as introduced - 89th Legislature (2015 - 2016) Posted on 03/14/2016 03:34pm
A bill for an act
relating to insurance; regulating auto repair shop referrals; providing penalties;
amending Minnesota Statutes 2014, section 72A.201, subdivisions 3, 6;
proposing coding for new law in Minnesota Statutes, chapter 72A.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Minnesota Statutes 2014, section 72A.201, subdivision 3, is amended to read:
For the purposes of this sectionnew text begin and section 72A.291new text end , the
following terms have the meanings given them.
(1) Adjuster or adjusters. "Adjuster" or "adjusters" is as defined in section 72B.02.
(2) Agent. "Agent" means insurance agents or insurance agencies licensed pursuant
to sections 60K.30 to 60K.56, and representatives of these agents or agencies.
(3) Claim. "Claim" means a request or demand made with an insurer for the
payment of funds or the provision of services under the terms of any policy, certificate,
contract of insurance, binder, or other contracts of temporary insurance. The term does not
include a claim under a health insurance policy made by a participating provider with an
insurer in accordance with the participating provider's service agreement with the insurer
which has been filed with the commissioner of commerce prior to its use.
(4) Claim settlement. "Claim settlement" means all activities of an insurer related
directly or indirectly to the determination of the extent of liabilities due or potentially
due under coverages afforded by the policy, and which result in claim payment, claim
acceptance, compromise, or other disposition.
(5) Claimant. "Claimant" means any individual, corporation, association,
partnership, or other legal entity asserting a claim against any individual, corporation,
association, partnership, or other legal entity which is insured under an insurance policy or
insurance contract of an insurer.
(6) Complaint. "Complaint" means a communication primarily expressing a
grievance.
(7) Insurance policy. "Insurance policy" means any evidence of coverage issued by
an insurer including all policies, contracts, certificates, riders, binders, and endorsements
which provide or describe coverage. The term includes any contract issuing coverage
under a self-insurance plan, group self-insurance plan, or joint self-insurance employee
health plans.
(8) Insured. "Insured" means an individual, corporation, association, partnership, or
other legal entity asserting a right to payment under their insurance policy or insurance
contract arising out of the occurrence of the contingency or loss covered by the policy or
contract. The term does not apply to a person who acquires rights under a mortgage.
(9) Insurer. "Insurer" includes any individual, corporation, association, partnership,
reciprocal exchange, Lloyds, fraternal benefits society, self-insurer, surplus line insurer,
self-insurance administrator, and nonprofit service plans under the jurisdiction of the
Department of Commerce.
(10) Investigation. "Investigation" means a reasonable procedure adopted by an
insurer to determine whether to accept or reject a claim.
(11) Notification of claim. "Notification of claim" means any communication to
an insurer by a claimant or an insured which reasonably apprises the insurer of a claim
brought under an insurance contract or policy issued by the insurer. Notification of claim
to an agent of the insurer is notice to the insurer.
(12) Proof of loss. "Proof of loss" means the necessary documentation required
from the insured to establish entitlement to payment under a policy.
(13) Self-insurance administrator. "Self-insurance administrator" means any
vendor of risk management services or entities administering self-insurance plans,
licensed pursuant to section 60A.23, subdivision 8.
(14) Self-insured or self-insurer. "Self-insured" or "self-insurer" means any entity
authorized pursuant to section 65B.48, subdivision 3; chapter 62H; section 176.181,
subdivision 2; Laws of Minnesota 1983, chapter 290, section 171; section 471.617; or
section 471.981 and includes any entity which, for a fee, employs the services of vendors
of risk management services in the administration of a self-insurance plan as defined by
section 60A.23, subdivision 8, clause (2), subclauses (a) and (d).
