Most people figure that if you drive without insurance in Minnesota and get hurt, you’re on your own. No claim, no benefits, no lawsuit. That’s the deal you made.
It isn’t. You can still sue the driver who hit you, and since the Legislature changed the statute in 1989 you can sue him for your medical bills too. What you can lose is the no-fault safety net. And the part almost nobody knows: you can lose it for the people you live with. Your spouse. Your adult kids. Your brother on the couch who doesn’t own a car and has never driven yours. The statute says blood and marriage don’t matter, as long as you live together as a family.
The Legislature did both of those things in the same bill, signed in April 1989. I’ll get to that.
Where does the penalty for driving uninsured actually live?
Not where you’d expect. The No-Fault Act opens with a promise to everybody. If the accident causing injury occurs in this state, “every person suffering loss from injury arising out of maintenance or use of a motor vehicle” has “a right to basic economic loss benefits.” Minn. Stat. § 65B.46, subd. 1. Those benefits run at least $40,000 per person: $20,000 for medical expense and a total of $20,000 for income loss, replacement services, and the survivor and funeral categories. § 65B.44, subd. 1(a).
Every person. Insured or not.
Then § 65B.47 decides whose policy pays, and that’s where the uninsured owner starts falling. Under subdivision 4, an injured “insured” looks first to the policy under which he’s an insured. A driver or occupant who isn’t an insured looks to the security covering the vehicle he was in. If he owns that vehicle and didn’t insure it, there’s nothing there. I walked through the whole priority ladder at /news/minnesota-no-fault-auto-basics/.
The bottom rung is the Minnesota Automobile Assigned Claims Plan, run by the insurers under § 65B.63. It exists for the people the ladder misses, and § 65B.64 subdivision 1 lets a person entitled to benefits claim through it if, among other things, “the plan of reparation security applicable to the injury cannot be identified”. Then subdivision 3 shuts the door:
A person shall not be entitled to basic economic loss benefits through the assigned claims plan with respect to injury which was sustained if at the time of such injury the injured person was the owner of a private passenger motor vehicle for which security is required under sections 65B.41 to 65B.71 and that person failed to have such security in effect.
For purposes of determining whether security is required under section 65B.48, an owner of any vehicle is deemed to have contemplated the operation or use of the vehicle at all times unless the owner demonstrates to the contrary by clear and convincing objective evidence.
Persons, whether or not related by blood or marriage, who dwell and function together with the owner as a family, other than adults who have been adjudicated as incompetent and minor children, shall also be disqualified from benefits through the assigned claims plan.
— Minn. Stat. § 65B.64, subd. 3
So on paper the right to benefits is still yours. What’s gone is the net. If no policy anywhere reaches you, you hit the floor.
Pumping gas doesn’t make you a pedestrian
The Minnesota Supreme Court has been unsentimental about this since 1982.
Jaime Balderrama ran out of gas on the I-94 bridge over the Mississippi. He parked in the right lane, walked to the next exit, came back with a can, and was standing behind his car filling the tank when an insured driver hit him from behind. Neither Balderrama nor his car was insured. Balderrama v. Milbank Mut. Ins. Co., 324 N.W.2d 355, 356 (Minn. 1982).
His argument was clever. Paragraph (c) of the priority section covers a person “who is not the driver or other occupant of an involved motor vehicle” by sending him to the policy on any involved vehicle, which would have meant the insured driver who hit him. He was standing outside his car, so he wasn’t its occupant, right?
The court said no. He was still the driver. “An uninsured driver driving an uninsured vehicle can drop no further through the priorities provision.” Id. at 357–58. His recourse was the assigned claims plan, and subdivision 3 barred him from that. Then the line the Court of Appeals was still quoting in 2000:
The legislature is not charitable to uninsured persons driving uninsured vehicles. For the no-fault system to work, persons must contribute premiums to the insurance pool; otherwise, responsible persons carrying insurance become the insurers of those unwilling to pay the true costs involved in establishing a viable no-fault insurance system.
— Balderrama, 324 N.W.2d at 358
Paragraph (c), the court said, wasn’t meant to be “a catch-all provision, opening a last resort and deep pocket for those avoiding their own responsibilities in operating motor vehicles.” Id. Three justices dissented.
Here’s the part of Balderrama people skip. Before he ever sued for no-fault benefits, he’d sued the driver who hit him, and that insurer settled the tort claim for $50,000. Id. at 356. The court held the release didn’t bar the separate no-fault claim. He just lost the no-fault claim on the merits. The lawsuit against the other driver worked fine.
Who else gets disqualified? The people you live with as a family.
This is the paragraph of § 65B.64 that should keep a household up at night.
