OPINION RUSSELL A. ANDERSON, Justice. Bradford Lynch, individually and as parent and natural guardian of Ian Lynch, brought this action to collect underinsured motorist (UIM) benefits under an automobile insurance policy issued to him by appellant American Family Mutual Insurance Company. The district court granted summary judgment for American Family, ruling that while the insurance policy does not exclude UIM benefits in this case, Lynch improperly seeks to convert UIM benefits into liability benefits. The court of appeals reversed, holding that the terms of the American Family policy permit recovery of UIM benefits and that no improper conversion of UIM benefits into liability benefits would occur. We now affirm but on different grounds, holding that Lynch seeks benefits that in effect convert UIM coverage into liability coverage, but that the Minnesota No-Fault Automobile Insurance Act (No-Fault Act) does not prohibit this coverage conversion and thus the explicit terms of the American Family policy that permit UIM benefits in these circumstances are valid. Kathleen Lynch borrowed a van from her neighbor, Lori Coleman, and while driving lost control and collided with an oncoming vehicle driven by Sandra Vogt. Ian Lynch, Kathleen Lynch's son, was a passenger in the van and was severely injured in the accident. *184 Coleman insured the van with a policy issued by Western National Mutual Insurance Company. The policy contained a $100,000 per person limit on liability coverage for bodily injury and a $100,000 per person limit on UIM coverage. Both Kathleen and Ian Lynch were "insured persons" under two automobile policies that American Family issued to Bradford Lynch, Kathleen Lynch's husband. The American Family policies contained a $100,000 per person limit on liability coverage for bodily injury and a $100,000 per person limit on UIM coverage for bodily injury. Ian brought a negligence action against Kathleen Lynch, Vogt, Coleman, and Gold Key Leasing, which leased the van to Coleman. The parties proceeded to voluntary binding arbitration on the issue of liability only and an arbitration panel found that Kathleen Lynch was solely liable for the accident. Gold Key was dismissed from the suit on the grounds that it had no liability under its lease with Coleman. Both Western National and American Family paid their liability limits of $100,000, but Ian's damages from the accident exceeded $200,000. The Western National policy excludes from its definition of underinsured motor vehicle any vehicle owned by or available for the regular use of the insured. Because the van fell within this "owned-vehicle" exclusion, UIM benefits were not available to the Lynches under the Western National policy. The Lynches then sought and were denied UIM benefits under their own policy with American Family. The American Family policy provides the following in its UIM coverage endorsement: We will pay compensatory damages for bodily injury to an insured person who is legally entitled to recover from the owner of [sic] operator of an underinsured motor vehicle. The bodily injury must be sustained by an insured person and must be caused by accident and arise out of the use of the underinsured motor vehicle. The policy further provides that "[i]nsured person means: * * * [y]ou or a relative" and defines an underinsured motor vehicle as "a motor vehicle which is insured by a liability bond or policy at the time of the accident which provides bodily injury liability limits less than the limits of liability of this Underinsured Motorist Coverage."[1] Like the Western National policy, the American Family policy contains a standard "owned-vehicle" exclusion that excludes from the definition of "underinsured motor vehicle" any vehicle "[o]wned by or furnished or available for the regular use of you or any resident of your household." Because the van was not owned by or available for the regular use of the Lynches, the American Family owned-vehicle exclusion does not prevent UIM coverage here. American Family does not dispute that the policy by its terms allows Ian Lynch to recover UIM benefits for damages he suffered as a consequence of the accident. American Family nevertheless denied UIM coverage on the basis that payment of UIM benefits would convert the UIM coverage into liability coverage, because *185 the UIM benefits would compensate the Lynches for damages caused by Kathleen Lynch's negligence, for which American Family had already paid liability benefits. Relying on a series of cases from this court, American Family argued that such coverage conversion is prohibited by the No-Fault Act and therefore UIM coverage was not available to the Lynches despite the language of the policy to the contrary. Bradford Lynch then brought this action to compel American Family to pay UIM benefits. On cross-motions for summary judgment, the district court ruled for American Family on the grounds that Lynch's claim for UIM benefits was in reality a claim for additional liability coverage and would therefore impermissibly convert less expensive UIM coverage to more expensive liability coverage. The court of appeals reversed, concluding that there was no prohibited coverage conversion in these circumstances. The court reasoned that the Lynches seek UIM benefits from the American Family policy not based on the underinsured status of Kathleen Lynch, the driver, but based on the underinsured status of the borrowed van. In other words, it was the failure of the owner of the van to purchase adequate liability insurance that gives rise to the UIM