The policy further stated that "[i]f a * * * non-owned car has other vehicle liability coverage on it, then this coverage is excess." Hertz brought a declaratory judgment action against State Farm, asserting that State Farm has the primary duty to defend and indemnify Powers against the claims arising from the accident involving the rented vehicle. In granting Hertz's motion for summary judgment, the trial court held that the Hertz rental agreement was a valid and enforceable contract that did not provide Powers with liability coverage at the time of the accident. It also held that the Hertz rental agreement did not violate the No-Fault Act because it guaranteed liability coverage if the renter or operator was not insured. It concluded that Minn. Stat. § 65B.49, subd. 3(3)(d), the statute dictating priority of coverage, did not apply because Hertz did not provide liability coverage at all on these facts. The trial court further concluded that Minn. Stat. § 65B.49, subd. 3(3)(d) did not apply because it took effect on August 1, 1994, after the March 1994 renewal date of the Powers' State Farm policy. Finally, the trial court held that State Farm, and not Hertz, was responsible for defending and indemnifying Powers for the claims arising out of the accident. The court of appeals affirmed the trial court, holding that the Hertz rental agreement satisfied the purpose of the No-Fault Act because Hertz provided liability coverage in the event that the renter or operator did not have other automobile liability insurance. Because the court of appeals held the Hertz rental agreement was valid and enforceable, it did not reach the issue of priority of coverage under the No-Fault Act. State Farm now appeals, arguing that the Hertz rental agreement violates the No-Fault Act, because Hertz, a self-insurer, was required to maintain liability coverage on the vehicles that it owns. We reverse. In our review of the summary judgment, we must determine "whether there are any genuine issues of material fact and whether the trial court erred in its application of the law." Interstate Fire & Cas. Co. v. Auto-Owners Ins. Co., 433 N.W.2d 82, 84 (Minn.1988). Because the facts are undisputed, this case raises only issues of statutory and contract interpretation, which are questions of law subject to de novo review. Garrick v. Northland Ins. Co., 469 N.W.2d 709, 711 (Minn.1991). The No-Fault Act requires that every Minnesota automobile owner maintain a "plan of reparation security," with specific, statutorily set minimum benefits, including liability coverage. Minn. Stat. § 65B.48, subd. 1; see also Minn. Stat. § 65B.49, subd. 3(1) (stating the minimum benefits required). That obligation may, of course, be met either by the purchase of a commercial automobile liability insurance policy under Minn. Stat. § 65B.48, subd. 2, or by qualification as a self-insured entity, under Minn. Stat. § 65B.48, subd. 3. In this case, Hertz met its obligation by seeking and receiving the authorization of the commissioner of commerce to operate as a self-insured entity. In seeking that approval, Hertz agreed to "discharge fully and promptly all payments and obligations which are now due or shall become due under the provisions of the Minnesota No-Fault Automobile Insurance Act and amendments thereto." State Farm asserts that Hertz's rental agreement violates the No-Fault Act because it allows Hertz to provide "contingent" liability coverage on vehicles it owns, although Hertz is statutorily required, as a self-insured owner of the vehicles, to maintain liability coverage, regardless of whether the renter or operator of a rented vehicle is otherwise insured. In response, Hertz argues that there is no violation of the No-Fault Act because there are no circumstances under which a Hertz vehicle would be uninsured. We disagree. A self-insured car rental agency does not meet its obligations *689 as an automobile owner under the No-Fault Act by thrusting upon the renter its responsibility to provide liability coverage that is, by providing liability coverage only in the event that the renter is without liability coverage. The statutory provisions at issue Minn. Stat. §§ 65B.48, subd. 1 and 65B.49, subd. 3(2) do not on their face require that an automobile owner maintain coverage that is not contingent upon the presence of other coverage. Nevertheless, it is inconsistent with the general purpose of the No-Fault Act to read the statute in the manner advocated by Hertz. Hertz's interpretation of the Act would create a practical exemption to the broad statutory mandate that all automobile owners carry liability insurance, an