Minnesota Statutes 2014, section 72A.201, subdivision 6, is amended to read:
In addition to the acts specified in subdivisions 4, 5, 7, 8, and 9, the
following acts by an insurer, adjuster, or a self-insured or self-insurance administrator
constitute unfair settlement practices:
(1) if an automobile insurance policy provides for the adjustment and settlement
of an automobile total loss on the basis of actual cash value or replacement with like
kind and quality and the insured is not an automobile dealer, failing to offer one of the
following methods of settlement:
(a) comparable and available replacement automobile, with all applicable taxes,
license fees, at least pro rata for the unexpired term of the replaced automobile's license,
and other fees incident to the transfer or evidence of ownership of the automobile paid, at
no cost to the insured other than the deductible amount as provided in the policy;
(b) a cash settlement based upon the actual cost of purchase of a comparable
automobile, including all applicable taxes, license fees, at least pro rata for the unexpired
term of the replaced automobile's license, and other fees incident to transfer of evidence
of ownership, less the deductible amount as provided in the policy. The costs must be
determined by:
(i) the cost of a comparable automobile, adjusted for mileage, condition, and options,
in the local market area of the insured, if such an automobile is available in that area; or
(ii) one of two or more quotations obtained from two or more qualified sources
located within the local market area when a comparable automobile is not available in
the local market area. The insured shall be provided the information contained in all
quotations prior to settlement; or
(iii) any settlement or offer of settlement which deviates from the procedure above
must be documented and justified in detail. The basis for the settlement or offer of
settlement must be explained to the insured;
(2) if an automobile insurance policy provides for the adjustment and settlement
of an automobile partial loss on the basis of repair or replacement with like kind and
quality and the insured is not an automobile dealer, failing to offer one of the following
methods of settlement:
(a) to assume all costs, including reasonable towing costs, for the satisfactory repair
of the motor vehicle. Satisfactory repair includes repair of both obvious and hidden
damage as caused by the claim incident. This assumption of cost may be reduced by
applicable policy provision; or
(b) to offer a cash settlement sufficient to pay for satisfactory repair of the vehicle.
Satisfactory repair includes repair of obvious and hidden damage caused by the claim
incident, and includes reasonable towing costs;
(3) regardless of whether the loss was total or partial, in the event that a damaged
vehicle of an insured cannot be safely driven, failing to exercise the right to inspect
automobile damage prior to repair within five business days following receipt of
notification of claim. In other cases the inspection must be made in 15 days;
(4) regardless of whether the loss was total or partial, requiring unreasonable travel
of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate,
to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made
pursuant to policy requirements, or to have the automobile repaired;
(5) regardless of whether the loss was total or partial, if loss of use coverage
exists under the insurance policy, failing to notify an insured at the time of the insurer's
acknowledgment of claim, or sooner if inquiry is made, of the fact of the coverage,
including the policy terms and conditions affecting the coverage and the manner in which
the insured can apply for this coverage;
(6) regardless of whether the loss was total or partial, failing to include the insured's
deductible in the insurer's demands under its subrogation rights. Subrogation recovery
must be shared at least on a proportionate basis with the insured, unless the deductible
amount has been otherwise recovered by the insured, except that when an insurer is
recovering directly from an uninsured third party by means of installments, the insured
must receive the full deductible share as soon as that amount is collected and before any
part of the total recovery is applied to any other use. No deduction for expenses may be
made from the deductible recovery unless an attorney is retained to collect the recovery, in
which case deduction may be made only for a pro rata share of the cost of retaining the
attorney. An insured is not bound by any settlement of its insurer's subrogation claim with
respect to the deductible amount, unless the insured receives, as a result of the subrogation
settlement, the full amount of the deductible. Recovery by the insurer and receipt by the
insured of less than all of the insured's deductible amount does not affect the insured's
rights to recover any unreimbursed portion of the deductible from parties liable for the loss;
(7) requiring as a condition of payment of a claim that repairs to any damaged vehicle
must be made by a particular contractor or repair shop or that parts, other than window glass,
must be replaced with parts other than original equipment parts or engaging in any act or
practice of intimidation, coercion, threat, incentive, or inducement for or against an insured
to use a particular contractor or repair shop. Consumer benefits included within preferred
vendor programs must not be considered an incentive or inducement. At the time a claim
is reported, the insurer must provide the following advisory to the insured or claimant:
"You have the legal right to choose a repair shop to fix your vehicle. Your policy will
cover the reasonable costs of repairing your vehicle to its pre-accident condition no matter
where you have repairs made. Have you selected a repair shop or would you like a referral?"
