SF 2173

2nd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to civil actions; requiring insurers to act in good faith in connection
with claims practices; proposing coding for new law in Minnesota Statutes,
chapter 604.

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

Section 1.

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 involving
an insured's claim under an insurance policy.
new text end

new text begin (b) An insurer does not act in good faith if the insured can show:
new text end

new text begin (1) the absence of a reasonable basis for denying the benefits of the insurance
policy; and
new text end

new text begin (2) the insurer's knowledge or reckless disregard of the lack of a reasonable basis
for denying a claim.
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: (i) a workers' compensation
insurance policy or contract; (ii) a policy or contract of a health carrier as defined in section
62A.011; or (iii) an insurance contract authorized under section 60A.06, subdivision 1,
clause (4); 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. The term does not include a political subdivision providing self-insurance or
establishing a pool under section 471.981, subdivision 3.
new text end

new text begin Subd. 2. new text end

new text begin Penalties and remedies. new text end

new text begin An insurer violating subdivision 1 is acting
against the public interest and is liable to the insured for costs, actual 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 Right to cure. new text end

new text begin (a) As a condition precedent to bringing an action for
violation of this section, the insurer must have been given 60 days' written notice of
the violation.
new text end

new text begin (b) The notice shall state with specificity the following information:
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new text begin (1) the facts and circumstances giving rise to the violation; and
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new text begin (2) the name of any individual involved in the violation.
new text end

new text begin (c) No action shall lie if, within 60 days after filing notice, the damages are paid or
circumstances giving rise to the violation are corrected.
new text end

new text begin Subd. 5. new text end

new text begin No effect on third parties. new text end

new text begin Nothing in this section shall be deemed to
effect third-party claims or remedies for bad faith against insurers under the common
law or any other statute.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2007, and applies to causes
of action commenced on or after that date.
new text end