HF 930

as introduced - 88th Legislature (2013 - 2014) Posted on 02/25/2013 02:29pm

A bill for an act
relating to commerce; regulating homeowner's insurance coverages and
residential contracting claims; regulating claims practices; amending Minnesota
Statutes 2012, sections 65A.27, subdivision 1; 72A.201, subdivision 4; 325E.66,
subdivision 2, by adding a subdivision; proposing coding for new law in
Minnesota Statutes, chapter 65A.

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

Section 1.

Minnesota Statutes 2012, section 65A.27, subdivision 1, is amended to read:

Subdivision 1.

Scope.

For purposes of sections 65A.27 to deleted text begin 65A.302 deleted text end new text begin 65A.304 new text end , the
following terms have the meanings given.

Sec. 2.

new text begin [65A.303] ANNUAL SUMMARY STATEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Summary statement of coverages and exclusions. new text end

new text begin (a) An insurer
shall provide a policyholder with an annual statement that summarizes the coverages and
exclusions under the policy issued by the insurer.
new text end

new text begin (b) The insurer's statement shall be clear and specific.
new text end

new text begin (c) The insurer's statement shall state whether the coverages under the policy provide
for replacement cost, actual cash value, or other method of loss payment for covered
structures and contents.
new text end

new text begin (d) The insurer's statement shall include a disclosure that states:
new text end

new text begin (1) the policyholder should read the policy for complete information on coverages
and exclusions;
new text end

new text begin (2) the policyholder should refer to the declarations page for a listing of coverages
purchased;
new text end

new text begin (3) the policyholder should communicate with the insurance producer or the insurer
for any additional information regarding the scope of coverages in the policy;
new text end

new text begin (4) the statement does not include additional optional coverage purchased by the
policyholder, if any;
new text end

new text begin (5) the statement is not part of the policy or contract of insurance and does not
create a private right of action;
new text end

new text begin (6) all rights, duties, and obligations are controlled by the policy and contract of
insurance; and
new text end

new text begin (7) the standard homeowner's insurance policy does not cover losses from flood.
new text end

new text begin Subd. 2. new text end

new text begin Status of statement. new text end

new text begin The statement under subdivision 1:
new text end

new text begin (1) is not part of the policy or contract of insurance; and
new text end

new text begin (2) does not create a private right of action.
new text end

new text begin Subd. 3. new text end

new text begin Rules. new text end

new text begin The commissioner may adopt rules to implement the provisions
of this section.
new text end

Sec. 3.

new text begin [65A.304] STATEMENT OF OPTIONAL COVERAGE AVAILABLE.
new text end

new text begin Subdivision 1. new text end

new text begin Generally. new text end

new text begin (a) An insurer that sells or negotiates homeowner's
insurance in the state shall provide an applicant, at the time of application for homeowner's
insurance, with a written statement that lists all additional optional coverage available
from the insurer to the applicant.
new text end

new text begin (b) If an application is made by telephone, the insurer is deemed to be in compliance
with this section if, within seven calendar days after the date of application, the insurer
sends by certificate of mailing the statement to the applicant or insured.
new text end

new text begin (c) If an application is made using the Internet, the insurer is deemed to be in
compliance with this section if the insurer provides the statement to the applicant prior
to submission of the application.
new text end

new text begin Subd. 2. new text end

new text begin Contents. new text end

new text begin The statement must:
new text end

new text begin (1) be on a separate form;
new text end

new text begin (2) be titled, in at least 12-point type, "Additional Optional Coverage Not Included
in the Standard Homeowner's Insurance Policy";
new text end

new text begin (3) contain the following disclosure in at least ten-point type:
new text end

new text begin "Your standard homeowner's insurance policy does not cover all risks. You may
need to obtain additional insurance to cover loss or damage to your home, property, and
the contents of your home or to cover risks related to business or personal activities on
your property.
new text end

new text begin This statement provides a list of the types of additional insurance coverage that are
available. Contact your insurance company, insurance producer, or insurance agent to
discuss these additional coverages."; and
new text end

new text begin (4) contain a list of additional optional coverage.
new text end

new text begin Subd. 3. new text end

new text begin Effect of notice. new text end

new text begin A statement provided under this section does not create
a private right of action.
new text end

Sec. 4.

Minnesota Statutes 2012, section 72A.201, subdivision 4, is amended to read:

Subd. 4.

Standards for claim filing and handling.

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

(1) except for claims made under a health insurance policy, after receiving
notification of claim from an insured or a claimant, failing to acknowledge receipt of the
notification of the claim within ten business days, and failing to promptly provide all
necessary claim forms and instructions to process the claim, unless the claim is settled
within ten business days. The acknowledgment must include the telephone number of the
company representative who can assist the insured or the claimant in providing information
and assistance that is reasonable so that the insured or claimant can comply with the policy
conditions and the insurer's reasonable requirements. If an acknowledgment is made by
means other than writing, an appropriate notation of the acknowledgment must be made in
the claim file of the insurer and dated. An appropriate notation must include at least the
following information where the acknowledgment is by telephone or oral contact:

(i) the telephone number called, if any;

(ii) the name of the person making the telephone call or oral contact;

(iii) the name of the person who actually received the telephone call or oral contact;

(iv) the time of the telephone call or oral contact; and

(v) the date of the telephone call or oral contact;

(2) failing to reply, within ten business days of receipt, to all other communications
about a claim from an insured or a claimant that reasonably indicate a response is
requested or needed;