The pre-1989 version disqualified “[m]embers of the owner’s household other than minor children”. In 1989 the Legislature rewrote it to reach “[p]ersons, whether or not related by blood or marriage, who dwell and function together with the owner as a family,” keeping only minor children and adults “adjudicated as incompetent” out of it. 1989 Minn. Laws ch. 58, § 3. The statute now says outright that blood and marriage don’t matter. If you live together as a family, you’re in.
The Court of Appeals laid out who’s left standing. “But minor children who live with the owner of an uninsured vehicle, and adults and children who do not live with the owner, are eligible to receive basic economic loss benefits through the assigned claims plan.” State Farm Mut. Auto. Ins. Co. v. Thunder, 605 N.W.2d 750, 756 (Minn. Ct. App. 2000). In Thunder, that meant the three minor children of a man killed in a single-car crash in his own uninsured car could collect survivors’ benefits through the plan. Id. at 752–53, 756–57.
Now the case that surprised me. In August 2010, Paek Saengkeo was hurt as a passenger in an uninsured car somebody else owned and drove. He didn’t own a car. He didn’t have a driver’s license. He lived with his brother and three friends. Saengkeo v. Minn. Auto. Assigned Claims, 877 N.W.2d 568, 569 (Minn. Ct. App. 2016). About as innocent a no-fault claimant as you’ll find.
He lost. His brother was still listed as co-owner on the title to a Ford Explorer he’d co-signed for with an ex-girlfriend. She’d made the payments, insured the car in her own name, and kept it after they split, and he had no access to it. Id. at 570. Didn’t matter. The court read § 65B.48 to require an owner to insure a vehicle “as long as use of the vehicle was contemplated by anyone”, and she was using it. Id. at 574. Brother was an uninsured owner. Saengkeo lived with him. Disqualified.
The court even said what the brother should have done: “If brother had any question about the vehicle’s use or whether he should maintain insurance on the vehicle, he could have removed his name from the title to ensure that he was not a legal owner of the Ford Explorer.” Id. One judge dissented and would have paid the claim. “He had no reason to obtain insurance.” Id. at 576 (Bjorkman, J., dissenting).
So a name left on a title you forgot about can cost the people you live with their no-fault benefits. If there’s a title in your name for a car you don’t drive, that’s a no-fault question, not just a DMV one.
And putting the car on somebody else’s policy doesn’t fix it. In 1983 the Supreme Court read the Act to require the owner to be the named insured under the security covering his vehicle, and turned away an owner whose truck was insured in his live-in partner’s name. Mickelson v. Am. Family Mut. Ins. Co., 329 N.W.2d 814, 816–18 (Minn. 1983). In the court’s words, the plan expressly excludes “those who are in a position to secure their own protection — owners of vehicles who fail to have the required security in effect and adult members of their households.” Id. at 818.
When does an uninsured owner still get no-fault benefits?
When some policy makes him an “insured”. That’s the escape hatch, and it’s bigger than people think.
In Iverson v. State Farm Mut. Auto. Ins. Co., a man owned two cars, insured one, and was killed driving the other. State Farm’s policy on the insured car had an exclusion for injuries in an owned car that wasn’t insured. The Supreme Court threw the exclusion out:
Notwithstanding the penalties for failing to insure an owned vehicle, the basic provisions of the Act provide for coverage of economic loss benefits to a person who is an insured under a policy even though that person owns an uninsured vehicle and is injured while operating it in violation of the Act.
— Iverson, 295 N.W.2d 573, 575 (Minn. 1980)
The court repeated its view that “coverage for economic loss benefits protects people not vehicles.” Id. And it was blunt about the other side of the line: if he hadn’t been an insured on a second car’s policy, his widow couldn’t have collected those benefits at all, because of what the court called “the No-Fault Act’s seemingly severe sanction of prohibiting owners of uninsured vehicles from participating in the assigned claims plan.” Id. at 576.
Who counts as an “insured”? The named insured, plus a spouse, another relative of the named insured, or a minor in the custody of the named insured or of a relative living in the same household, while “residing in the same household with the named insured” and “not identified by name in any other contract for a plan of reparation security” as an insured. § 65B.43, subd. 5. Notice the word relative. Mickelson held an unmarried live-in partner isn’t one. 329 N.W.2d at 816. So an unrelated housemate can be disqualified from the assigned claims plan under a sentence that can count him as family, and shut out of the household policy under a definition that doesn’t. Same Act, same household, both cutting the same way.
And if you’re riding in somebody else’s insured car? Subdivision 4(b) sends an occupant “who is not an insured” to “the security covering that vehicle.” Nothing in that paragraph asks whether you own an uninsured car back home. On its words, I read the host car’s coverage to reach you. That fits how the Supreme Court framed it in 1986: the uninsured claimants there couldn’t recover from an insurer or the plan “because they were riding in their own uninsured vehicles at the time of the accidents.” Rehnelt v. Stuebe, 397 N.W.2d 563, 564 (Minn. 1986).