claim and there is therefore no impermissible coverage conversion. We granted review because this case presents two aspects of the coverage conversion issue not addressed in our previous cases. First, would payment of UIM benefits by American Family in the circumstances of this case result in the conversion of the UIM coverage into liability coverage? Second, if the answer to the first question is yes, does the No-Fault Act prohibit that coverage conversion so that UIM coverage is precluded even though the terms of the insurance policy provide for coverage in these circumstances? In an appeal from a summary judgment where there are no genuine issues of material fact, the reviewing court determines whether the lower court erred in its application of the law. Scheibel v. Ill. Farmers Ins. Co., 615 N.W.2d 34, 36-37 (Minn.2000). The issues presented on appeal are legal, and therefore subject to de novo review. Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998). A basic precept of insurance contract law is that the extent of the insurer's liability is governed by the contract into which it entered as long as the policy does not omit coverage required by law and does not violate applicable statutes. Am. Family Mut. Ins. Co. v. Ryan, 330 N.W.2d 113, 115 (Minn.1983); Bobich v. Oja, 258 Minn. 287, 294, 104 N.W.2d 19, 24 (1960). Neither party argues that the American Family policy omits coverage required by law. Moreover, American Family concedes that its UIM endorsement provides coverage in these circumstances. Accordingly, American Family can deny UIM coverage only if we determine that providing coverage violates the No-Fault Act. American Family argues that to enforce the UIM endorsement as written would result in coverage conversion that does violate the No-Fault Act. As noted, we must first determine if there is coverage conversion in this situation and, if so, decide whether it is prohibited by the Act. Before addressing those questions, a review of our cases concerning coverage conversion will be helpful. We first addressed the concept of coverage conversion in Myers v. State Farm Mut. Auto. Ins. Co., 336 N.W.2d 288 (Minn.1983). Myers involved a UIM claim by heirs of a passenger killed in a single-car accident. The trustee for the heirs *186 collected $25,000 in liability coverage from the negligent driver's insurer and $25,000 from the car owner's liability insurer, State Farm, and then sought further payment based on the underinsured motorist coverage provided in the State Farm policy.[2]Id. at 289. The policy, however, excluded from the definition of "underinsured motor vehicle" any vehicle owned by or available for the regular use of the insured or any family member. Id. at 290. Because the named insured owned the car in which Myers was killed, State Farm asserted that this owned-vehicle exclusion precluded UIM benefits. Id. The heirs argued that the owned-vehicle exclusion was invalid as contrary to the No-Fault Act because it barred UIM benefits mandated by the Act. Id. at 291. We held that the owned-vehicle exclusion did not violate the No-Fault Act and could validly be applied to bar UIM coverage, because the effect of the exclusion was to prevent a conversion of UIM coverage into liability coverage not contemplated by the Act. We explained: Underinsured motorist coverage is first-party coverage and, in that sense, the coverage follows the person not the vehicle. Here, however, the decedent passenger's heirs have already collected under the liability coverage of the insurer of the Stein car. To now collect further under the same insurer's underinsured motorist coverage would be to convert the underinsured motorist coverage into third-party insurance, treating it essentially the same as third-party liability coverage. The policy definition * * * properly prevents this conversion of first-party coverage into third-party coverage. Id. at 291. We next addressed the UIM-to-liability coverage conversion issue in Meyer v. Ill. Farmers Ins. Group, 371 N.W.2d 535 (Minn.1985). Meyer was injured in a single-car accident in which she was a passenger and her husband the driver. Id. at 536. Although she received the full liability limits from the vehicle's insurer, because she was not fully compensated for her injuries, Meyer also sought underinsured motorist benefits from the insurer. Id. The policy contained no provision for UIM coverage, but because the insurer had not made the mandatory offer of UIM coverage then required by the No-Fault Act, UIM coverage was implied as a matter of law under Minn. Stat. § 65B.49, subd. 6(e) (1974). Meyer, 371 N.W.2d at 536. We held that UIM coverage would not be imposed in a one-vehicle accident under the same policy that insured the vehicle for liability coverage because: [t]he statute at issue requires that underinsured coverage be offered to compensate damages that are uncompensated because they exceed "the residual bodily injury liability limit of the owner of the other vehicle." From this language, it is apparent that the statute contemplates that a vehicle upon which underinsured benefits are to be paid is not to be the same vehicle that sets the limits of liability coverage. Id. (emphasis in original) (quoting Minn. Stat. § 65B.49, subd. 6(e)). The court pointed out that its interpretation of the "other vehicle" limitation in UIM coverage was "consistent with the position and purpose of underinsurance in the general scheme of insurance coverage." Id. at 537. The court explained that UIM and liability coverage are intended to insure different risks and that

