1.1                          A bill for an act 
  1.2             relating to insurance; regulating nonrenewals and 
  1.3             underwriting of homeowner's insurance; prohibiting 
  1.4             various discriminatory practices in automobile and 
  1.5             homeowner's insurance; amending Minnesota Statutes 
  1.6             2002, sections 65A.29, subdivisions 8, 11; 65A.30; 
  1.7             72A.20, subdivisions 13, 23. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2002, section 65A.29, 
  1.10  subdivision 8, is amended to read: 
  1.11     Subd. 8.  [RULES.] (a) The commissioner may adopt rules 
  1.12  pursuant to chapter 14, to specify the grounds for nonrenewal, 
  1.13  reduction in limits of coverage, or elimination of coverage of a 
  1.14  homeowner's policy.  The rules must limit the grounds to the 
  1.15  following factors:  
  1.16     (1) reasons stated for cancellation in section 65A.01, 
  1.17  subdivision 3a; 
  1.18     (2) reasons stated in section 72A.20, subdivision 13; 
  1.19     (3) insured's loss experience, ~~not to include natural~~ 
  1.20  ~~causes~~ as limited by paragraphs (b) and (c); and 
  1.21     (4) other factors deemed reasonable by the commissioner. 
  1.22     (b) An insurer may not take the action specified in 
  1.23  paragraph (a) because of losses caused by natural causes. 
  1.24     (c) If two or fewer claims are submitted during the 
  1.25  experience period, the insurer may not take the action specified 
  1.26  in paragraph (a) on the grounds of the number of claims, but the 
  2.1   insurer may take the action specified in paragraph (a) on the 
  2.2   basis of two claims submitted during the experience period, the 
  2.3   aggregate of which exceeds $3,000. 
  2.4      (d) The rules may give consideration to the form and 
  2.5   content of the termination notice to the insured, a statement as 
  2.6   to what constitutes receipt of the termination notice, and the 
  2.7   procedure by which the insured may appeal a termination notice.  
  2.8      (e) The rules adopted under this subdivision may provide 
  2.9   for imposition of a monetary penalty not greater than $500 per 
  2.10  occurrence upon insurers who are found to be in violation of the 
  2.11  law or the rules.  
  2.12     ~~(b)~~ (f) In addition to any rules adopted under this 
  2.13  subdivision, an insured may appeal any nonrenewal under this 
  2.14  section to the commissioner of commerce.  If the commissioner 
  2.15  finds that the nonrenewal is unjustified, arbitrary, or 
  2.16  capricious, the commissioner shall order the insurer to 
  2.17  reinstate the insured's policy.  The commissioner's order may be 
  2.18  appealed pursuant to chapter 14.  The insured's policy shall 
  2.19  continue in force pending the conclusion of the appeal to the 
  2.20  commissioner.  The insurer must notify the insured of the 
  2.21  insured's right to appeal the nonrenewal to the commissioner in 
  2.22  the notice of nonrenewal required under subdivision 7. 
  2.23     Sec. 2.  Minnesota Statutes 2002, section 65A.29, 
  2.24  subdivision 11, is amended to read: 
  2.25     Subd. 11.  [NONRENEWAL.] Every insurer shall establish a 
  2.26  plan that sets out the minimum number and amount of claims 
  2.27  during an experience period that may result in a 
  2.28  nonrenewal.  For purposes of the plan, the insurer may not 
  2.29  consider the following as claims:  
  2.30     (1) the insured's inquiry about coverage for a hypothetical 
  2.31  or potential claim; 
  2.32     (2) notification by the insured of a potential claim where 
  2.33  the insured does not ultimately file the claim; or 
  2.34     (3) a claim where the insurer does not ultimately pay out 
  2.35  any funds.  
  2.36     No homeowner's insurance policy may be nonrenewed based on 
  3.1   the insured's loss experience unless the insurer has sent a 
  3.2   written notice that any future losses may result in nonrenewal 
  3.3   due to loss experience. 
  3.4      Any nonrenewal of a homeowner's insurance policy must, at a 
  3.5   minimum, comply with the requirements of subdivision 8 and the 
  3.6   rules adopted by the commissioner. 
