HF 859

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 05/05/2011 02:03pm

A bill for an act
relating to insurance; requiring auto insurers to inform certain insureds of the
right to select any rental vehicle; requiring an advisory; amending Minnesota
Statutes 2010, section 72A.201, subdivision 6.

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

Section 1.

Minnesota Statutes 2010, section 72A.201, subdivision 6, is amended to
read:

Subd. 6.

Standards for automobile insurance claims handling, settlement offers,
and agreements.

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; deleted text begin or
deleted text end

(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 new text begin ; or
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new text begin (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
their 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 vendor."
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2011, and applies to claims
incurred on or after that date under policies issued or renewed on or after that date.
new text end