+ 5 more citations in this opinion.

State Farm Mutual Automobile Insurance Co. v. Great West Casualty Co. · 2001 2 citations

+ 2 more citations in this opinion.

Schons v. State Farm Mutual Automobile Insurance Co. · 2001 28 citations

+ 28 more citations in this opinion.

American Family Insurance Group v. Schroedl · 2000 2 citations

+ 2 more citations in this opinion.

Becker v. State Farm Mutual Automobile Insurance Co. · 2000 15 citations

+ 15 more citations in this opinion.

American National Property & Casualty Co. v. Loren · 1999 2 citations

We conclude that the ANPAC policy provision excluding UIM coverage for an insured “[occupying or struck by a motor vehicle owned by * ⅜ ⅜ a [resident] relative” violates Minn. Stat. § 65B.49, subd. 3a. Therefore, we answer the certified question in the affirmative.

Ka Ying Vue v. State Farm Insurance Companies · 1998 4 citations

+ 4 more citations in this opinion.

Lobeck v. State Farm Mutual Automobile Insurance Co. · 1998 2 citations

+ 2 more citations in this opinion.

Weeks v. American Family Mutual Insurance Co. · 1998 1 citation

+ 1 more citation in this opinion.

Hertz Corp. v. State Farm Mutual Insurance Co. · 1998 24 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.

+ 21 more citations in this opinion.

Gusk v. Farm Bureau Mutual Insurance Co. · 1997 2 citations

+ 2 more citations in this opinion.

Allied Mut. v. Western Nat. Mut. · 1996 2 citations

+ 2 more citations in this opinion.

Allied Mutual Insurance Co. v. Western National Mutual Insurance Co. · 1996 2 citations

+ 2 more citations in this opinion.

Wintz v. Colonial Ins. Co. of California · 1996 2 citations

+ 2 more citations in this opinion.

Dean v. American Family Mutual Insurance Co. · 1995 1 citation

Minn. Stat. § 65B.49, subd. 4a (1994).

Cantu v. Atlanta Casualty Companies · 1995 2 citations

IT IS HEREBY ORDERED that the petition of the Atlanta Casualty Companies for further review of the court of appeals’ decision filed June 6, 1995 be, and the same is, granted for the sole purpose of reversing *292 that decision and reinstating the summary judgment entered in favor of the petitioner in the Kandiyohi County District Court. The record demonstrates that after the insured had relocated to Minnesota, the automobile insurance policy had not been “renewed, delivered or issued for delivery, or executed in the state,” events which would have required this insurer to provide uninsured motorist coverage to a state resident. See Minn. Stat. § 65B.49, subd. 3a(l) (1992). The cumulative analysis of AMCO Ins. Co. v. Lang, 420 N.W.2d 895 (Minn.1988); and Hauer v. Integrity Mut. Ins. Co., 352 N.W.2d 406 (Minn.1984) requires the conclusion that Minn. Stat. § 65B.49, subd. 3a(l) (1992) is inapplicable.

Jepson v. General Casualty Co. of Wisconsin · 1994 1 citation

+ 1 more citation in this opinion.

