SF 2667

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating auto glass repair 
  1.3             and replacement; amending Minnesota Statutes 2000, 
  1.4             section 72A.201, subdivision 6; proposing coding for 
  1.5             new law in Minnesota Statutes, chapter 72A; repealing 
  1.6             Minnesota Statutes 2000, section 72A.202. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2000, section 72A.201, 
  1.9   subdivision 6, is amended to read: 
  1.10     Subd. 6.  [STANDARDS FOR AUTOMOBILE INSURANCE CLAIMS 
  1.11  HANDLING, SETTLEMENT OFFERS, AND AGREEMENTS.] In addition to the 
  1.12  acts specified in subdivisions 4, 5, 7, 8, and 9, the following 
  1.13  acts by an insurer, adjuster, or a self-insured or 
  1.14  self-insurance administrator constitute unfair settlement 
  1.15  practices:  
  1.16     (1) if an automobile insurance policy provides for the 
  1.17  adjustment and settlement of an automobile total loss on the 
  1.18  basis of actual cash value or replacement with like kind and 
  1.19  quality and the insured is not an automobile dealer, failing to 
  1.20  offer one of the following methods of settlement:  
  1.21     (a) comparable and available replacement automobile, with 
  1.22  all applicable taxes, license fees, at least pro rata for the 
  1.23  unexpired term of the replaced automobile's license, and other 
  1.24  fees incident to the transfer or evidence of ownership of the 
  1.25  automobile paid, at no cost to the insured other than the 
  1.26  deductible amount as provided in the policy; 
  2.1      (b) a cash settlement based upon the actual cost of 
  2.2   purchase of a comparable automobile, including all applicable 
  2.3   taxes, license fees, at least pro rata for the unexpired term of 
  2.4   the replaced automobile's license, and other fees incident to 
  2.5   transfer of evidence of ownership, less the deductible amount as 
  2.6   provided in the policy.  The costs must be determined by:  
  2.7      (i) the cost of a comparable automobile, adjusted for 
  2.8   mileage, condition, and options, in the local market area of the 
  2.9   insured, if such an automobile is available in that area; or 
  2.10     (ii) one of two or more quotations obtained from two or 
  2.11  more qualified sources located within the local market area when 
  2.12  a comparable automobile is not available in the local market 
  2.13  area.  The insured shall be provided the information contained 
  2.14  in all quotations prior to settlement; or 
  2.15     (iii) any settlement or offer of settlement which deviates 
  2.16  from the procedure above must be documented and justified in 
  2.17  detail.  The basis for the settlement or offer of settlement 
  2.18  must be explained to the insured; 
  2.19     (2) if an automobile insurance policy provides for the 
  2.20  adjustment and settlement of an automobile partial loss on the 
  2.21  basis of repair or replacement with like kind and quality and 
  2.22  the insured is not an automobile dealer, failing to offer one of 
  2.23  the following methods of settlement:  
  2.24     (a) to assume all costs, including reasonable towing costs, 
  2.25  for the satisfactory repair of the motor vehicle.  Satisfactory 
  2.26  repair includes repair of both obvious and hidden damage as 
  2.27  caused by the claim incident.  This assumption of cost may be 
  2.28  reduced by applicable policy provision; or 
  2.29     (b) to offer a cash settlement sufficient to pay for 
  2.30  satisfactory repair of the vehicle.  Satisfactory repair 
  2.31  includes repair of obvious and hidden damage caused by the claim 
  2.32  incident, and includes reasonable towing costs; 
  2.33     (3) regardless of whether the loss was total or partial, in 
  2.34  the event that a damaged vehicle of an insured cannot be safely 
  2.35  driven, failing to exercise the right to inspect automobile 
  2.36  damage prior to repair within five business days following 
  3.1   receipt of notification of claim.  In other cases the inspection 
  3.2   must be made in 15 days; 
  3.3      (4) regardless of whether the loss was total or partial, 
  3.4   requiring unreasonable travel of a claimant or insured to 
  3.5   inspect a replacement automobile, to obtain a repair estimate, 
  3.6   to allow an insurer to inspect a repair estimate, to allow an 
  3.7   insurer to inspect repairs made pursuant to policy requirements, 
  3.8   or to have the automobile repaired; 
  3.9      (5) regardless of whether the loss was total or partial, if 
  3.10  loss of use coverage exists under the insurance policy, failing 
  3.11  to notify an insured at the time of the insurer's acknowledgment 
  3.12  of claim, or sooner if inquiry is made, of the fact of the 
  3.13  coverage, including the policy terms and conditions affecting 
  3.14  the coverage and the manner in which the insured can apply for 
  3.15  this coverage; 
  3.16     (6) regardless of whether the loss was total or partial, 
  3.17  failing to include the insured's deductible in the insurer's 
  3.18  demands under its subrogation rights.  Subrogation recovery must 
  3.19  be shared at least on a proportionate basis with the insured, 
  3.20  unless the deductible amount has been otherwise recovered by the 
  3.21  insured, except that when an insurer is recovering directly from 
  3.22  an uninsured third party by means of installments, the insured 
  3.23  must receive the full deductible share as soon as that amount is 
  3.24  collected and before any part of the total recovery is applied 
  3.25  to any other use.  No deduction for expenses may be made from 
  3.26  the deductible recovery unless an attorney is retained to 