Can you still sue the driver who hit you? Yes, medical bills included.
For a few years, you couldn’t sue for the medical bills.
In December 1986, the Supreme Court held that uninsured people hurt riding in their own uninsured vehicles couldn’t recover the economic loss the Act covers in a negligence suit against the other driver. The tort-recovery section was “an exclusive list”, and holding otherwise “would shake the underpinnings of the Minnesota No-Fault Automobile Insurance Act.” Rehnelt, 397 N.W.2d at 566.
The Legislature answered in 1989. It added the assigned claims plan and the phrase “any lack of insurance coverage for the economic loss described in section 65B.44” to § 65B.51, subdivision 2, which now reads:
A person may bring a negligence action for economic loss not paid or payable by a reparation obligor or through the assigned claims plan because of any lack of insurance coverage for the economic loss described in section 65B.44, daily or weekly dollar limitations of section 65B.44, the seven-day services exclusion of section 65B.44, the limitations of benefits contained in section 65B.44, subdivision 1, or an exclusion from coverage by sections 65B.58 to 65B.60.
— Minn. Stat. § 65B.51, subd. 2 (emphasis added)
That was section 1 of chapter 58. Section 3 of the same chapter was the rewrite that wrote “whether or not related by blood or marriage” into the assigned-claims disqualification. 1989 Minn. Laws ch. 58, §§ 1, 3. The governor signed it at 6:18 p.m. on April 26, 1989. One bill, one hand giving, the other rewriting who’s shut out.
In 2003 the Court of Appeals read the new words for what they say: “Accordingly, a plain reading of the statute permits a person without no-fault insurance to sue for economic loss.” Munoz v. Kihlgren, 661 N.W.2d 301, 304 (Minn. Ct. App. 2003). Barring the claim, the court said, “would result in an unjustifiable windfall for the negligent tortfeasor and a penalty that is inconsistent with the Act”, and the Act already had other sanctions for not buying insurance. Id. at 306.
Pain and suffering survives too, with the usual strings. “The no-fault act does not preclude an uninsured plaintiff from bringing a negligence action against an insured defendant for non-economic damages, provided the plaintiff meets the thresholds established in Minn. Stat. § 65B.51, subd. 3.” Ramsamooj v. Olson, 574 N.W.2d 751, 753 (Minn. Ct. App. 1998). Those thresholds are $4,000 in medical expense as the statute computes it, or permanent disfigurement, permanent injury, death, or disability for 60 days or more. § 65B.51, subd. 3.
One wrinkle I’d watch. The $4,000 prong counts “reasonable medical expense benefits paid, payable or payable but for any applicable deductible”. For a person whose benefits were never payable, that’s an awkward fit, and the other prongs don’t depend on insurance at all. I explained how that $4,000 number actually gets computed at /news/minnesota-no-fault-tort-threshold/.
What about uninsured motorist coverage?
If you’re hurt in your own uninsured car, don’t count on it. Minnesota’s mandatory UM and UIM coverages “do not apply to bodily injury of the insured while occupying a motor vehicle owned by the insured, unless the occupied vehicle is an insured motor vehicle.” § 65B.49, subd. 3a(7).
The same idea holds across a family. In Petrich ex rel. Lee v. Hartford Fire Ins. Co., a stepson was hurt in the one family car his stepfather hadn’t insured, and the Supreme Court enforced the policy’s owned-vehicle exclusion against his UM claim. 427 N.W.2d 244, 245–46 (Minn. 1988). The court’s view of who to blame was short: “But this complaint should be directed to the car owner who has a responsibility for insuring his cars”. Id. at 246. Both sides agreed the stepson could still collect economic loss benefits, and the court said UM and UIM “do not stand on the same footing.” Id. I covered how those coverages work, and how people throw them away, at /news/minnesota-uninsured-underinsured-motorist/.
Motorcycles are their own mess. A rider’s injuries are deemed not to arise from the use of a motor vehicle, § 65B.46, subd. 3, and the required motorcycle coverage is liability only, § 65B.48, subd. 5. That’s at /news/minnesota-motorcycle-crash-no-fault-gap/.
The bill comes due either way
Losing the safety net is the civil penalty. There’s a criminal one, and it isn’t small.