Lessard v. Milwaukee Insurance Co. · 1994 3 citations

+ 3 more citations in this opinion.

Carlson v. Mutual Service Insurance · 1993 1 citation

+ 1 more citation in this opinion.

Neuman v. State Farm Mutual Automobile Ins. Co. · 1992 2 citations

+ 2 more citations in this opinion.

Meister v. Western National Mutual Insurance · 1992 2 citations

+ 2 more citations in this opinion.

McClain v. Begley · 1991 4 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.

+ 2 more citations in this opinion.

Roering v. Grinnell Mutual Reinsurance Co. · 1989 35 citations

+ 35 more citations in this opinion.

Thommen v. Illinois Farmers Insurance Co. · 1989 6 citations

+ 6 more citations in this opinion.

Broton v. Western National Mutual Insurance Co. · 1988 18 citations

+ 18 more citations in this opinion.

Petrich Ex Rel. Lee v. Hartford Fire Insurance Co. · 1988 1 citation

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Schmidt v. Midwest Family Mutual Insurance Co. · 1988 1 citation

+ 1 more citation in this opinion.

Johnson v. American Family Mutual Insurance Co. · 1988 2 citations

+ 2 more citations in this opinion.

Osterdyke v. State Farm Mutual Automobile Insurance Co. · 1988 7 citations

+ 7 more citations in this opinion.

AMCO Insurance Co. v. Lang · 1988 5 citations

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Hanson v. American Family Mutual Insurance Co. · 1987 7 citations

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Jablonski v. Mutual Service Casualty Insurance Co. · 1987 3 citations

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Johnson v. Urie · 1987 7 citations

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Dorn v. Liberty Mutual Fire Insurance Co. · 1987 2 citations

+ 2 more citations in this opinion.

Lewis v. Pennsylvania General Insurance Co. · 1986 18 citations

+ 18 more citations in this opinion.

Murphy v. Milbank Mutual Insurance Co. · 1986 6 citations

+ 6 more citations in this opinion.

Hoeschen v. South Carolina Insurance Co. · 1985 1 citation

+ 1 more citation in this opinion.

Western National Mutual Insurance Co. v. State Farm Insurance Co. · 1985 4 citations