exemption nowhere evident in the language of the statute. Further, the distinction relied upon by Hertz and the court of appeals, that the statutory requirements on Hertz are different because it is self-insured, is contrary to our reading of the NoFault Act in other cases. We have said that "[s]elf-insurance is the functional equivalent of a commercial insurance policy. * * * The purpose of either form of insurance is to compensate victims appropriately. The certificate filed with the commissioner [of commerce] is the functional equivalent of an insurance policy." McClain v. Begley, 465 N.W.2d 680, 682 (Minn.1991). Further, in his concurring opinion in McClain, Justice Simonett concluded that, in considering the application of the No-Fault Act to self-insureds, we should "treat the self-insurer as if it had purchased a policy of auto liability insurance for each of its vehicles with itself as the named insured. Such a policy, if purchased, would contain an omnibus clause extending coverage to permissive drivers as additional unnamed insureds." Id. at 684. Applying this conceptual approach here, one could identify Powers as a permissive driver of the rented vehicle, whose liability would be fully covered by virtue of the omnibus clause.[1] Further, we find no merit in Hertz's argument that this construction of the No-Fault Act violates its freedom of contract. Legislation may impact contractual obligations, if certain conditions are met. Generally speaking, "[t]he federal constitutional prohibition against contract impairment, U.S. Const., art. I, § 10, cl. 1, has been construed to mean that the state reserves some power to modify contract terms when the public interest requires." Christensen v. Minneapolis Mun. Employees Retirement Bd., 331 N.W.2d 740, 750 (Minn. 1983). The legislature, therefore, can alter contract terms by enacting statutes as long as the legislation is "necessary to meet a broad and pressing social or economic need, if the legislation is reasonably adopted for the solution of the problem involved, and if it is not over broad or over harsh." Id. (quoting White Motor Corp. v. Malone, 599 F.2d 283, 287 (8th Cir.1979)). The purposes of the No-Fault Act are spelled out in Minn Stat. § 65B.42: to "relieve the severe economic distress of uncompensated victims"; to prevent overcompensation; to assure prompt payment; to "ease the burden of litigation"; and to correct imbalances and abuses in the automobile accident liability system. That these are legitimate public purposes is unquestionable, and a statutory scheme the linchpin of which is a requirement that each automobile owner carry liability coverage is not either harsh or overly broad. This court has stated, in the context of a No-Fault Act case, that "contract provisions which conflict with statutory law will not be enforced." Roering v. Grinnell Mut. Reinsurance Co., 444 N.W.2d 829, 833 (Minn. 1989). We have also stated that "an insurer's liability is governed by the contract between the parties only as long as coverage *690 required by law is not omitted and policy provisions do not contravene applicable statutes." Streich v. American Family Mut. Ins. Co., 358 N.W.2d 396, 399 (Minn.1984) (emphasis added). We conclude that the provision of the rental agreement purporting to limit Hertz' liability obligation to situations in which there is no other coverage, contravenes the No-Fault Act and is, therefore, unenforceable.[2] Because we hold that Hertz's attempted limitation of coverage is unenforceable, we must determine which insurance coverage is primary in this case. We begin with the consideration of Minn. Stat. § 65B.49, subd. 3(3)(d), a statutory amendment to the No-Fault Act which became effective on August 1, 1994. See Minn. Stat. § 645.02 (1996). Minn. Stat. § 65B.49, subd. 3(3)(d) (1996) states that: (3) Every plan of reparation security shall be subject to the following provisions which need not be contained therein: * * * * (d) Except as provided in subdivision 5a,[3] a residual liability insurance policy shall be excess of a nonowned vehicle policy whether the nonowned vehicle is borrowed or rented, or used for business or pleasure. A nonowned vehicle is one not used or provided on a regular basis. Hertz argues that Minn. Stat. § 65B.49, subd. 3(3)(d) does not apply to the instant case because (1) Powers' State Farm policy, which was effective at the time of the accident, was renewed prior to the effective date of this statutory amendment and (2) the statutory amendment only applies to insurance "policies" and not to self-insurers. Hertz further argues that State Farm's "other insurance" provision