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Minnesota Legislature

Office of the Revisor of Statutes

HF 1251

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

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

Bill Text Versions

Engrossments
Introduction Posted on 02/21/2007
1st Engrossment Posted on 03/12/2007

Current Version - 1st Engrossment

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A bill for an act
relating to civil actions; authorizing direct actions and imposing direct liability on
certain insurers in certain actions; preserving certain claims; regulating actions
involving certain insurance practices; appropriating money; amending Minnesota
Statutes 2006, section 302A.781, by adding a subdivision; proposing coding for
new law in Minnesota Statutes, chapters 72A; 540; 604.

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

Section 1.

new text begin [72A.329] DIRECT LIABILITY OF INSURER.
new text end

new text begin Any bond or policy of insurance covering liability to others for negligence makes
the insurer liable, up to the amounts stated in the bond or policy, to the persons entitled to
recover against the insured for the death of any person or for injury to persons or property,
irrespective of whether the liability is presently established or is contingent and to become
fixed or certain by final judgment against the insured.
new text end

Sec. 2.

Minnesota Statutes 2006, section 302A.781, is amended by adding a
subdivision to read:


new text begin Subd. 5. new text end

new text begin Other claims preserved. new text end

new text begin In addition to the claims in subdivision 4, all
other statutory and common law rights of persons who may bring claims of injury to a
person, including death, are not affected by dissolution under this chapter.
new text end

Sec. 3.

new text begin [540.19] NEGLIGENCE ACTIONS; INSURERS.
new text end

new text begin Subdivision 1. new text end

new text begin Direct action. new text end

new text begin In any action for damages caused by negligence,
any insurer which:
new text end

new text begin (1) has an interest in the outcome of the controversy adverse to the plaintiff or any
of the parties to the controversy;
new text end

new text begin (2) by its policy of insurance assumes or reserves the right to control the prosecution,
defense, or settlement of the claim or action; or
new text end

new text begin (3) by its policy agrees to prosecute or defend the action brought by plaintiff or any
of the parties to the action, or agrees to engage counsel to prosecute or defend the action
or agrees to pay the costs of the litigation,
new text end

new text begin is by this section made a proper party defendant in any action brought by plaintiff in this
state on account of any claim against the insured. If the policy of insurance was issued
or delivered outside this state, the insurer is by this subdivision made a proper party
defendant only if the accident, injury, or negligence occurred in this state.
new text end

new text begin Subd. 2. new text end

new text begin Other parties; impleading. new text end

new text begin If an insurer is made a party defendant
pursuant to this section and it appears at any time before or during the trial that there is or
may be a cross issue between the insurer and the insured or any issue between any other
person and the insurer involving the question of the insurer's liability if judgment should
be rendered against the insured, the court may, upon motion of any defendant in the action,
cause the person who may be liable upon such cross issue to be made a party defendant
to the action and all the issues involved in the controversy determined in the trial of the
action or any third party may be impleaded. Nothing in this subdivision prohibits the trial
court from directing and conducting separate trials on the issue of liability to the plaintiff
or other party seeking affirmative relief and on the issue of whether the insurance policy in
question affords coverage. Any party may move for separate trials. If the court orders
separate trials, the court shall specify in its order the sequence in which the trials are to
be conducted.
new text end

Sec. 4.

new text begin [604.18] GOOD FAITH INSURANCE PRACTICES.
new text end

new text begin Subdivision 1. new text end

new text begin Required conduct. new text end

new text begin (a) An insurer shall act in good faith in
connection with any matter involving a claim under an insurance policy.
new text end

new text begin (b) An insurer does not act in good faith if the insurer delays or denies benefits
offered or paid without an objectively reasonable basis for its offer, delay, or denial. An
insurer also does not act in good faith if the insurer engages in any fraud, false pretense,
false promise, misrepresentation, misleading statement, or deceptive practice that others
rely on in connection with any matter involving a claim under an insurance policy.
new text end

new text begin (c) For purposes of this section:
new text end

new text begin (1) "insurance policy" means an insurance policy or contract issued, executed,
renewed, maintained, or delivered in this state, other than a workers' compensation
insurance policy or contract; and
new text end

new text begin (2) "insurer" means an insurance company: (i) incorporated or organized in this state;
or (ii) admitted to do business in this state but not incorporated or organized in this state.
new text end

new text begin Subd. 2. new text end

new text begin Penalties and remedies. new text end

new text begin A person violating subdivision 1 is acting against
the public interest and is liable to the injured party for costs, damages, and reasonable
attorney fees.
new text end

new text begin Subd. 3. new text end

new text begin Insurance producers; liability limited. new text end

new text begin A licensed insurance producer
is not liable under this section for errors, acts, or omissions attributed to the insurer that
appointed the producer to transact business on its behalf, except to the extent the producer
has caused or contributed to the error, act, or omission.
new text end

new text begin Subd. 4. new text end

new text begin Report to commissioner. new text end

new text begin An insurer shall promptly report to the
commissioner of commerce the date and disposition of every settlement and award against
the insurer for a violation of subdivision 1.
new text end

Sec. 5. new text beginAPPROPRIATION; REPORT.
new text end

new text begin $....... is appropriated from the general fund to the commissioner of commerce for
the purpose of allowing the commissioner to monitor compliance with the good faith
obligations of insurers imposed by section 4.
new text end

new text begin The commissioner shall prepare a compliance report and submit it to the house and
senate standing committees with jurisdiction over insurance matters on January 1 of
each year. The report must also include the information received by the commissioner
under section 604.18, subdivision 3.
new text end

Sec. 6. new text beginEFFECTIVE DATE; APPLICATION.
new text end

new text begin Section 1 is effective August 1, 2007, and applies to bonds or policies of insurance
issued, renewed, or in place on or after that date. Section 3 is effective August 1, 2007,
and applies to actions commenced on or after that date. Section 4 is effective August 1,
2007, and applies to causes of action commenced or pending on or after that date.
new text end