KELLEY, Justice. Dorothy Archiletti owned an automobile(s) licensed, garaged, and insured in Missouri. State Farm Insurance Company (State Farm) insured the Archiletti vehicle(s) in Missouri, a state which does not have an automobile no-fault reparations act. State Farm was licensed to write automobile insurance policies in Minnesota, but did not collect any premiums for no-fault coverage on the Archiletti policy. On September 30,1980, Dorothy Archiletti sustained personal injuries in a motor vehicle accident that occurred in Minnesota. At the time of the accident, she was an occupant of a motor vehicle licensed and garaged in Minnesota and insured by Western National Mutual Insurance Company (Western). Western paid Archiletti basic economic benefits pursuant to the Minnesota No-Fault Act.1 In an attempt to recoup these payments, Western commenced this subrogation action against State Farm. Western claimed that State Farm’s obligation took precedence over Western’s obligation, at priority level 4(a) of Minn. Stat. § 65B.47, because State Farm was licensed to sell automobile insurance in Minnesota. The trial court agreed and granted summary judgment. The court of appeals affirmed. Western National Mutual Insurance Co. v. State Farm Insurance, 353 N.W.2d 169 (Minn.App.1984). We reverse. Prior to the accident, Dorothy Archiletti traveled to Minnesota from Missouri by commercial airline and left her automobile(s) at her residence. She sustained her injuries in the Minnesota accident while riding as a passenger in a vehicle owned by John and LaVonne Wefel. The Wefels are Minnesota residents. The trial court and a divided court of appeals held that the Minnesota No-Fault Act obligates State Farm to provide no-fault basic economic benefits to its Missouri insured. Both courts reached this conclusion, notwithstanding that: (1) the insured automobile(s) was not in Minnesota at the time of the accident; (2) Missouri, where the Archiletti vehicle(s) was garaged and insured, did not have a no-fault reparations act; and (3) Archiletti never paid a premium for no-fault benefits. Integral to both courts’ reasoning was the assumption *443that Petty v. Allstate Ins. Co., 290 N.W.2d 763 (Minn.1980) limited construction of Minnesota’s “certification” statute, Minn. Stat. § 65B.50 (1982). See Western National Mutual Ins. Co., 353 N.W.2d at 171. Both parties, on appeal, rely on the Petty decision. Western contends, and a majority of the court of appeals’ panel agreed, that the Petty decision stands for the proposition that the presence of the out-of-state insured’s vehicle in the state is insignificant with respect to an out-of-state insurer’s obligation. On the other hand, State Farm asserts that the Petty opinion’s reference to the presence of the Pettys’ insured vehicle was determinative. In Petty, Mr. and Mrs. Petty drove one of their two automobiles from California into the State of Minnesota. Petty, 290 N.W.2d at 764. While in Minnesota, the two California residents were injured in an automobile accident within this state. At the time of the accident, however, the Pet-tys were occupants of a Minnesota vehicle owned by the Pettys’ daughter. The Pet-tys’ two automobiles were registered and garaged in California and were insured by Allstate under a policy written and issued in California. The Pettys did not pay no-fault premiums because California at that time did not have a no-fault reparations act. Under those circumstances, we held that the Pettys could stack no-fault benefits under Minnesota law. Id. at 766. Our holding that a nonresident insured could stack out-of-state coverage does not compel acceptance of either argument now before us. The sole issue presented in Petty was “whether nonresident owners of more than one vehicle insured in a state which does not provide no-fault benefits are entitled to stack benefits under applicable Minnesota statutes.” Id. at 765. The initial question of Allstate’s obligation to pay no-fault benefits was not there at issue. Indeed, as we stated in Petty, “Allstate acknowledged its obligation to provide nonresident policyholders with the minimum security as provided by Minn. Stat. § 65B.49 (1978) (emphasis added).” Id.2 Moreover, unlike the present situation, the Pettys had driven one of their vehicles into the State of Minnesota and it was physically present in Minnesota at the time of the accident. Allstate’s concession in Petty is irrelevant in addressing the issue in the present appeal.3 Having found that the Petty decision does not compel a conclusion either way, resolution of the issue in the case depends upon the interpretation of Minn. Stat. § 65B.50 (1984).4 Western, relying *444solely on Minn. Stat. § 65B.50, Subd. 1 (1984), claims that all insurers licensed to write automobile insurance in Minnesota agree, as a condition of doing business in Minnesota, to provide no-fault benefits to out-of-state insureds involved in Minnesota accidents. It claims that subdivision 2 of the statute does not contradict its contention because subdivisions 1 and 2 deal with two distinct situations. In its view, subdivision 1 has the effect of creating a continuous implied coverage once a licensed insurer’s nonresident insured comes into the State of Minnesota. It further maintains that subdivision 2 merely provides that nonlicensed insurers must provide no-fault benefits only when a vehicle it insured comes within the borders of Minnesota. While conceding that the legislature cannot govern nonresident coverage of vehicles not in Minnesota, Western argues that the required nonresident coverage is a separate obligation imposed, having no relevance to obligations imposed upon licensed insurers under Minn. Stat. § 65B.50, subd. 1. It attempts to buttress this argument by noting that Minn. Stat. § 65B.50 only references Minn. Stat. § 65B.49, which only deals with requirements imposed upon insurers. On the other hand, State Farm contends that resolution of the issue depends upon a close review of several interrelated provisions in the No-Fault Act. It argues that both subdivisions of Minn. Stat. § 65B.50 support its position that the out-of-state vehicle must be in Minnesota before the out-of-state insurer is obligated to provide no-fault benefits. It contends this interpretation is reasonable because it supports the policy of the No-Fault Act. For example, in this case State Farm’s insured is covered by the insurance