is not applicable here, because, as a self-insurer, its reparation security is simply not "other insurance." For the second proposition, Hertz asserts that "a certificate of self-insurance is a contract with the state to protect the public, whereas an automobile liability insurance policy is a contract with the insured to provide indemnity." State Farm argues that the statutory amendment does apply because, according to Hertz's application for self-insurance, Hertz obligated itself to "discharge fully and promptly all payments and obligations which are now due or shall become due under the provisions of the Minnesota No-Fault Automobile Insurance Act and amendments thereto." State Farm further argues that self-insurance is the equivalent of an insurance policy, and the statutory amendment cannot be found inapplicable simply because it uses the word "policy," rather than the broader term "plan of reparation security." We have stated that "the general rule is that upon each renewal an entirely new and independent contract of insurance is created and is governed by the laws in effect on the date of renewal." Hauer v. Integrity Mut. Ins. Co., 352 N.W.2d 406, 408 (Minn. 1984). However, "[o]n each reinstatement or renewal of policies, any statutes or amendments pertaining to such policies and enacted after their issuance are incorporated into the new policies." Id. (quoting Taylor v. American Nat'l Ins. Co., 264 Minn. 21, 25, 117 N.W.2d 408, 411 (1962)). Therefore, Hertz is incorrect in its assertion that Minn. Stat. § 65B.49, subd. 3(3)(d) does not apply because it became effective after Powers renewed his State Farm policy. State Farm is correct in its contention that Hertz's application for self-insurance required that Hertz comply with the No-Fault Act in its entirety and with any amendments enacted in the future. Also, as previously stated, neither this court nor the legislature has provided that self-insured entities should be treated any differently from other insurers, and for that reason Hertz's assertion that the statutory amendment only applies to third-party insurers is mistaken. Therefore, we conclude that Minn. Stat. § 65B.49, subd. 3(3)(d) is applicable to determine *691 which coverage should be deemed primary. In applying Minn. Stat. § 65B.49, subd. 3(3)(d) to the instant case, we conclude that the Hertz self-insurance is primary. The State Farm policy is secondary under the statute, in excess of the Hertz coverage. Even if this court did not apply Minn. Stat. § 65B.49, subd. 3(3)(d) to this case, the Hertz coverage would still be deemed primary under the common-law "closest to the risk" doctrine. Under our previous cases, to determine which coverage is primary we applied the "closest to the risk" test, in which we ask: (1) Which policy specifically described the accident-causing instrumentality? (2) Which premium is reflective of the greater contemplated exposure? (3) Does one policy contemplate the risk and use of the accident-causing instrumentality with greater specificity than the other policy that is, is the coverage of the risk primary in one policy and incidental to the other? Interstate Fire & Cas. Co., 433 N.W.2d at 86. Applying these factors to this case, the Hertz self-insurance policy specifically describes the rental vehicle involved in the accident because Hertz is the owner and its self-insurance is specifically available to cover the vehicle at issue, while Powers' State Farm policy only describes Powers' personal automobile. As to the second factor, because Hertz chose to self-insure, it avoided the payment of premiums to cover its liability. However, it is clear that Powers' State Farm policy did not contemplate primary coverage for more than damage to a rental vehicle, and its premiums are reflective of that fact. In addressing the third and final factor, the State Farm policy specifically states that its non-owned vehicle coverage is excess and incidental to any other policy covering the vehicle. While Hertz attempts to shift primacy to the State Farm policy through its rental agreement, Hertz's self insurance must provide liability coverage for damages caused by the use of vehicles it owns and offers for rent. Therefore, Hertz's self-insurance coverage is primary even under common law principles. In summary, Hertz cannot contract away its primary obligations under the No-Fault Act by limiting its liability coverage to situations where no other coverage exists. Therefore, Hertz must provide primary liability coverage for the damages resulting from Powers' accident while driving the rental car owned by Hertz. Reversed. BLATZ, Justice (concurring specially). I concur in the result of the majority decision. The legislature clearly set forth in Minn. Stat. § 65B.49, subd. 3(3)(d) that "a residual liability insurance policy shall be excess of a nonowned vehicle policy." This statutory amendment to the No-Fault Act was effective on August 1, 1994. The statute requires that Hertz's nonowned vehicle policy be deemed primary in providing Powers with liability coverage. This statutory amendment was effective the day before Powers rented the Hertz vehicle, and, therefore, Hertz is bound by its mandates. While I do not agree with all of the other legal analysis and conclusions reached by the majority, Minn. Stat. § 65B.49, subd. 3(3)(d) is dispositive of this matter. Therefore, I concur in the result. KEITH, Chief Justice (concurring specially). I join in the special concurrence of Justice Blatz. PAGE, Justice (dissenting). I respectfully dissent. The court's decision, which allows the renter of a rental car, who has his or her own liability insurance coverage and who declines to purchase the rental car company's liability insurance supplement to escape responsibility for the renter's involvement in an accident with the rental car, is wrong, fundamentally unfair, and poor public policy. What purpose is served by allowing the renter and the renter's insurance company to avoid responsibility for the renter's action? I would suggest none. To the extent that it is asserted that this result *692 is necessary in order to fulfill the purposes of Minnesota's No-Fault Automobile Insurance Act, that simply is not the case. The purpose of the No-Fault Act is "[t]o relieve the severe economic distress of uncompensated victims of automobile accidents." Minn. Stat. § 65B.42(1) (1996). On the facts before us, that purpose is met and will always be met. The terms of the rental agreement at issue make clear that under any circumstances "[i]f neither [the customer] nor the operator of the car have [liability] insurance," Hertz will provide coverage. Thus, no "victim," injured as a result of an accident with one of Hertz's rental cars, will remain "uncompensated." Finally, the result reached today is poor public policy. If Hertz cannot rely on its customers to either provide their own liability insurance protection or, at the time of rental, purchase Hertz's liability insurance supplement, the cost of that protection is likely to be passed on by Hertz to all of its rental car customers. There is no sound reason why individual renters should not be required to bear the cost of their own liability insurance protection. Therefore, I dissent. NOTES [1] In McClain, the rental car agency attempted to shift all financial liability to the renter through a provision in the rental agreement that provided that the renter was responsible for insuring the rental car. 465 N.W.2d at 681. Here, Hertz has attempted a similar shift of responsibility, but has agreed to provide coverage if the renter does not have liability coverage through a policy on another automobile. The Hertz approach is different in scope than that of the rental car agency in McClain, but its fundamental aim is the same to avoid the statutory obligations of the No Fault Act. [2] If our interpretation of the No-Fault Act is deemed incorrect by the legislature, and rental car agencies are to be treated differently than all other automobile owners, the legislature is, of course, free to clarify the statute at any time. [3] Subdivision 5a provides that every plan of reparation security insuring a natural person must cover damage to rented automobiles.

+ 1 more citation in this opinion.

Malmin v. Minnesota Mutual Fire & Casualty Co. · 1996 4 citations

+ 4 more citations in this opinion.

Metropolitan Property & Casualty Insurance Co. v. Metropolitan Transit Commission · 1995 2 citations

Appellant, Metropolitan Transit Commission (“MTC”), and respondent, Metropolitan Property & Casualty Insurance Co. (“Metropolitan”), ask this court to determine the date of accrual of a no-fault insurer’s right of indemnity under the Minnesota No-Fault Automobile Insurance Act, Minn. Stat. § 65B.41-.71 (1992). MTC appeals from a court of appeals decision holding that a no-fault insurer’s right of indemnity under Minn. Stat. § 65B.53, subd. 1 (1992) accrues when the insurer actually pays on its insured’s claim. Because we believe that the legislature did not clearly intend to amend the common law rules for the accrual of indemnity with the enactment of Minn. Stat. § 65B.53, subd. 1 (1992), we affirm.

Employers Mutual Companies v. Nordstrom · 1993 1 citation

+ 1 more citation in this opinion.

