1.1 	A bill for an act
1.2 	relating to civil actions; requiring insurers to act in good faith in connection 
1.3 	with claims practices; proposing coding for new law in Minnesota Statutes, 
1.4 	chapter 604.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [604.18] GOOD FAITH INSURANCE PRACTICES.
1.7 		Subdivision 1.Required conduct. (a) An insurer shall act in good faith involving 
1.8 	an insured's claim under an insurance policy.
1.9 	(b) An insurer does not act in good faith if the insured can show:
1.10 	(1) the absence of a reasonable basis for denying the benefits of the insurance 
1.11 	policy; and
1.12 	(2) the insurer's knowledge or reckless disregard of the lack of a reasonable basis 
1.13 	for denying a claim.
1.14 	(c) For purposes of this section:
1.15 	(1) "insurance policy" means an insurance policy or contract issued, executed, 
1.16 	renewed, maintained, or delivered in this state, other than: (i) a workers' compensation 
1.17 	insurance policy or contract; (ii) a policy or contract of a health carrier as defined in section 
1.18 	62A.011; or (iii) an insurance contract authorized under section 60A.06, subdivision 1, 
1.19 	clause (4); and 
1.20 	(2) "insurer" means an insurance company: (i) incorporated or organized in this 
1.21 	state; or (ii) admitted to do business in this state but not incorporated or organized in 
1.22 	this state. The term does not include a political subdivision providing self-insurance or 
1.23 	establishing a pool under section 471.981, subdivision 3.
2.1 		Subd. 2.Penalties and remedies. An insurer violating subdivision 1 is acting 
2.2 	against the public interest and is liable to the insured for costs, actual damages, and 
2.3 	reasonable attorney fees.
2.4 		Subd. 3.Insurance producers; liability limited. A licensed insurance producer 
2.5 	is not liable under this section for errors, acts, or omissions attributed to the insurer that 
2.6 	appointed the producer to transact business on its behalf, except to the extent the producer 
2.7 	has caused or contributed to the error, act, or omission.
2.8 		Subd. 4.Right to cure. (a) As a condition precedent to bringing an action for 
2.9 	violation of this section, the insurer must have been given 60 days' written notice of 
2.10 	the violation.
2.11 	(b) The notice shall state with specificity the following information:
2.12 	(1) the facts and circumstances giving rise to the violation; and
2.13 	(2) the name of any individual involved in the violation.
2.14 	(c) No action shall lie if, within 60 days after filing notice, the damages are paid or 
2.15 	circumstances giving rise to the violation are corrected.
2.16 		Subd. 5.No effect on third parties. Nothing in this section shall be deemed to 
2.17 	effect third-party claims or remedies for bad faith against insurers under the common 
2.18 	law or any other statute.

2.19 	EFFECTIVE DATE. This section is effective August 1, 2007, and applies to causes 
2.20 	of action commenced on or after that date.