HF 2234

as introduced - 91st Legislature (2019 - 2020) Posted on 03/07/2019 02:49pm

A bill for an act
relating to insurance; governing the post-accident, insurance-funded repair of
motor vehicles; amending Minnesota Statutes 2018, section 72A.201, subdivisions
3, 6.

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

Section 1.

Minnesota Statutes 2018, section 72A.201, subdivision 3, is amended to read:

Subd. 3.

Definitions.

new text begin (a) new text end For the purposes of this section, the following terms have the
meanings given them.

deleted text begin (1) Adjuster or adjusters. deleted text end new text begin (b) new text end "Adjuster" or "adjusters" deleted text begin is as defined deleted text end new text begin has the meaning
given new text end in section 72B.02.

deleted text begin (2) Agent. deleted text end new text begin (c) new text end "Agent" means insurance agents or insurance agencies licensed pursuant
to sections 60K.30 to 60K.56, and representatives of these agents or agencies.

deleted text begin (3) Claim. deleted text end new text begin (d) new text end "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.

deleted text begin (4) Claim settlement. deleted text end new text begin (e) new text end "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.

deleted text begin (5) Claimant. deleted text end new text begin (f) new text end "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.

deleted text begin (6) Complaint. deleted text end new text begin (g) new text end "Complaint" means a communication primarily expressing a
grievance.

deleted text begin (7) Insurance policy. deleted text end new text begin (h) new text end "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.

deleted text begin (8) Insured. deleted text end new text begin (i) new text end "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.

deleted text begin (9) Insurer. deleted text end new text begin (j) new text end "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.

deleted text begin (10) Investigation. deleted text end new text begin (k) new text end "Investigation" means a reasonable procedure adopted by an
insurer to determine whether to accept or reject a claim.

deleted text begin (11) Notification of claim. deleted text end new text begin (l) new text end "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.

deleted text begin (12) Proof of loss. deleted text end new text begin (m) new text end "Proof of loss" means the necessary documentation required
from the insured to establish entitlement to payment under a policy.

new text begin (n) "Satisfactory repair" means all repair operations, parts, paint, and materials necessary
to restore the vehicle to its pre-loss condition. Satisfactory repair includes completion of
vehicle repairs consistent with the repair procedures, specifications, and other documentation
issued by the original equipment manufacturer.
new text end

deleted text begin (13) Self-insurance administrator. deleted text end new text begin (o) new text end "Self-insurance administrator" means any vendor
of risk management services or entities administering self-insurance plans, licensed pursuant
to section 60A.23, subdivision 8.

deleted text begin (14) Self-insured or self-insurer. deleted text end new text begin (p) new text end "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).

Sec. 2.

Minnesota Statutes 2018, 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:

deleted text begin (a) deleted text end new text begin (i) new text end 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;

deleted text begin (b) deleted text end new text begin (ii) new text end 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:

deleted text begin (i) deleted text end new text begin (A) new text end 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

deleted text begin (ii) deleted text end new text begin (B) new text end 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

deleted text begin (iii) deleted text end new text begin (C) new text end 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:

deleted text begin (a) deleted text end new text begin (i) new text end 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

deleted text begin (b) deleted text end new text begin (ii) new text end 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
deleted text end

(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 vendor." new text begin ; or
new text end

new text begin (18) conditioning payment to settle a claim on the use of a repair procedure or
specification that conflicts with the repair procedures and specifications recommended by
the original equipment manufacturer of the vehicle. Notwithstanding any statements or
recommendations contained in the original equipment manufacturer's repair specifications
or procedures with respect to the use of original equipment manufacturer parts, clause (7)
governs the use of parts during an insurer-funded repair.
new text end