covering the vehicle involved in the accident, Minn. Stat. § 65B.47(4)(b) — coverage for which Western collected a premium, but for which State Farm did not.5 State Farm further notes that Minn. Stat. § 65B.50, subd. 1, references section 65B.49 with respect to the scope of benefits that must be provided to nonresident policyholders including a provision requiring insurers to provide nonresident basic economic loss benefits. Moreover, State Farm notes that section 65B.49 provides that subdivision 1 is “subject to the provisions of section 65B.41 to 65B.71.” One of those latter provisions is Minn. Stat. § 65B.48(1), the compulsory reparation security section, which plainly requires a nonresident to maintain no-fault coverage only while his vehicle is within the state. Thus, State Farm maintains that the plain language of the certification statute, and the corresponding statutes to which it refers, indicates that the legislature did not intend to require no-fault insurance on a nonresident’s automobile not being used in Minnesota. Accordingly, it argues that the general rule that no-fault benefits “follow the individual” expressed in Minn. Stat. § 65B.47(4)(a) does not here apply. Rather, it claims, the applicable priority level is Minn. Stat. § 65B.47(4)(b) — the security covering the vehicle involved in the accident. Our examination of the applicable sections of the No-Fault Act confirms that the statutory language does not explicitly address the issue in this case. We, therefore, proceed to ascertain the intent of the legislature by considering, inter alia, the consequences of a particular interpretation. See Minn. Stat. § 645.16(6) (1984). In doing so, we conclude the legislature did not intend the consequences that would ensue should the construction urged by Western be sustained. Western’s proposed interpretation would impose on an insurer of vehicles owned and garaged by nonresidents in foreign states an unreasonable and economically heavy burden of being compelled to attempt to adjust premiums to reflect the highly unpredictable likelihood that the nonresident might be entitled to benefits under the Minnesota No-Fault Act even if they entered this state by public transportation having no nexus with the operation of the insured vehicle. *445The public policy reflected in the No-Fault Reparations Act impliedly recognizes that it is advantageous to Minnesota automobile owners to have the benefit of competition for premium costs and coverages from as broad a pool of automobile insurers as possible. To adopt Western’s proposed interpretation would tend to discourage those out-of-state insurers, licensed to do business in Minnesota,, from continued licensure and certification if the number of policies written in Minnesota was small, thereby reducing the pool. This result would be antipathetic to the goals of the No-Fault Act. See, e.g., Nationwide Ins. Co. v. Battaglia, 410 A.2d 1017 (Del. 1980). State Farm’s construction not only furthers the overall purpose of our No-Fault Act, but is also more consistent with related no-fault provisions. Its contention is consonant with other sections of the Act, in contradistinction to Western’s construction, which essentially views Minn. Stat. § 65B.50 in isolation. We find it important and persuasive to look to related provisions in construing our No-Fault Act.6 Therefore, we conclude that physical presence of a nonresident’s automobile within the state, at the time the automobile accident giving rise to the nonresident claim occurred, is a prerequisite for imposing liability on the nonresident’s Minnesota licensed automobile insurer for economic loss benefits under Minn. Stat. § 65B.47. Because no automobile owned by the Archi-lettis was in the state at the time Mrs. Archiletti sustained her injuries, economic losses sustained by her in the accident were compensable from the insurer of the Minnesota vehicle in which she was riding. That was Western. It follows that Western’s subrogation action fails. Reversed. COYNE, J., took no part in the consideration or decision of this case. I dissent. I simply cannot follow the logic of the majority opinion. It attempts to justify the decision on the grounds of *446our case of Petty v. Allstate Insurance Company, 290 N.W.2d 763 (Minn.1980). I cannot agree. It seems Petty is directly in point. In Petty, two California residents were injured in a Minnesota automobile accident. There were two vehicles registered in California and insured by. Allstate, written and issued in California. One of those California vehicles was present in Minnesota, but was parked and was not in anyway involved in the collision. The insureds were driving a Minnesota vehicle owned by their daughter at the time of the injury. The majority decision appears to make a distinction between having a vehicle insured in another state in Minnesota at the time of the accident and not having a vehicle here in the state. I will present merely one example of how ridiculous that distinction is. Appellant admits that if the claimants here had had one of their vehicles in Minnesota at the time of the accident, even though that vehicle was parked and was in no way involved in the collision, the policy on that vehicle would provide protection to Dorothy Archiletti, who sustained the personal injuries here. Let us suppose, for example, that the people she was visiting, John and LaVonne Wefel, lived near the Minnesota-Iowa border. Let us suppose that the Archilettis allowed one of the Wef-els’ friends to drive the Archiletti vehicle while Dorothy Archiletti was in the Wefel vehicle, as she was in this case. If one of the Wefels’ friends driving the Archiletti vehicle happened to be in Minnesota at the time of the accident and the injury to Dorothy Archiletti, it is admitted that the Archi-letti insurance policy written by State Farm would cover Dorothy Archiletti. Yet, if 5 minutes before that, even though the vehicle had been in Minnesota, it had crossed the line into Iowa, there’d be no such coverage. I simply cannot understand why it makes any difference whether they should be recovering in the two instances. That is why this court has historically held that insurance follows the person, not the vehicle. Following the vehicle could lead to ridiculous results as I think the result is in this case. That is why I would affirm both the trial court and the Minnesota Court of Appeals in this case.