  3.7      Sec. 3.  Minnesota Statutes 2002, section 65A.30, is 
  3.8   amended to read: 
  3.9      65A.30 [DAY CARE SERVICES; COVERAGE.] 
  3.10     Subdivision 1.  [NO COVERAGE.] There shall be no coverage 
  3.11  under a day care provider's homeowner's insurance for losses or 
  3.12  damages arising out of the operation of day care services unless:
  3.13     (1) specifically covered in a policy; or 
  3.14     (2) covered by a rider for business coverage attached to a 
  3.15  policy. 
  3.16     For purposes of this section, "day care" means "family day 
  3.17  care" and "group family day care" as defined in Minnesota Rules, 
  3.18  part 9502.0315.  "Day care" does not include care provided by an 
  3.19  individual who is related, as defined in Minnesota Rules, part 
  3.20  9502.0315, to the person being cared for or care provided by an 
  3.21  unrelated individual to persons from a single family of persons 
  3.22  related to each other. 
  3.23     Subd. 2.  [PROHIBITED UNDERWRITING PRACTICES.] No insurer 
  3.24  shall refuse to renew, or decline to offer or write, homeowners' 
  3.25  insurance coverage solely because the property to be covered 
  3.26  houses day care services as defined in this section.  
  3.27     Sec. 4.  Minnesota Statutes 2002, section 72A.20, 
  3.28  subdivision 13, is amended to read: 
  3.29     Subd. 13.  [~~REFUSAL TO RENEW~~ PROHIBITED UNDERWRITING 
  3.30  PRACTICES; HOMEOWNER'S INSURANCE.] ~~Refusing~~ It is an unfair 
  3.31  method of competition and an unfair and deceptive act or 
  3.32  practice to refuse to renew, ~~declining~~ to decline to offer or 
  3.33  write, or ~~charging~~ to charge differential rates for an 
  3.34  equivalent amount of homeowner's insurance coverage, as defined 
  3.35  by section 65A.27, for property located in a town or statutory 
  3.36  or home rule charter city, in which the insurer offers to sell 
  4.1   or writes homeowner's insurance, solely because:  
  4.2      (a) of the geographic area in which the property is 
  4.3   located; 
  4.4      (b) of the age of the primary structure sought to be 
  4.5   insured; 
  4.6      (c) the insured or prospective insured was denied coverage 
  4.7   of the property by another insurer, whether by cancellation, 
  4.8   nonrenewal or declination to offer coverage, for a reason other 
  4.9   than those specified in section 65A.01, subdivision 3a, clauses 
  4.10  (a) to (e); ~~or~~ 
  4.11     (d) the property of the insured or prospective insured has 
  4.12  been insured under the Minnesota FAIR Plan Act~~, shall constitute~~ 
  4.13  ~~an unfair method of competition and an unfair and deceptive act~~ 
  4.14  ~~or practice~~; 
  4.15     (e) the insured has inquired about coverage for a 
  4.16  hypothetical or potential claim, or has notified the insurer of 
  4.17  a potential claim where the insured does not ultimately file the 
  4.18  claims, or has made a claim where the insurer does not 
  4.19  ultimately pay out any funds; or 
  4.20     (f) the property has been the subject of claims resulting 
  4.21  from natural causes. 
  4.22     This subdivision prohibits an insurer from filing or 
  4.23  charging different rates for different zip code areas within the 
  4.24  same town or statutory or home rule charter city. 
  4.25     This subdivision shall not prohibit the insurer from 
  4.26  applying underwriting or rating standards which the insurer 
  4.27  applies generally in all other locations in the state and which 
  4.28  are not specifically prohibited by clauses (a) to ~~(d)~~ (f).  Such 
  4.29  underwriting or rating standards shall specifically include but 
  4.30  not be limited to standards based upon the proximity of the 
  4.31  insured property to an extraordinary hazard or based upon the 
  4.32  quality or availability of fire protection services or based 
  4.33  upon the density or concentration of the insurer's risks.  
