Court Opinion

ID: 9883724
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:14:31.320156+00
Date Added: 2024-06-11T07:48:29.689724
License: Public Domain

NIERENGARTEN, Judge
(dissenting).
I respectfully dissent from the majority opinion insofar as it concludes the Minnesota Insurance Guaranty Association is liable for payment of the insolvent insurer’s obligations on the covered claims without an offset, and that Wondra may assert a claim for underinsured motorist benefits against American Family.
As the majority points out, uninsured and underinsured insurance coverage may apply simultaneously to a single accident and an insured may elect to pursue a claim under either coverage. See Murphy v. Milbank Mutual Insurance Co., 388 N.W.2d 732, 737 (Minn.1986). The majority concludes Wondra has both underinsured coverage and uninsured coverage under his policy with American Family and that he may assert a claim for underinsured benefits from American Family after asserting a liability coverage claim against the Minnesota Insurance Guaranty Association. I disagree.
The American Family policy issued to Wondra affords Wondra underinsured motorist coverage, but expressly excludes underinsured motorist coverage of vehicles insured by an insurance company at the time of the accident but which “becomes insolvent.” Williams was insured by Iowa National Mutual Insurance Company at the time of the accident; the company became an insolvent insurer two years after the accident. Consequently, Wondra’s claims for underinsured motorist benefits are not covered under the underinsured motorist provisions of his American Family policy. However, Wondra does have a valid claim for coverage under the uninsured motorist provisions of his policy because the American Family policy defines an uninsured motor vehicle as a vehicle insured by an insurance company “at the time of the accident but * * * the company * * * becomes insolvent.” Since Williams’ insurer became insolvent, Wondra may assert only a claim for uninsured motorist coverage against American Family.
According to the language of the Minnesota Insurance Guaranty Association Act, Wondra must assert that claim against American Family before he can claim benefits under the act.
Any person having a claim against an insured under any provision in an insurance policy other than a policy of an insurer in liquidation which is also a covered claim, is required to exhaust first any rights under the other policy.
Minn.Stat. § 60C.13, subd. 1 (1986) (emphasis added).
The majority concludes American Family’s definition of underinsured coverage is impermissibly narrow or void because it excludes underinsured coverage when an insurance company becomes insolvent. I do not believe American Family’s definition of underinsurance coverage is impermissi-bly narrow because, as a practical matter, Wondra is afforded up to $50,000 in coverage under either provision and therefore is not deprived of any coverage. If Williams’ insurance company were solvent and paid the limits of its coverage Wondra could have asserted a claim for $50,000 under the underinsured provisions of his American Family policy. Conversely, if Williams’ insurance company were insolvent and paid no benefits Wondra still could assert a claim for $50,000 under the uninsured coverage provisions of his American Family policy. Wondra’s total recovery may differ, but his recovery from American Family is $50,000 in either case. His claim for underinsured coverage benefits, otherwise recoverable under the underinsured motorist provisions of his policy, merely is converted to a claim for uninsured benefits by operation of his insurance policy. Cf. Gudvangen v. Austin Mutual Insurance Co., 284 N.W.2d 813, 815 (Minn.1979) (the automobile insurer was in receivership; the automobile was uninsured for the purposes of the no-fault insurance act because no plan of reparation security was in effect).
*462The majority states Wondra had a $150,-000 insurance pool available to him at the time of the accident and concludes that total pool still should be available under the Minnesota Insurance Guaranty Act. I disagree. The Minnesota Insurance Guaranty Association is deemed the insurer to the extent of the insolvent insurer’s obligations on the covered claims. See Minn.Stat. § 60C.05, subd. 1(a) (1986). The insurance guaranty act was intended to relieve policyholders and claimants from financial losses caused by insurers’ insolvencies. See id. § 60C.02, subd. 2. However, the offset provisions of the act indicate the act is intended as a supplemental source for reparation security and that the association is not necessarily intended to become a primary insurer. See id. § 60C.13, subd. 1 (any amount payable on a covered claim “shall be reduced” by the amount of any recovery under an insurance policy other than the policy of the insolvent insurer). Accordingly, I would affirm the district court which concluded Wondra first must assert a claim for uninsured motorist benefits against American Family and that any amounts subsequently received from the Minnesota Insurance Guaranty Association must be reduced by that amount.