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On November 24, 2021, the Minnesota Supreme Court released Poitra v. North Star Mutual, concluding that the resident-relative exclusion in a homeowner’s insurance policy is enforceable. A resident-relative or household exclusion generally excludes or limits liability coverage when the person injured is the named insured or resides with the named insured and is a relative or is a minor in the named insured’s care.
The Poitras had sought coverage when their grandson who lived with them was bitten by the family dog. North Star denied coverage, citing the resident-relative exclusion. The Poitras argued the exclusion was unenforceable, alleging it interfered with Minnesota’s past abolition of intrafamilial tort immunities and alleging it violated the right of redress guaranteed in the Minnesota State Constitution. The Court rejected these arguments and concluded the exclusion is enforceable. Any change must come from the legislature.
The challenge to resident-relative exclusions has gained public attention in recent years after Twin Cities TV reporter Courtney Godfrey lost part of her leg in a boating accident. She sought coverage under her husband’s boat liability policy, but coverage was excluded by the household exclusion. Her challenge to the exclusion was litigated in federal court, with the Eighth Circuit concluding earlier this year in Godfrey v. State Farm that Minnesota courts would enforce the exclusion.
Legislation was introduced during the 2019 Minnesota legislative session that would have invalidated resident-relative exclusions in boat and personal liability umbrella policies. The bill did not pass, and the plaintiffs’ bar subsequently focused on legal challenges to the exclusion. Now, after the outcome in Poitra and Godfrey, it is anticipated that there will be a renewed focus on passing legislation that would invalidate resident-relative exclusions in auto, home, boat, and umbrella coverage.
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The outcome in Poitra is premised on the following key conclusions:
- Beginning in the 1960s, the Minnesota Supreme Court began to abolish intrafamilial tort immunities (parent v. child immunity, interspousal immunity, sibling immunity). The Poitras argued that this abolishment of immunity also invalidated resident-relative exclusions because the exclusions limit recovery for the claims. The Court concluded that abolition of common-law immunity, a doctrine created by the Court in the first place, does not extend to preclude the freedom of private parties to contract.
- The Court concluded that it can invalidate contractual provisions that contravene public policy, but only when the contract is “injurious to the interests of the public or contravenes some established interest of society.” When there are competing policy arguments for and against the resident-relative exclusion, any limitation must come from the legislature.
- The Poitras argued that the resident-relative exclusion was unconstitutional, alleging it interfered with the right of redress guaranteed by the Minnesota Constitution. But the Constitutional only guarantees the right to bring a lawsuit and seek a judgment. The Court concluded that “the right to redress of injuries or wrongs under the Minnesota Constitution does not guarantee access to a particular source of funds.”
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The members of Arthur Chapman’s Insurance Coverage Group are ready to walk you through your insurance coverage questions.
Beth Jenson Prouty of Arthur Chapman’s Insurance Coverage Group submitted an Amicus Brief on this case for amicus curiae American Property Casualty Insurance Association (APCIA) and The National Association of Mutual Insurance Companies (“NAMIC”).
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