McClain v. Begley · 1991 2 citations

465 N.W.2d 680 (1991) Claudia McCLAIN, as Trustee for the heirs and next of kin of Michelle Elizabeth McClain, decedent, petitioner, Appellant, v. Bridget J. BEGLEY, petitioner, Appellant, Christine S. Meyers, Defendant, Altra Auto Rental, Inc., a division of Agency Rent-A-Car, Inc., Respondent. and ALTRA AUTO RENTAL, INC., A DIVISION OF AGENCY RENT-A-CAR, INC., Respondent, v. FIREMEN'S FUND INSURANCE COMPANY, Defendant, Allstate Insurance Company, petitioner, Appellant. No. C1-89-2206. Supreme Court of Minnesota. February 15, 1991. Eric Magnuson, Andrew M. Walsh, Rider, Bennett, Egan & Arundel, William M. Hart, R. Gregory Stephens, Meagher & Geer, Minneapolis, for appellants. Scott W. Johnson, James A. O'Neal, Paul W. Heirling, Faegre & Benson, Bonita J. Girard, Bassford, Hecht, Lochhart & Mullia, Minneapolis, for respondents. Heard, considered and decided by the court en banc. *681 YETKA, Justice. This case is here on appeal from the court of appeals, which reversed summary judgment awarded by the trial court on motion of plaintiff McClain. We reverse the court of appeals and reinstate the judgment of the trial court. Petitioner McClain brought an action against Altra Auto Rental, Inc., Bridget Begley, and Christine Meyers for the wrongful death of her daughter, Michelle McClain. The death resulted from a car accident involving a car rented by Michelle McClain, Begley and Meyers from Altra. Altra insured the rental car through a plan of self-insurance under the no-fault act. Allstate insured Begley, the driver of the rental car at the time of the accident, through her parents' liability policy. After McClain commenced suit, Altra brought a declaratory judgment action against Allstate to determine priority of coverage. In January 1988, McClain moved for partial summary judgment, claiming that Altra's self-insurance plan provided primary coverage to the extent of the $500,000 liability limits stated on the certificate of insurance. The motion was granted on April 7, 1988. Altra's petition for discretionary review was denied by the court of appeals. Thereafter, the parties stipulated to damages and the entry of judgment with the express understanding that Altra would appeal the summary judgment decision.[1] The court of appeals reversed the trial court, holding that, in the absence of express liability coverage limits in a self-insurance plan, a self-insurer is liable only for the statutory minimum amount of coverage. McClain v. Begley, 457 N.W.2d 230 (Minn.App.1990). Respondents McClain and Begley appealed. This court granted respondents' petition for review. This case arises from an automobile accident on March 30, 1986, in Missouri. Michelle McClain, Bridget Begley, Christine Meyers, and Shannon Murphy, all college students, planned a spring-break trip to Padre Island, Texas. Prior to the trip, Murphy contacted Altra about renting a car. An agent of Altra told Murphy that, to qualify for the least expensive rate, she must rent the car as a replacement for an insured, but out-of-service car. Murphy told the agent that McClain had an out-of-service car insured through Firemen's Fund Insurance. On March 21, 1986, the Altra agent delivered the car to Murphy and Meyers. Meyers signed the rental contract which stated that Altra did not provide liability coverage on the car and that the car was to be insured by the lessee. A few days after the rental contract was signed, the agent filled in the rental form with a fictitious policy number, agent, and agency phone number. On March 30, 1986, as the women were returning from the trip, Begley fell asleep at the wheel and collided with a car parked on the shoulder of an interstate in Missouri. McClain was killed in the collision. Altra insures its cars through a plan of self-insurance. As a self-insured entity, Altra completed and filed the forms developed by the Department of Commerce. One of the forms included a question and an answer which we repeat as follows: 12. List all excess insurance applicable to motor vehicle accidents, with name(s) of insurer(s), policy number(s) and limits of liability. Lexington Insurance Company Policy No. 552 8742 Effective: 12-31-86/87 Amount of Insurance: $2,500,000 in excess of $500,000 S.I.R. [Self-insured Retention] The above question and answer was part of a form entitled "REQUEST FOR EXEMPTION FROM INSURING LIABILITIES UNDER THE MINNESOTA NO-FAULT AUTOMOBILE INSURANCE ACT." The parties to the lawsuit entered into a stipulation which, in substance, provided the following: Altra owned the car in *682 which McClain was killed. The negligence of Begley, the driver, was the sole cause of McClain's death. The total damages for the death are $155,000. If the trial court orders are upheld on final appeal, Altra will pay $155,000 to plaintiff. If Altra's obligation is limited to the statutory minimum, Altra will pay $30,000 and Allstate will pay $100,000. As a result of all this pre-appeal maneuvering, the parties agree and have submitted to the court the following: 1. The question of the applicability of Minnesota's car owner's responsibility act is not raised and is thus not before this court. 