SF 1826

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 11/09/2017 10:38am

A bill for an act
relating to insurance; regulating rates; modifying depreciation calculations;
amending Minnesota Statutes 2016, sections 70A.06, by adding a subdivision;
72A.201, subdivision 5.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 70A.06, is amended by adding a subdivision
to read:

new text begin Subd. 4a. new text end

new text begin Expense depreciation applicable when determining value of damaged
property in insurance policies. new text end

new text begin (a) As used in this section:
new text end

new text begin (1) "damaged property" means a dwelling, structure, personal property, or any other
property or service, the damage to which is covered under the terms of an insurance policy;
and
new text end

new text begin (2) "expense depreciation" means depreciation, including but not limited to the cost of
goods, materials, labor, and services necessary to replace, repair, or rebuild damaged property.
new text end

new text begin (b) An insurance policy covering damaged property:
new text end

new text begin (1) may allow for expense depreciation; and
new text end

new text begin (2) shall provide notice within the insurance policy in a form approved by the
commissioner of commerce that expense depreciation may be deducted.
new text end

new text begin (c) If expense depreciation is applied to a loss for damaged property, upon request from
a policy holder, the insurer shall provide a written explanation as to how the expense
depreciation was calculated.
new text end

new text begin (d) A policy form submitted for approval to the commissioner that includes expense
depreciation, is not grounds for disapproving the policy form.
new text end

Sec. 2.

Minnesota Statutes 2016, section 72A.201, subdivision 5, is amended to read:

Subd. 5.

Standards for fair settlement offers and agreements.

The following acts by
an insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair
settlement practices:

(1) making any partial or final payment, settlement, or offer of settlement, which does
not include an explanation of what the payment, settlement, or offer of settlement is for;

(2) making an offer to an insured of partial or total settlement of one part of a claim
contingent upon agreement to settle another part of the claim;

(3) refusing to pay one or more elements of a claim by an insured for which there is no
good faith dispute;

(4) threatening cancellation, rescission, or nonrenewal of a policy as an inducement to
settlement of a claim;

(5) notwithstanding any inconsistent provision of section 65A.01, subdivision 3, failing
to issue payment for any amount finally agreed upon in settlement of all or part of any claim
within five business days from the receipt of the agreement by the insurer or from the date
of the performance by the claimant of any conditions set by such agreement, whichever is
later;

(6) failing to inform the insured of the policy provision or provisions under which
payment is made;

(7) settling or attempting to settle a claim or part of a claim with an insured under actual
cash value provisions for less than the value of the property immediately preceding the loss,
including all applicable taxes and license fees. In no case may an insurer be required to pay
an amount greater than the amount of insurance;

(8) except where limited by policy provisions, settling or offering to settle a claim or
part of a claim with an insured under replacement value provisions for less than the sum
necessary to replace the damaged item with one of like kind and quality, including all
applicable taxes, license, and transfer fees;

(9) reducing or attempting to reduce for new text begin expense new text end depreciation any settlement or any offer
of settlement for items not adversely affected by age, use, or obsolescence new text begin . The costs of
goods, material, labor, and services necessary to replace, repair, or rebuild damaged property
may be depreciated new text end ;

(10) reducing or attempting to reduce for betterment any settlement or any offer of
settlement unless the resale value of the item has increased over the preloss value by the
repair of the damage.