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HF 1528

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to insurance; regulating claims practices;
amending Minnesota Statutes 2004, section 72A.201,
subdivision 6.

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

Section 1.

Minnesota Statutes 2004, 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 new text begin 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:
new text end

new text begin "Minnesota law gives you the 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?"
new text end

new text begin 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
new text end ;

(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; or

(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.