2. Altra sought protection of its fleet under the Minnesota no-fault act. 3. Altra, through its rental agreements, had attempted to shift responsibility for all liability coverage to the lessees of its cars and absolve itself of any liability. This has been held illegal by the Minnesota Department of Commerce. 4. Thus, the sole issue for this court to decide involves the interpretation of the no-fault insurance act, Minn. Stat. §§ 65B.41-65B.71 (1990), and its applicability to self-insurers. Interpretation of statutes is a question of law. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985). The parties have stipulated to the facts and to the amount of damages. This court thus must determine whether the court of appeals erred in its application of the law to the facts of this case. This court is not bound by the decision of the court of appeals. A.J. Chromy Constr. Co. v. Commercial Mechanical Serv., Inc., 260 N.W.2d 579 (Minn.1977). The Minnesota no-fault act imposes a duty on the owner of a motor vehicle to maintain "a plan of reparation security * * * insuring against loss resulting from liability imposed by law for injury and property damage by any person arising out of the ownership * * * of the vehicle." Minn. Stat. § 65B.48, subd. 1. The owner has the choice of self-insuring or buying an insurance policy. The act states five purposes: to relieve the "severe economic distress of uncompensated victims," to prevent overcompensation, to provide prompt payment, to reduce litigation, and to correct abuses of the tort liability system. Minn. Stat. § 65B.42. The obligations imposed on self-insurers should reflect those goals. Self-insurance is the functional equivalent of a commercial insurance policy. The law of workers' compensation treats self-insurers no differently than those who insure by commercial policy. The purpose of either form of insurance is to compensate victims appropriately. The certificate filed with the commissioner is the functional equivalent of an insurance policy. While under the Minnesota no-fault statutes, Minn. Stat. § 65B.49, subd. 3(1), any insurer is required to have liability coverage of $30,000 as a minimum, Altra made a deliberate representation to the Department of Commerce to provide coverage in excess of that amount, namely, $500,000. Based on that representation and other data supplied to the Department of Commerce, Altra was accepted as a self-insured. It should thus be held to the representations that it made. The cases and precedent cited in the briefs are simply not applicable to the unique facts of this case, for the decision in this case is based more on equitable estoppel principles than on any other. The court of appeals is thus reversed and judgment of the trial court reinstated. COYNE and GARDEBRING, JJ., took no part in the consideration or decision of this matter. SIMONETT, Justice (concurring). I join in the majority opinion but my reasoning, only sketched out here, is different. A Minnesota car owner can satisfy the requirements of our No-Fault Act by purchasing a liability policy with limits of $30,000 for bodily injury to any one person, $60,000 for any one accident, and $10,000 *683 property damage. Minn. Stat. § 65B.49, subd. 3(1). These limits, of course, do not limit the car owner's tort liability; a car owner remains liable for any tort exposure over the policy limits. By purchasing minimum coverage, a car owner in this state keeps his car registered, keeps his driver's license, and avoids criminal penalties. Minn. Stat. § 65B.67. Policy limits measure the amount of protection afforded the insured. Also, policy limits, whether the statutory minimum or higher, are significant in determining when other auto liability policies covering the driver (if such is the case) will come into play. A self-insurer must approach these risk management problems a little differently than a regular policyholder. The self-insurer's exposure is its tort liability exposure, which the self-insurer may limit by purchasing an excess policy for claims against it over and above a certain amount. In relation to this excess policy, the self-insurer's underlying personal exposure is its self-insured retention. This self-insurance, by statutory definition, is a plan of reparation. Minn. Stat. § 65B.43, subd. 15. Consequently, there is no need for a self-insurer to file any detailed plan. See Anderson v. Northwestern Bell Tel. Co., 443 N.W.2d 546, 549 (Minn.App.1989) ("[S]elf-insureds are not required to have the carefully worded, highly specific policy provisions, declarations and coverage limits required of insurance companies."). Ordinarily, a self-insured retention operates much the same as stated limits in a regular insurance policy. But not necessarily. Arguably, a self-insurer may, with respect to certain persons, place limits on its self-insured retention which are lower than the self-insured retention. The self-insurer will try to do this so that if there are other auto insurance policies also covering the driver of the car, such other insurance will no longer be excess but will then apply. In this case, for example, the driver of the rented car, Bridget Begley, had her parents' auto policy affording her coverage, and the question arises as to when this other insurance takes over.