Minnesota Statute of Limitations for Excess Uninsured Motorist (UM) Coverage starts on the Date of the Accident.

The Minnesota Supreme Court recently held that a claim for excess UM coverage under the Minnesota No-Fault Act accrues or begins to run on the date of the accident if the driver did not have insurance at the time of the accident.  The case, Hegseth v. American Family Mutual Insurance, — N.W.2d —, No. A14-1189 (Minn. Mar. 23, 2016), has important implications for accidents involving uninsured motor vehicles:

1. A plaintiff has six years from the date of the accident to commence a lawsuit against both primary and excess UM insurers;
2. Such a plaintiff may commence suit against the primary or the excess UM insurers anytime within six years of the date of the accident; and
3. A lawsuit filed against an excess UM insurer more than six-years after the accident is outside the statute of limitation and must be dismissed.

The facts of Hegseth are straightforward.  On March 30, 2007, Jamy Hegseth was a passenger in a vehicle driven by another person when that vehicle and a semi-truck were involved in an accident.  The semi-truck fled the scene.  As a result of her injuries, Hegseth sought UM benefits from two policies: a policy issued by West Bend Insurance covering the vehicle she occupied, and an American Family policy coverning her own vehicle. See Minn. Stat. § 65B.43, subd. 18 (UM benefits available for injuries sustained from accidents involving uninsured motor vehicles and hit-and-runs).  The West Bend policy provided $50,000 in UM coverage, and the American Family policy provided $100,000 in UM coverage.

On June 14, 2012, Hegseth settled her claim for primary UM benefits with West Bend for the UM policy limit of $50,000.  Thereafter, Hegseth demanded American Family pay her excess UM benefits of $50,000, the maximum amount available from the excess policy. See Sleiter v. Am. Family, 868 N.W.2d 21, 28 (Minn. 2015).  American Family denied the claim, contending Hegseth was fully compensated.

On July 9, 2013, Hegseth commenced a lawsuit seeking excess UM benefits from American Family. American Family moved for summary judgment on the ground that the excess UM claim was barred by the 6-year statute of limitations for contract actions in Minn. Stat. § 541.05, subd. 1(1).  The district court granted the motion, concluding that Hegseth’s claim had accrued over 6 years earlier, on the date of the accident.  The court of appeals affirmed.  On appeal, Hegseth argued that the resolution of the primary UM claim is a condition precedent to the assertion of an excess UM claim, so that the excess UM claim would only become ripe when the primary UM claim was resolved.

The Minnesota Supreme Court disagreed, holding that for statute of limitations purposes, primary and excess UM claims start at the same time: on the date of the accident.  Resolution of a primary UM claim is not a condition precedent to seeking excess UM coverage.  Put differently, a plaintiff is not required to first resolve the primary UM claim before the excess UM claim becomes ripe.  The practical implications are twofold: (1) a claimant may bring an action against the primary and excess UM insurer at the same time; and (2) there is no distinction between the primary and excess UM claims for statute of limitations purposes.

Justice Lillehaug, in a concurring opinion, noted:

Today the court announces, in no uncertain terms, that a claim made in good faith against an excess UM insurer is fully ripe as of the date of the accident. The court thereby gives clear notice to excess UM insurers that they may no longer contend that injured parties’ claims to excess coverage are legally premature. Now injured parties may press excess UM insurers to join primary UM insurers at the settlement table, upon pain of lawsuit.

We will continue to monitor decisions effecting UM coverage.  If you have any questions concerning UM coverage or civil litigation in general, please contact Bob Kuderer, Greg Kuderer, Matt Johnson, or Tom Brock.