An owner who drives an uninsured vehicle, or lets someone else drive it on a public road, while he “knows or has reason to know” it isn’t insured “is guilty of a crime”. § 169.797, subd. 2. So is a driver who knows or has reason to know the owner has no insurance. Id., subd. 3. It’s a misdemeanor, which in Minnesota means up to 90 days, a $1,000 fine, or both, § 609.02, subd. 3, and the court “shall impose a fine of not less than $200 nor more than the maximum amount authorized by law”, though it may allow community service instead if the defendant is indigent. § 169.797, subd. 4(a). A violation within ten years of the first of two prior convictions is a gross misdemeanor, and so is a driver’s violation of subdivision 3 that causes or contributes to a crash resulting in death or substantial bodily harm. Id. On conviction, the driver’s license “shall be revoked for not more than 12 months”, and if the driver owns the car, the registration too. Id., subd. 4(f). Separately, the commissioner of public safety “shall revoke the registration” and “shall suspend the driver’s license” without a preliminary hearing, on department records or other sufficient evidence that the required security wasn’t maintained. Id., subd. 4a. A driver who owns the car and actually had insurance can avoid a conviction by getting proof of insurance to the court administrator by the first court appearance. Id., subd. 4(b).
And if you caused the crash, the No-Fault Act won’t shelter you. An owner who didn’t provide the required security “shall not by the provisions of chapter 65B be relieved of tort liability arising out of the operation, ownership, maintenance, or use of the vehicle.” § 169.797, subd. 1. If the assigned claims plan paid your passenger, the insurer servicing that claim “shall have the right to seek indemnification from an uninsured tortfeasor.” § 65B.64, subd. 2. Lent the car to a friend who caused the wreck? Owner liability in Minnesota is broader than most people think, and I wrote about it at /news/minnesota-vehicle-owner-liability/.
Skipping the premium doesn’t save you the bill. It just changes who sends it.
Madgett Law, LLC
Madgett Law, LLC represents people hurt in Minnesota car and truck crashes, including the no-fault and uninsured and underinsured motorist layers most people don’t know they have. Whether you’re an “insured” under somebody’s policy, whether a household member’s title disqualifies you from the assigned claims plan, and what you can still recover from the driver who hit you can each change the shape of a claim. Read about our personal injury practice, then send us a message.
Sources: Minn. Stat. § 65B.43, subd. 5 (“insured” defined; spouse, other relative, or minor in custody residing in the same household and not named in another contract); Minn. Stat. § 65B.44, subd. 1(a) ($40,000 minimum; $20,000 medical, $20,000 income loss and other categories); Minn. Stat. § 65B.46, subd. 1 (right to basic economic loss benefits), subd. 3 (motorcycle injuries); Minn. Stat. § 65B.47, subd. 4(a)–(c) (priorities in all other cases); Minn. Stat. § 65B.48, subd. 1 (compulsory security during the period operation or use is contemplated), subd. 5 (motorcycle liability security); Minn. Stat. § 65B.49, subd. 3a(7) (UM and UIM do not apply while occupying an owned vehicle that is not an insured motor vehicle); Minn. Stat. § 65B.51, subd. 2 (negligence action for economic loss, including any lack of insurance coverage), subd. 3 (tort thresholds); Minn. Stat. § 65B.63 (assigned claims plan); Minn. Stat. § 65B.64, subd. 1(c) (eligibility when the applicable security cannot be identified), subd. 2 (indemnification from an uninsured tortfeasor), subd. 3 (disqualification of uninsured owner and household; contemplated-use presumption; clear and convincing objective evidence); 1989 Minn. Laws ch. 58, §§ 1, 3 (amending § 65B.51, subd. 2 and § 65B.64, subd. 3); Minn. Stat. § 169.797, subd. 1 (no relief from tort liability), subd. 2 (owner), subd. 3 (driver), subd. 4(a) (misdemeanor; gross misdemeanor; $200 minimum fine), subd. 4(b) (proof of insurance), subd. 4(f) (license and registration revocation up to 12 months), subd. 4a (administrative revocation and suspension); Minn. Stat. § 609.02, subd. 3 (misdemeanor defined); Balderrama v. Milbank Mut. Ins. Co., 324 N.W.2d 355, 356–58 (Minn. 1982); Mickelson v. Am. Family Mut. Ins. Co., 329 N.W.2d 814, 816–18 (Minn. 1983); Iverson v. State Farm Mut. Auto. Ins. Co., 295 N.W.2d 573, 575–76 (Minn. 1980); Rehnelt v. Stuebe, 397 N.W.2d 563, 564–66 (Minn. 1986); Petrich ex rel. Lee v. Hartford Fire Ins. Co., 427 N.W.2d 244, 245–46 (Minn. 1988); State Farm Mut. Auto. Ins. Co. v. Thunder, 605 N.W.2d 750, 756–57 (Minn. Ct. App. 2000); Ramsamooj v. Olson, 574 N.W.2d 751, 753 (Minn. Ct. App. 1998); Munoz v. Kihlgren, 661 N.W.2d 301, 304–06 (Minn. Ct. App. 2003); Saengkeo v. Minn. Auto. Assigned Claims, 877 N.W.2d 568, 569–70, 574, 576 (Minn. Ct. App. 2016). This article is general information about Minnesota law, not legal advice. Reading it does not create an attorney–client relationship, and no outcome is promised or implied.