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Legal Memorandum: Statute of Limitations for a UM Claim

Issue: Under Minnesota law, does the filing of claim and acceptance of the claim and payment of benefits bind coverage and toll, extend, or move the operative date for calculation of the statute of limitations?

Area of Law: Insurance Law, Litigation & Procedure
Keywords: Statute of limitations; Uninsured motorist (UIM); Insurer
Jurisdiction: Federal, Minnesota
Cited Cases: 381 N.W.2d 439; 675 N.W.2d 925; 617 N.W.2d 401
Cited Statutes: None
Date: 10/01/2004

The payment of insurance benefits moves the date from which the statute of limitations for a claim against a UM (Underinsured Motorist) insurer begins to run.  Formerly, the six-year limitations period began to run on the date of the accident.  See O’Neill v. Ill. Farmers Ins. Co., 381 N.W.2d 439 (Minn. 1986), overruled by Oanes v. Allstate Ins. Co., 617 N.W.2d 401 (Minn. 2000).  However, if an insurer begins paying no-fault benefits, it is deemed to have accepted liability under the uninsured-motorist provision of the insured policy.  Therefore, if the insurer stops paying benefits before the claim has been satisfied, it breaches the insurance contract.  At that point the action against the insurer accrues and the limitations period will begin to run.  Oanes, 617 N.W.2d 401.  In Entzion v. Ill. Farmers Ins. Co., 675 N.W.2d 925 (Minn. 2004), the insurer paid no-fault benefits for two years before it stopped.  Although the insured’s claim against the insurer was found to be barred by the statute of limitations, the court determined that the limitations period began not on the date of the accident, but on the date the benefits were denied. 

Consequently, the statute of limitations will not run out until six years after the date the insurer stops making the benefits payments.

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