There are two principal viewpoints on when a UM/UIM claim accrues for purposes of triggering a limitations period. The majority view holds that the accrual date is triggered upon the insurance company’s breach of the insurance contract as opposed to the date of the accident. The following states follow this viewpoint: Alaska, Arizona, Arkansas, California, Delaware, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, Oklahoma, Oregon, Rhode Island, Texas, Washington and West Virginia. See Steven Plitt and Jordan R. Plitt, Practical Tools for Handling Insurance Cases (Thomson Reuters 2011, 2015 Supplement), § 11:34, p. 98 (citing cases).
A minority of courts have adopted a tort statute of limitations for accrual focusing on the fact that notwithstanding the contractual nature of the agreement between the parties, UM and UIM claims are essentially claims for tort committed by the uninsured or underinsured motorist. Because no liability can be imposed upon the insurer unless the elements of the tort are established, these courts find that the limitation period applied to tort actions should control and, therefore, use a two-year tort accrual trigger. The following states have adopted the date of accident accrual trigger: Colorado, Florida, Georgia, Louisiana, Michigan, New Jersey and Ohio. Plitt and Plitt, Practical Tools for Handling Insurance Cases (2015 Supplement) § 11:34, p. 99 (citing cases).
The Minnesota Supreme Court recently held, as a matter of first impression, that all UM claims in Minnesota accrue on the date of the accident. In Hegseth v. American Family Mut. Ins. Group, 2016 WL 1128420, 877 N.W.2d 191 (Minn. 2016), the Minnesota Supreme Court was faced with the question of when an excess UM claim accrued for purposes of presenting a UM claim under Minnesota law. Under established Minnesota law, the Court had held that a claim for UM benefits accrued on the date of the accident. See Weeks v. American Family Mut. Ins. Co., 480 N.W.2d 24, 26 (Minn. 2009). The Court premised its decision in Weeks on the fact that a cause of action for UM benefits was governed by contract principles, but also presented tort aspects because liability under the coverage was determined by tort law. Because the liability of the uninsured motorist, rather than the existence of coverage under the insurance policy, was the underlying substantive issue of a UM claim, the Court found that a cause of action for UM benefits accrued when the accident occurred.
In Oanes v. Allstate Ins. Co., 617 N.W.2d 401 (Minn. 2000), the Supreme Court considered whether a UIM claim accrued on the date of the accident or at a later time. In Oanes, the Court held that a UIM claim accrued under Minnesota law on the date of settlement with or judgment against the tortfeasor. This resolved a perceived paradox that existed in Minnesota case law where, on the one hand insureds were required to bring UIM claims within six years of the accident while, on the other hand, a separate line of cases established that the resolution of the UIM claim against the tortfeasor was a condition precedent to the assertion of a UIM claim. This paradox made it possible for the statute of limitations to expire on a UIM claim before it was known whether the tortfeasor was actually underinsured and, therefore, whether a UIM claim could be brought.
In Hegseth, the Court addressed excess uninsured motorist coverage. The Court found that the date of accident accrual rule afforded injured parties the maximum flexibility available in proceeding with their UM claims. Under this rule, a party with viable claims for both primary and excess UM benefits could choose one of several paths to recover those benefits. First, the injured person could choose to assert the claims sequentially or simultaneously. Second, the injured party could bring separate proceedings to establish entitlement to UM benefits. Third, the injured party could join both the primary and excess insurers in a single proceeding. According to the Court, a determination that an excess UM claim was not ripe until resolution of the primary claim would eliminate that flexibility. Additionally, utilizing a date of accident accrual rule best to serve the purpose of Minnesota’s no fault act, see Minn. Stat. §§ 65B.41-.71 (2014). A requirement that claimants bring primary and excess UM claims sequentially would undermine the no-fault act’s purpose of assuring prompt payment of benefits, speedy administration of justice and work against easing the burden of litigation on the courts in Minnesota. Finding that the exhaustion of the primary UM claim was the trigger for excess UM coverage would delay compensation for injured individuals and would create the potential for duplicative litigation.
The Minnesota Supreme Court concluded that claims for excess UM benefits accrue on the date of the accident. The resolution of the primary UM claim was not a condition precedent to the assertion of an excess UM claim. A claim for excess UM benefits could be brought at any time after the date of the accident if the claimant had excess UM coverage together with a good faith basis to believe that the amount of damages sustained exceeded the primary UM coverage available.
The Hegseth ruling together with the Weeks ruling establishes that all UM claims in Minnesota accrue on the date of the accident.
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