After an insured has indicated that the insured has selected a repair shop, the insurer
must cease all efforts to influence the insured's or claimant's choice of repair shop;
(8) where liability is reasonably clear, failing to inform the claimant in an automobile
property damage liability claim that the claimant may have a claim for loss of use of
the vehicle;
(9) failing to make a good faith assignment of comparative negligence percentages
in ascertaining the issue of liability;
(10) failing to pay any interest required by statute on overdue payment for an
automobile personal injury protection claim;
(11) if an automobile insurance policy contains either or both of the time limitation
provisions as permitted by section 65B.55, subdivisions 1 and 2, failing to notify the insured
in writing of those limitations at least 60 days prior to the expiration of that time limitation;
(12) if an insurer chooses to have an insured examined as permitted by section
65B.56, subdivision 1, failing to notify the insured of all of the insured's rights and
obligations under that statute, including the right to request, in writing, and to receive
a copy of the report of the examination;
(13) failing to provide, to an insured who has submitted a claim for benefits
described in section 65B.44, a complete copy of the insurer's claim file on the insured,
excluding internal company memoranda, all materials that relate to any insurance fraud
investigation, materials that constitute attorney work product or that qualify for the
attorney-client privilege, and medical reviews that are subject to section 145.64, within ten
business days of receiving a written request from the insured. The insurer may charge
the insured a reasonable copying fee. This clause supersedes any inconsistent provisions
of sections 72A.49 to 72A.505;
(14) if an automobile policy provides for the adjustment or settlement of an
automobile loss due to damaged window glass, failing to provide payment to the insured's
chosen vendor based on a competitive price that is fair and reasonable within the local
industry at large.
Where facts establish that a different rate in a specific geographic area actually served
by the vendor is required by that market, that geographic area must be considered. This
clause does not prohibit an insurer from recommending a vendor to the insured or from
agreeing with a vendor to perform work at an agreed-upon price, provided, however,
that before recommending a vendor, the insurer shall offer its insured the opportunity to
choose the vendor. If the insurer recommends a vendor, the insurer must also provide
the following advisory:
"Minnesota law gives you the right to go to any glass vendor you choose, and
prohibits me from pressuring you to choose a particular vendor.";
(15) requiring that the repair or replacement of motor vehicle glass and related
products and services be made in a particular place or shop or by a particular entity, or by
otherwise limiting the ability of the insured to select the place, shop, or entity to repair or
replace the motor vehicle glass and related products and services;
(16) engaging in any act or practice of intimidation, coercion, threat, incentive, or
inducement for or against an insured to use a particular company or location to provide
the motor vehicle glass repair or replacement services or products. For purposes of this
section, a warranty shall not be considered an inducement or incentive; deleted text begin or
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(17) failing to inform an insured making a claim under collision or comprehensive
coverage, that includes rental vehicle reimbursement coverage, of the insured's right to
select any rental vehicle company. If the insurer recommends a rental vehicle company to
the insured, the insurer must also provide the following advisory: "Minnesota law gives
you the right to choose any rental vehicle company, and prohibits me from requiring you
to choose a particular vendordeleted text begin .deleted text end "new text begin ; or
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(18) failing to consider all of the following criteria, and only the following criteria,
when referring a claimant or insured to a repair shop: (i) convenience of location for the
claimant or insured; (ii) quality and workmanship of repairs; (iii) repair warranties; (iv)
equipment and facility; (v) technician training and certification; (vi) timing of repairs,
excluding any delays attributable to the insurer; (vii) customer service, including washing,
vacuuming, pick-up, and delivery; and (viii) ethical and professional business practices.
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Any insurer, agent, or adjuster that violates any provision
of sections 72A.17 to 72A.32 is liable to any person who suffers damage as a result of
the violation. The person damaged may bring a civil action against the insurer, agent, or
adjuster to recover any damages sustained, or $1,000, whichever is greater.
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In the case of a willful violation of any provision of
sections 72A.17 to 72A.32, the insurer, agent, or adjuster shall, in addition to penalties in
subdivision 1, be liable for a civil penalty of not less than $5,000, nor more than $15,000,
for each violation, paid to the plaintiff.
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