Although Minnesota legislation eliminated household exclusion from car accidents, it did not do so for other types of accidents as a boating accident. In Courtney Godfrey, Ryan Novaczyk v. State Farm Fire and Casualty Company; Government Employers Insurance Company No. 19-3731, U.S. Court of Appeals, Eighth Circuit (August 24, 2021) Courtney Godfrey sued State Farm Fire and Casualty Company and Government Employers Insurance Company for liability after she was injured on her husband's boat. The district court granted a summary judgment to the insurers and Ms Godfrey asked the court to conclude that the exclusion of households was contrary to public policy in the state of Minnesota.
Godfrey was seriously injured when she was thrown from her husband, Ryan Novaczyk's boat. Godfrey and Novaczyk filed claims for damages with State Farm, which insured the boat, and GEICO, which sold Novaczyk umbrella insurance. Both insurances had household exemptions which made them refrain from covering damages to the insured or the members of the insured's household because Godfrey and Novaczyk were married and lived together.
Godfrey sued Novaczyk, GEICO and State Farm. GEICO dismissed the case before the federal court, and Novaczyk was readjusted as a plaintiff. Godfrey agreed that the household's exception applied to her claim, but she claimed that they violated Minnesota's public order. The district court granted the insurance companies a summary judgment because the exemptions were not prohibited by law or Minnesota public order.
Because the Eighth Circle was called upon to interpret Minnesota law, it was bound by the decision of the Minnesota Supreme Court, and if the Supreme Court of Minnesota has not spoken on a particular issue, the Eighth Circle was required. to try to predict how the Minnesota Supreme Court would decide it and may consider relevant state precedents, analogous decisions, reputable poems, and other reliable information.
Godfrey suggests that the issue of umbrella and boat owner liability insurance stemming from spousal negligence creates a new legal issue that we should certify to the Minnesota Supreme Court. The design of insurance contracts allows the parties to enter into contracts as they wish, and as long as coverage required by law is not omitted and insurance provisions do not contravene applicable statutes, the scope of the insurer's liability is governed by the contract entered into.  State Farm and GEICO household exemptions prevent recovery here. Although the current Minnesota Auto Insurance Act in Minnesota is not covered, family members and household members are included in the statutory definition of "insured." Minnesota has not approved a similar law for boat or umbrella insurance. In fact, Minnesota consistently enforces household exclusions when control statutes do not prohibit such exceptions, nor do they require homeowner policies to provide liability protection for claims made by one resident in another household against another. The authority to change this rule lies with the legislator in Minnesota. If the rule is wrong, the legislature has ample power to change it. It is the duty of the courts to apply the law as it stands.
The Eighth Circuit could not find any language in Minnesota statutes that addresses mandatory coverage or household exemptions beyond Minnesota's statutory liability insurance mandate.
The Eighth Circuit refused to extend its legal role to extend the Minnesota Act to invalidate household exemptions. As a pluralistic federal court, it cannot extend Minnesota law. In addition, the eighth circle found no question of a draw. The Minnesota Supreme Court addressed this and declined to return to the issue in several different cases. Godfrey did not present a close question on state law, so the Eighth Circuit refused to take the matter to the Minnesota Court.
The district court's grant of a summary judgment was confirmed.
That there is a good reason for a household exclusion is axiomatic in every state due to potential collusion and fraud. The language of the exceptions is clear and unambiguous and clearly feasible. Ms Godfrey, without contract law, tried to persuade the court to create a public policy against such exclusions because the state did so with respect to car accidents but not other types of injuries, such as falling off a boat. The Eight Circuit wisely realized that the issue is one for the legislature, not a court.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost as much for insurers and policyholders.
He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance and claims management attorney and more than 54 years in the insurance industry.
He is available at http://www.zalma.com and email@example.com. Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurance companies and their indemnity staff to become insurance professionals.
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