[1] In this case Altra, Inc. (the Rental Agency) purchased an excess policy with coverage of "$2,500,000 in excess of $500,000 S.I.R." (the initials refer to Self-Insured Retention). This excess policy, however, contained a "Renter's Exclusion" endorsement which appears to exclude claims such as McClain's arising from accidents while the automobile is being operated by a lessee under a rental agreement.[2] I understand the Rental Agency's position to be that it is self-insured for claims arising when its own employees are driving its cars up to $500,000, after which the excess policy takes over for the next $2.5 million; but that as to claims arising where a lessee is operating the rented vehicle, while the personal exposure, if any, of the Rental Agency as owner of the rented car is limitless, the Rental Agency's self-insurance exposure for the lessee-operator is the minimum statutory limits under the Minnesota No-Fault Act. The issue then becomes: To what extent, if any, does the grant of self-insurance authority to the Rental Agency provide protection to persons operating the Rental Agency's automobiles as lessee-operators? *684 It seems to me there are two possible ways in which the Rental Agency, as a self-insurer, might possibly provide coverage to its lessee-operators. One possibility is that the self-insurer contracts with the lessee to protect the lessee the same as if the lessee had purchased a standard auto liability insurance policy for the rented car. Presumably the Rental Agency could place limits on this contractual coverage by so stating in the rental contract. The problem with this arrangement, however, is that the Rental Agency is a self-insurer, not an insurer. I doubt if a self-insurer is authorized to issue contracts of insurance.[3] The second possibility is to treat the self-insurer as if it had purchased a policy of auto liability insurance for each of its vehicles with itself as the named insured. Such a policy, if purchased, would contain an omnibus clause extending coverage to permissive drivers as additional unnamed insureds.[4] This seems to me the better approach and more in keeping with the concept of self-insurance. This brings up, however, another question: Can omnibus coverage limits ever be less than the coverage limits for the named insured? Courts in other states appear to differ on this. For example, in Balboa Ins. Co. v. State Farm Mut. Auto. Ins. Co., 17 Ariz. App. 157, 496 P.2d 147 (1972), a rental car agency had purchased a liability policy with $100,000/300,000 coverage but with an endorsement limiting coverage for lessee-operators to $10,000/20,000, the statutory minimum. The court held these differing limits were permissible, relying on Rocky Mountain Fire & Cas. Co. v. Allstate Ins. Co., 107 Ariz. 227, 485 P.2d 552 (1971). Compare Southern Home Ins. Co. v. Burdette's Leasing Service, Inc., 268 S.C. 472, 234 S.E.2d 870 (1977), where the South Carolina Supreme Court held that an auto rental agency's self-insurance covered permissive users including lessee-customers, and that the self-insurance "substitutes for an insurance policy to the extent of the statutory policy requirements." Id., 234 S.E.2d at 872 (emphasis added). Wisconsin has a so-called "omnibus statute" which provides that coverage applicable to the named insured is to be extended to any person using the motor vehicle. Wis.Stat. § 632.32(3), successor to Wis. Stat. § 204.30(3) (1967). In Smith v. National Indemnity Co., 57 Wis.2d 706, 205 N.W.2d 365 (1973), the car rental agency had liability insurance with coverage for itself, as the named owner insured, of $100,000/300,000; an endorsement to the policy, however, limited coverage for renters to $10,000/20,000. The Wisconsin Supreme Court held, applying its omnibus coverage statute, that the car rental agency could not have less coverage for its lessee-customers than for itself. In National Indemnity Co. v. Manley, 53 Cal.App.3d 126, 125 Cal.Rptr. 513 (1975), the rental agency's liability policy contained *685 an endorsement that it was excess over other insurance. The intermediate appellate court held that under the California Insurance Code an insurer could provide in its policy for only minimum statutory coverage for permissive users, but that in this instance the policy clause attempted to exclude permissive users from any coverage whatsoever and, hence, was void. 53 Cal. App.3d at 133, 125 Cal.Rptr. at 513. The court, therefore, ruled that permissive users would be entitled to coverage in the same amount as that specified by the policy for the named insured. See also Globe Indemnity Co. v. Universal Underwriters Ins. Co., 201 Cal.App.2d 9, 17-18, 20 Cal. Rptr. 73, 78-79 (1962). I think arguments can be made both for and against restricting omnibus coverage to minimum statutory limits in cases where a self-insurer is engaged in the business of short-term car rentals.