+ 2 more citations in this opinion.

Beukhof v. State Farm Automobile Insurance Co. · 1985 7 citations

+ 7 more citations in this opinion.

Meyer v. Illinois Farmers Insurance Group · 1985 6 citations

+ 6 more citations in this opinion.

Sobania v. Integrity Mutual Insurance Co. · 1985 3 citations

+ 3 more citations in this opinion.

Arbitration of Fryer v. National Union Fire Insurance Co. · 1985 1 citation

+ 1 more citation in this opinion.

Sorbo v. Mendiola · 1985 3 citations

+ 3 more citations in this opinion.

Hauer v. Integrity Mutual Insurance Co. · 1984 3 citations

+ 3 more citations in this opinion.

Burgraff v. Aetna Life & Casualty Co. · 1984 8 citations

+ 8 more citations in this opinion.

Boldt v. State Farm Mutual Automobile Insurance Co. · 1984 4 citations

+ 4 more citations in this opinion.

Kashmark v. Western Insurance Companies · 1984 4 citations

+ 4 more citations in this opinion.

Cooper v. Younkin · 1983 1 citation

+ 1 more citation in this opinion.

Schmidt v. Clothier · 1983 6 citations

+ 6 more citations in this opinion.

Frank v. Illinois Farmers Insurance Co. · 1983 2 citations

+ 2 more citations in this opinion.

Yeager v. Auto-Owners Insurance Co. · 1983 2 citations

At trial, Auto-Owners strenuously maintained that Thomas Napier, the independent agent who had sold the insurance to plaintiff John Yeager, had orally explained in detail to Mr. Yeager the availability of optional coverages and that Mr. Yeager had declined to purchase them. The trial court, however, found that the insurer’s agent had not made an adequate offer of the optional coverages and, therefore, pursuant to Minn. Stat. § 65B.49, subd. 6 (1978) (repealed in 1980), added to the garage liability section of Mr. Yeager’s multiperil policy with Auto-Owners, by imposition of law, the additional, optional coverages of $20,000 no-fault medical expense benefits and $100,000 *735 underinsured motorist coverage. In addition, the trial court ordered stacking of coverages as follows: (1) the basic no-fault coverages written in the policy of $20,000 medical expense and $10,000 income loss were stacked seven times for the seven vehicles covered by the policy; (2) the optional medical expense coverage of $20,000 imposed by law for failure to offer to the insured was stacked seven times; and (3) the underinsured motorist coverage of $100,000 imposed by law was likewise stacked seven times.

Randall v. State Farm Mutual Automobile Insurance Co. · 1983 2 citations

+ 2 more citations in this opinion.

Flanery v. Total Tree, Inc. · 1983 1 citation

+ 1 more citation in this opinion.

Milbank Mutual Insurance Co. v. United States Fidelity & Guaranty Co. · 1983 2 citations

+ 2 more citations in this opinion.

Rademacher v. Insurance Co. of North America · 1983 2 citations

+ 2 more citations in this opinion.

Murphy v. Milbank Mutual Insurance · 1982 2 citations

+ 2 more citations in this opinion.

