DISSENT
GILBERT, Justice,dissenting.
I respectfully dissent from the majority opinion and would affirm the court of appeals. This case involves a small property damage claim resulting from an accident where the fault between two.drivers is in dispute. Glen Meyer has obtained the mandatory no-fault insurance coverage and as an insured he is not bound to arbitrate the claim that is brought by Michelle Miller. Meyers’ carrier may pursue resolution of the claim on its own, but nothing in the No-Fault Act or the insurance contract prohibits the reparations obligor and *338its insured from allowing an insured to contest such a claim. Furthermore, the liability coverage provided by Cincinnati has not been cancelled or annulled by agreement between the reparation obligor (Cincinnati) and Meyer, its insured. See MinmStat. § 65B.49, subd. S(3)(a) (2002). Cincinnati stands behind whatever liability • and damage for which Meyer is ultimately adjudicated as being responsible.
There are arbitration provisions within Minnesota’s No-Fault Arbitration Insurance Act. The majority incorrectly concludes that a third-party claimant (as opposed to an insured and the reparation obligor) has been provided with the remedy of arbitration for property damage claims. To the contrary, Minn.Stat. § 65B.42 does “create a system of small claims arbitration to decrease the expense of and to simplify litigation.” Minn.Stat. § 65B.42(4) (2002). However, this provision provides for arbitration procedures concerning claims by an insured against the insured’s reparation obligor for collision damage coverage. See Minn.Stat. § 65B.525, subd. 1 (2002). Likewise, there is mandatory intercompany arbitration of certain claims as required in section 65B.42(4), but these provisions are not at issue in this ease. However, there is no statutory or contractual requirement that Miller or Meyer resolve their dispute through arbitration. Thus, contrary to what the majority holds, the purpose of a system of small claims arbitration -would not be frustrated by allowing an insured to prevent the operation of the No-Fault Act by refusing to tender.
Furthermore, Meyer here has not unilaterally opted out of the mandatory insurance scheme after an accident has occurred. He merely wants to litigate the damage issue, which he has also offered to pay directly once the amount and liability have been determined. Obviously, if he does not make that payment, Cincinnati is required to-make that payment. The insured’s actions are motivated because of premium considerations and possible cancellation of his policy, if he has Cincinnati handle the claim directly. One would think that up to at least the amount of the (non-subrogation) deductible of $500 an insured would be freely able to litigate that issue, notwithstanding the “Automobile Subrogation Agreement.”
The majority recognizes that insureds do privately negotiate settlements with the owner of other vehicles. At oral argument State Farm admitted that it knows many of its insureds do the same thing and they have a policy of allowing such private settlements. This not only helps its insured by keeping premiums down and policies in effect, but' also saves administrative costs and expenses of the reparation obligor of otherwise setting up the claim file, investigating and litigating or arbitrating such claim and possibly making payments on those claims. It appears to be understood by everybody in the industry that this is a widespread practice and it is not even in dispute that the reparation obligor is never released from ultimate responsibility.
Accordingly, I would affirm the court of appeals and' allow this practice to continue. The majority is elevating form over substance. Its legal conclusion is premised on an inaccurate assumption about arbitration requirements between two insureds and elevates the subrogation arbitration agreement between two reparation obligors over the separate rights of two insureds.