(3)(i) unless provided otherwise by clause (ii) or (iii), other law, or in the policy,
failing to complete its investigation and inform the insured or claimant of acceptance or
denial of a claim within 30 business days after receipt of notification of claim unless
the investigation cannot be reasonably completed within that time. In the event that the
investigation cannot reasonably be completed within that time, the insurer shall notify
the insured or claimant within the time period of the reasons why the investigation is not
complete and the expected date the investigation will be complete. For claims made under
a health policy the notification of claim must be in writing;

(ii) for claims submitted under a health policy, the insurer must comply with all of
the requirements of section 62Q.75;

(iii) for claims submitted under a health policy that are accepted, the insurer must
notify the insured or claimant no less than semiannually of the disposition of claims of the
insured or claimant. Notwithstanding the requirements of section 72A.20, subdivision
37, this notification requirement is satisfied if the information related to the acceptance of
the claim is made accessible to the insured or claimant on a secured Web site maintained
by the insurer. For purposes of this clause, acceptance of a claim means that there is no
additional financial liability for the insured or claimant, either because there is a flat
co-payment amount specified in the health plan or because there is no co-payment,
deductible, or coinsurance owed;

(4) where evidence of suspected fraud is present, the requirement to disclose their
reasons for failure to complete the investigation within the time period set forth in clause
(3) need not be specific. The insurer must make this evidence available to the Department
of Commerce if requested;

(5) failing to notify an insured who has made a notification of claim of all available
benefits or coverages which the insured may be eligible to receive under the terms of a
policy and of the documentation which the insured must supply in order to ascertain
eligibility;

(6) unless otherwise provided by law or in the policy, requiring an insured to give
written notice of loss or proof of loss within a specified time, and thereafter seeking to
relieve the insurer of its obligations if the time limit is not complied with, unless the
failure to comply with the time limit prejudices the insurer's rights and then only if the
insurer gave prior notice to the insured of the potential prejudice;

(7) advising an insured or a claimant not to obtain the services of an attorney or
an adjuster, or representing that payment will be delayed if an attorney or an adjuster
is retained by the insured or the claimant;

(8) failing to advise in writing an insured or claimant who has filed a notification of
claim known to be unresolved, and who has not retained an attorney, of the expiration of
a statute of limitations at least 60 days prior to that expiration. For the purposes of this
clause, any claim on which the insurer has received no communication from the insured
or claimant for a period of two years preceding the expiration of the applicable statute
of limitations shall not be considered to be known to be unresolved and notice need not
be sent pursuant to this clause;

(9) demanding information which would not affect the settlement of the claim;

(10) unless expressly permitted by law or the policy, refusing to settle a claim of an
insured on the basis that the responsibility should be assumed by others;

(11) failing, within 60 business days after receipt of a properly executed proof of loss,
to advise the insured of the acceptance or denial of the claim by the insurer. No insurer
shall deny a claim on the grounds of a specific policy provision, condition, or exclusion
unless reference to the provision, condition, or exclusion is included in the denial. The
denial must be given to the insured in writing with a copy filed in the claim file;

(12) denying or reducing a claim on the basis of an application which was altered or
falsified by the agent or insurer without the knowledge of the insured;

(13) failing to notify the insured of the existence of the additional living expense
coverage when an insured under a homeowners policy sustains a loss by reason of a
covered occurrence and the damage to the dwelling is such that it is not habitable;

(14) failing to inform an insured or a claimant that the insurer will pay for an
estimate of repair if the insurer requested the estimate and the insured or claimant had
previously submitted two estimates of repair deleted text begin . deleted text end new text begin ;
new text end

new text begin (15) refusing to discuss a claim with the contractor with whom the claimant has
contracted to provide goods and services in connection with the loss.
new text end

Sec. 5.

Minnesota Statutes 2012, section 325E.66, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Payments to residential contractor. new text end

new text begin (a) The insurer shall make payment
by check or draft directly to the residential contractor providing the covered home repair
or improvement services or, with the consent of the residential contractor, by an electronic
funds transfer to the residential contractor, if the following conditions are met and if
the insured has actual knowledge of them:
new text end

new text begin (1) the property owner of record has signed or transmitted to the insurer a written
statement of all of the following:
new text end

new text begin (i) the work completed under the contract is satisfactory;
new text end

new text begin (ii) the insurer, upon direct payment to the residential contractor, is released from
liability; and
new text end

new text begin (iii) the written statement was not signed by the owner until all work under the
contract was completed;
new text end

new text begin (2) the property owner of record, the named insured, and any loss payee have
consented in writing to the direct payment and release from liability; and
new text end

new text begin (3) the completed work has been approved by the appropriate public official as
conforming to existing building, electrical, and construction codes.
new text end

new text begin (b) If the insurer has authorized the work and its liability is not in dispute, the
direct payment provided for in paragraph (a) must be made to the residential contractor
performing the work no later than 30 days after the insurer has actual knowledge that the
conditions in paragraph (a) have been satisfied.
new text end

new text begin (c) For purposes of this subdivision, "loss payee" includes any mortgagee of the
insured real property.
new text end

Sec. 6.

Minnesota Statutes 2012, section 325E.66, subdivision 2, is amended to read:

Subd. 2.

Private remedy.

new text begin (a) new text end If a residential contractor violates subdivision 1, the
insured or the applicable insurer may bring an action against the residential contractor
in a court of competent jurisdiction for damages sustained by the insured or insurer as a
consequence of the residential contractor's violation.

new text begin (b) If an insurer violates subdivision 1a, the residential contractor may bring an
action against the insurer in a court of competent jurisdiction for damages sustained as a
result of the insurer's violation.
new text end