Hastings v. United Pacific Insurance Co. · 1982 2 citations

Plaintiff Richard Hastings was involved in an automobile accident on October 20, 1979, while a passenger in a friend’s automobile, and sustained a serious brain injury. There is no dispute that his injuries far exceed the insurance coverages available on the two involved automobiles. This declaratory judgment action was commenced by plaintiff against defendant United Pacific Insurance Company seeking reformation of the policy of insurance held by plaintiff’s mother, Nancy Hastings Fairfield, to include $400,000 in underinsured motorist coverage. The issue on appeal is whether the trial court erred in concluding that materials mailed by United Pacific did not sufficiently comply with Minn. Stat. § 65B.49, subd. 6(e) (1978) (repealed 1980), and in ordering the reformation of the policy issued by United Pacific to afford coverage in the amount of $400,000.

League General Insurance Co. v. Tvedt · 1982 4 citations

This appeal arises out of a declaratory judgment action brought by plaintiff, League General Insurance Company, to determine its liability for injuries caused by Steven P. Tvedt, the son of its insured, Richard N. Tvedt, to defendant Ronald Dozier. The question presented in whether optional coverages should be read into the Tvedt policy by operation of law on the ground that League General failed to make a mandatory offer of optional coverages as required under Minn. Stat. § 65B.49, subd. 6 (1978) (repealed 1980).

+ 1 more citation in this opinion.

Peterson v. Kludt · 1982 1 citation

+ 1 more citation in this opinion.

State Farm Insurance Companies v. Galajda · 1982 2 citations

+ 2 more citations in this opinion.

Kuchenmeister v. Illinois Farmers Insurance Co. · 1981 2 citations

+ 2 more citations in this opinion.

Feick Ex Rel. Feick v. State Farm Mutual Automobile Insurance Co. · 1981 1 citation

+ 1 more citation in this opinion.

Johnson Ex Rel. Johnson v. St. Paul Insurance Companies · 1981 1 citation

+ 1 more citation in this opinion.

Petty v. Allstate Insurance Co. · 1980 1 citation

+ 1 more citation in this opinion.

DiLuzio v. Home Mutual Insurance Co. · 1980 2 citations

+ 2 more citations in this opinion.

Holman v. All Nation Insurance Co. · 1980 3 citations

+ 3 more citations in this opinion.

Minnesota Court of Appeals

Demitrius Verros v. State Farm Mutual Automobile Insurance Co. · 2025 1 citation

+ 1 more citation in this opinion.

Rodriguez v. State Farm Mut. Auto. Ins. Co. · 2018 1 citation

+ 1 more citation in this opinion.

Bret Hedrington v. American Standard Insurance Company of Wisconsin · 2016 3 citations

+ 3 more citations in this opinion.

Bradley Mordini v. American Family Mutual Insurance Co. · 2016 2 citations

injury of the insured while occupying a motorcycle owned by the insured.” Minn. Stat. § 65B.49, subd. 3(a)(8) (2014). Because no UIM insurance is required for motorcycles,

policy is void pursuant to Minn. Stat. § 65B.49 and therefore the auto policy is to be read

Ronning v. State Farm Mutual Automobile Insurance Co. · 2016 3 citations

+ 3 more citations in this opinion.

Paek Saengkeo v. Minnesota Automobile Assigned Claims · 2016 2 citations

liability coverage. Minn. Stat. § 65B.48, subd. 1; see also Minn. Stat. § 65B.49, subd.

+ 1 more citation in this opinion.

Jon P. Hanbury, individually and as father and natural guardian of Andrew and Nick Hanbury v. American Family Mutual Insurance Company · 2015 3 citations

+ 3 more citations in this opinion.

State Farm Mutual Automobile Insurance Company, (A14-132), (A14-224) v. Angela Mary Lennartson, (A14-132), Katie Foss, (A14-224). · 2014 1 citation

+ 1 more citation in this opinion.

· 2014 1 citation

coverage. Minn. Stat. § 65B.49. “Basic economic loss” coverage is one of them. Id.,

State Farm Mutual Automobile Insurance Co. v. Metropolitan Council · 2014 1 citation

+ 1 more citation in this opinion.

Economy Premier Assurance Co. v. Western National Mutual Insurance Co. · 2013 3 citations