SW Legal studies in Business

Minnesota Law Does Not Govern Insurance Dispute Over Out-of-State Accident
Description Minnesota high court held that, in an accident involving a Minnesota resident who was injured by a Nebraska resident in an accident in Nevada, where both parties had insurance from their respective states, the Nebraska insurer was not subject to Minnesota law with respect to the issue of whether it had to indemnify the Minnesota insurer for the payments it made to its policyholder.
Topic Insurance
Key Words No-Fault Insurance; Indemnity
C A S E   S U M M A R Y
Facts Anderson, a Minnesota resident insured by State Farm, was injured in an accident when he was driving in Nevada and was rear-ended by a truck owned by Hollis Trucking of Nebraska. Hollis was insured by Great SW Legal Casualty, which is licensed to do business both in Minnesota and Nebraska. Under Minnesota's No Fault Act, State Farm paid Anderson's medical expenses and lost wages of $43,000, and then sought indemnity from Great SW Legal. Minnesota law requires insurers to arbitrate such matters, but Great SW Legal refused to submit to arbitration. State Farm sued. Great SW Legal contended that Nevada law, not Minnesota law, governed the matter, so it was not obligated to arbitrate. The trial court held that Minnesota law governed and that Great SW Legal had to indemnify State Farm. The appeals court affirmed. Great SW Legal appealed.
Decision Reversed. Great SW Legal, a Nebraska company, has no duty under the No-Fault Automobile Insurance Act to indemnify State Farm, the Minnesota policyholder's obligor. Out-of-state insurers are protected from the unreasonable burden of adjusting premiums based on the unpredictable likelihood that they will be required to indemnify a Minnesota insurer even where the insured was not involved in an accident in Minnesota and did not contract for a Minnesota insurance policy. The Great SW Legal policy was issued in Nebraska to a policyholder involved in an accident in Nevada. Minnesota law does not govern the matter. Furthermore, had the entire matter occurred in Minnesota, under the no-fault rule, Great SW Legal would not have had to indemnify State Farm.
Citation State Farm Mutual Automobile Insurance Co. v. Great SW Legal Casualty Co., 623 N.W.2d 894 (Sup. Ct., Minn., 2001)

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