Does an injured passenger, riding in someone else’s vehicle, have a right to underinsured motorist coverage from their own policy depending upon the amount of passengers in the occupied vehicle?
According to the latest opinion from the Minnesota Supreme Court to interpret the No-Fault Act, the number of passengers in the occupied vehicle may play a role in determining whether an injured passenger can collect from their own UIM policy. In Sleiter v. American Family Ins. Co., ___ N.W.2d ___, A13-1596, (Minn. Aug. 5, 2015), the Court determined that the Minnesota No-Fault Act was ambiguous regarding a provision governing the availability of UIM benefits and reversed the Minnesota Court of Appeals.
In Sleiter, the Court grappled with the meaning of a provision of Minn. Stat. §65B.49, subd. 3a(5), a provision of the No-Fault Act which provides for “excess insurance protection” when the injured party is occupying a vehicle for which they are not insured. This “excess” coverage is afforded by a policy separately insuring them. The Court addressed how the limitations on this excess insurance operate. Specifically, the Court looked at whether access to their own UIM coverage is determined by the “coverage available” as denominated by the UIM policy covering the occupied vehicle or the amount of money actually received by or available to the injured party. The Court found that this last phrase was ambiguous and resolved the ambiguity in favor of the insured.
The facts of this case help to explain the Court’s decision. The Appellant was one of more than a dozen injured school children on a school bus that was struck by an at-fault driver of a separate motor vehicle on February 19, 2008. The Appellant’s damages were calculated by a special master to be $140,000. His pro rata share of the at-fault vehicle’s policy was $1,600.33 and his share of the $1,000,000 UIM policy covering the bus was $34,543.70. This left a substantial gap between damages and recovery. As a result the boy sought recovery through his family’s UIM policy of $100,000. Unfortunately, as determined by the trial court, because the family’s policy did not exceed the bus’s policy, he could not recover. This was the understanding regarding the operation of Minn. Stat. §65B.49, subd. 3a(5), as affirmed by the Court of Appeals, until the instant decision.
The Minnesota Supreme Court determined that because the “coverage available” to the appellant from the occupied vehicle’s policy, namely $34,543.70, was less than the UIM coverage on his family vehicle’s policy, the appellant was entitled to collect against it to satisfy the remainder of his damages. The Court specifically departed from its decision in Schons v. State Farm Mut. Auto. Ins. Co., 621 N.W. 743 (Minn. 2001) because of the particular facts of this case. Here, unlike in Schons, the “coverage available” was unknown at the time of the incident because availability was determined, at least in part, by the large number of injured persons in the occupied vehicle and their respective damage claims as determined by the special master.
Going forward, insurers need to be watchful for instances involving multiple injured parties in the occupied vehicle when their own insured attempts to collect based upon a personal auto policy’s UIM coverage. It may very well be, however, that such payment is not due until after a firm determination is made of the pro rata share from the occupied vehicle’s UIM coverage.
If you have any questions about underinsured motorist coverage or any other portion of the Minnesota No-Fault Act, please feel free to call or e-mail any one of our many experienced attorneys – www.hansendordell.com / 651-482-8900.