[5] One would need, however, a better record than the one we have here to resolve this question. The record does indicate that the Minnesota Department of Commerce expects a self-insured rental agency to provide liability protection for its lessee-operators, and there is some indication that this coverage can be limited to the statutory minimum.[6] On this record and for this case, I take the following position. The Rental Agency affords protection to its lessee-operators as if it had omnibus coverage. Car rental companies are a special case of self-insurance. The Rental Agency may limit its omnibus coverage at least for lessee-operators to the statutory minimum and it may do this in the rental contract. In this case, however, the Rental Agency went further and attempted to deny all omnibus coverage. This attempt was void.[7] Therefore, left in place for omnibus coverage are the same "limits" for residual liability coverage as for the named insured, see Manley, supra, which in this case is either unlimited or $500,000, depending on how the renter's exclusion is construed. In any event, for the purposes of this case, the Rental Agency is responsible under the stipulation of the parties to pay $155,000. I think the $500,000 self-insured retention refers to residual tort liability, not to first party no-fault benefits, and, therefore, no-fault economic loss benefits are the statutory minimum. KEITH, Chief Justice (concurring). I join in the concurrence of Justice Simonett. *686 TOMLJANOVICH, Justice (concurring). I join in the concurrence of Justice Simonett. NOTES [1] The parties stipulated to damages of $155,000, noting that if the summary judgment decision is reversed, then Altra will pay the statutorily mandated amount, $30,000, and Allstate will pay the limit of its secondary liability, $100,000. Thus, were the summary judgment decision reversed, McClain's estate would be uncompensated for $25,000. [1] The trial court ruled that Altra's self-insurance was primary vis-a-vis Allstate's policy issued to Bridget Begley's parents and affording coverage to Bridget Begley as driver of the rented car. This ruling was not appealed. Altra appeals only the issue of how much of its self-insured retention must be paid on the wrongful death claim before Allstate's policy must pay.

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+ 1 more citation in this opinion.

Johnson v. State Farm Mutual Automobile Insurance Co. · 1998 1 citation

+ 1 more citation in this opinion.

LeBeau v. John Deere Insurance Co. · 1998 2 citations

FACTS LeBeau's daughter was injured in a May 1992 motor vehicle accident in Wisconsin. At the time of the accident, she was a passenger in LeBeau's vehicle, which was insured by John Deere pursuant to the Minnesota no-fault automobile insurance act, Minn. Stat. §§ 65B.41-.71 (1990). The accident occurred when a vehicle owned and operated by Dorothy Larson collided with LeBeau's vehicle. As a result of the accident, LeBeau's daughter injured her nose and incurred a total of $519.32 in medical expenses between May 1992 and November 1994. Larson's insurer paid those medical expenses. In November 1994, a physician recommended that LeBeau's daughter undergo future surgery on her nose. The physician believed the surgery would cost $9,000. LeBeau brought a tort claim against Larson and her insurer. LeBeau agreed to settle the claim for $25,000, and the minor settlement was submitted to the district court for approval. The court approved the settlement and also approved claims by LeBeau's attorneys in the amount of $2,755 for the costs of the settlement, including reasonable attorney fees, thus reducing the net settlement amount to $22,245. In approving the settlement, the court was aware of the recommendation that LeBeau's daughter undergo nose surgery. The release settled all possible claims by LeBeau or his daughter, including claims for future medical expenses. In July 1996, LeBeau's daughter had plastic surgery for her nose. The total cost of the surgery was $8,508.25. LeBeau submitted a claim for the surgery to John Deere, which refused coverage, claiming that the cost of the surgery had been included in the settlement and release, and that LeBeau was seeking a double recovery in violation of the no-fault act. *85 LeBeau sued John Deere, and a trial was conducted on stipulated facts. The district court found that LeBeau would receive an impermissible double recovery if John Deere were to reimburse him for surgery expenses, which were considered by all parties and by the court at the time of the minor settlement. The court recognized that John Deere's subrogation rights had not yet been triggered because John Deere could only assert those rights after it had paid a claim to LeBeau resulting in double recovery. But the court explained that if it were to require John Deere to pay LeBeau's claim, such payment would result in a double recovery, triggering John Deere's subrogation rights and bringing the case again before the court. Therefore, under the narrow facts of this case, and in the interests of judicial economy, the court decided that John Deere was not required to pay LeBeau's claim.