  4.34  Clause (b) shall not prohibit the use of rating standards based 
  4.35  upon the age of the insured structure's plumbing, electrical, 
  4.36  heating or cooling system or other part of the structure, the 
  5.1   age of which affects the risk of loss.  Any insurer's failure to 
  5.2   comply with section 65A.29, subdivisions 2 to 4, either (1) by 
  5.3   failing to give an insured or applicant the required notice or 
  5.4   statement or (2) by failing to state specifically a bona fide 
  5.5   underwriting or other reason for the refusal to write shall 
  5.6   create a presumption that the insurer has violated this 
  5.7   subdivision.  
  5.8      Sec. 5.  Minnesota Statutes 2002, section 72A.20, 
  5.9   subdivision 23, is amended to read: 
  5.10     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
  5.11  POLICIES.] (a) No insurer that offers an automobile insurance 
  5.12  policy in this state shall: 
  5.13     (1) use the employment status of the applicant as an 
  5.14  underwriting standard or guideline; or 
  5.15     (2) deny coverage to a policyholder for the same reason. 
  5.16     (b) No insurer that offers an automobile insurance policy 
  5.17  in this state shall: 
  5.18     (1) use the applicant's status as a residential tenant, as 
  5.19  the term is defined in section 504B.001, subdivision 12, as an 
  5.20  underwriting standard or guideline; or 
  5.21     (2) deny coverage to a policyholder for the same reason; or 
  5.22     (3) make any discrimination in offering or establishing 
  5.23  rates, premiums, dividends, or benefits of any kind, or by way 
  5.24  of rebate, for the same reason.  
  5.25     (c) No insurer that offers an automobile insurance policy 
  5.26  in this state shall: 
  5.27     (1) use the failure of the applicant to have an automobile 
  5.28  policy in force during any period of time before the application 
  5.29  is made as an underwriting standard or guideline; or 
  5.30     (2) deny coverage to a policyholder for the same reason. 
  5.31     Paragraph (c) does not apply if the applicant was required 
  5.32  by law to maintain automobile insurance coverage and failed to 
  5.33  do so. 
  5.34     An insurer may require reasonable proof that the applicant 
  5.35  did not fail to maintain this coverage.  The insurer is not 
  5.36  required to accept the mere lack of a conviction or citation for 
  6.1   failure to maintain this coverage as proof of failure to 
  6.2   maintain coverage.  The insurer must provide the applicant with 
  6.3   information identifying the documentation that is required to 
  6.4   establish reasonable proof that the applicant did not fail to 
  6.5   maintain the coverage. 
  6.6      (d) No insurer that offers an automobile insurance policy 
  6.7   in this state shall use an insured's or applicant's prior claims 
  6.8   for benefits paid under section 65B.44 or prior claims for 
  6.9   collision losses as an underwriting standard or guideline, or 
  6.10  for rating purposes, if the insured or applicant was 50 percent 
  6.11  or less negligent in the accident or accidents causing the 
  6.12  claims. 
  6.13     (e) No insurer shall refuse to issue any standard or 
  6.14  preferred policy of motor vehicle insurance or make any 
  6.15  discrimination in the acceptance of risks, in rates, premiums, 
  6.16  dividends, or benefits of any kind, or by way of rebate:  
  6.17     (1) between persons of the same class, or 
  6.18     (2) on account of race, or 
  6.19     (3) on account of physical handicap if the handicap is 
  6.20  compensated for by special training, equipment, prosthetic 
  6.21  device, corrective lenses, or medication and if the physically 
  6.22  handicapped person: 
  6.23     (i) is licensed by the Department of Public Safety to 
  6.24  operate a motor vehicle in this state, and 
  6.25     (ii) operates only vehicles that are equipped with 
  6.26  auxiliary devices and equipment necessary for safe and effective 
  6.27  operation by the handicapped person, or 
  6.28     (4) on account of marital dissolution. 
  6.29     Sec. 6.  [EFFECTIVE DATES.] 
  6.30     Sections 2 to 5 are effective January 1, 2005, and apply to 
  6.31  coverage applied for, issued, or renewed on or after that date.  
  6.32  Section 1 is effective January 1, 2005, and applies to losses 
  6.33  occurring on or after that date, regardless of whether the 
  6.34  commissioner has as of that date amended Minnesota Rules to 
  6.35  comply with that section.