  3.27  collect the recovery, in which case deduction may be made only 
  3.28  for a pro rata share of the cost of retaining the attorney.  An 
  3.29  insured is not bound by any settlement of its insurer's 
  3.30  subrogation claim with respect to the deductible amount, unless 
  3.31  the insured receives, as a result of the subrogation settlement, 
  3.32  the full amount of the deductible.  Recovery by the insurer and 
  3.33  receipt by the insured of less than all of the insured's 
  3.34  deductible amount does not affect the insured's rights to 
  3.35  recover any unreimbursed portion of the deductible from parties 
  3.36  liable for the loss; 
  4.1      (7) requiring as a condition of payment of a claim that 
  4.2   repairs to any damaged vehicle must be made by a particular 
  4.3   contractor or repair shop or that parts, other than window 
  4.4   glass, must be replaced with parts other than original equipment 
  4.5   parts; 
  4.6      (8) where liability is reasonably clear, failing to inform 
  4.7   the claimant in an automobile property damage liability claim 
  4.8   that the claimant may have a claim for loss of use of the 
  4.9   vehicle; 
  4.10     (9) failing to make a good faith assignment of comparative 
  4.11  negligence percentages in ascertaining the issue of liability; 
  4.12     (10) failing to pay any interest required by statute on 
  4.13  overdue payment for an automobile personal injury protection 
  4.14  claim; 
  4.15     (11) if an automobile insurance policy contains either or 
  4.16  both of the time limitation provisions as permitted by section 
  4.17  65B.55, subdivisions 1 and 2, failing to notify the insured in 
  4.18  writing of those limitations at least 60 days prior to the 
  4.19  expiration of that time limitation; 
  4.20     (12) if an insurer chooses to have an insured examined as 
  4.21  permitted by section 65B.56, subdivision 1, failing to notify 
  4.22  the insured of all of the insured's rights and obligations under 
  4.23  that statute, including the right to request, in writing, and to 
  4.24  receive a copy of the report of the examination; 
  4.25     (13) failing to provide, to an insured who has submitted a 
  4.26  claim for benefits described in section 65B.44, a complete copy 
  4.27  of the insurer's claim file on the insured, excluding internal 
  4.28  company memoranda, all materials that relate to any insurance 
  4.29  fraud investigation, materials that constitute attorney 
  4.30  work-product or that qualify for the attorney-client privilege, 
  4.31  and medical reviews that are subject to section 145.64, within 
  4.32  ten business days of receiving a written request from the 
  4.33  insured.  The insurer may charge the insured a reasonable 
  4.34  copying fee.  This clause supersedes any inconsistent provisions 
  4.35  of sections 72A.49 to 72A.505; 
  4.36     (14) if an automobile policy provides for the adjustment or 
  5.1   settlement of an automobile loss due to damaged window glass, 
  5.2   failing to provide payment to the insured's chosen vendor based 
  5.3   on a competitive fair and reasonable market price as determined 
  5.4   according to section 72A.203.  If the insurer disputes the 
  5.5   amount charged by the vendor, the price shall be as established 
  5.6   by the commissioner through a market survey to determine a fair 
  5.7   and reasonable market price for similar services.  The survey 
  5.8   shall be: 
  5.9      (a) an annual survey using accepted industry standards; 
  5.10     (b) a statistically significant sample of auto glass 
  5.11  vendors; and 
  5.12     (c) of work actually done. 
  5.13  The commissioner shall consult with interested parties in 
  5.14  designing the survey document.  Reasonable deviation from the 
  5.15  market price determined by survey is allowed when based on the 
  5.16  facts in each case.  This clause does not prohibit an insurer 
  5.17  from recommending a vendor to the insured or from agreeing with 
  5.18  a vendor to perform work at an agreed-upon price, provided, 
  5.19  however, that before recommending a vendor, the insurer shall 
  5.20  offer its insured the opportunity to choose the vendor; 
  5.21     (15) requiring that the repair or replacement of motor 
  5.22  vehicle glass and related products and services be made in a 
  5.23  particular place or shop or by a particular entity, or by 
  5.24  otherwise limiting the ability of the insured to select the 
  5.25  place, shop, or entity to repair or replace the motor vehicle 
  5.26  glass and related products and services; or 
  5.27     (16) engaging in any act or practice of intimidation, 
  5.28  coercion, threat, incentive, or inducement for or against an 
  5.29  insured to use a particular company or location to provide the 
  5.30  motor vehicle glass repair or replacement services or products.  
  5.31  For purposes of this section, a warranty shall not be considered 
  5.32  an inducement or incentive. 
  5.33     Sec. 2.  [72A.203] [AUTO GLASS; FAIR AND REASONABLE MARKET 
  5.34  PRICE.] 
  5.35     Subdivision 1.  [OBLIGATION TO PAY.] (a) A vendor invoice 
  5.36  that falls within the range of fair and reasonable market 
  6.1   prices, as determined by the commissioner under subdivision 2, 
  6.2   is presumed to be fair and reasonable.  The insurer shall pay 
  6.3   the invoice within 30 days of receiving it unless arbitration 
  6.4   under subdivision 3 is initiated by the insurer within that time.
  6.5      (b) A vendor invoice that falls outside the range of fair 
  6.6   and reasonable market prices, as determined by the commissioner 
  6.7   under subdivision 2, is presumed not to be fair and reasonable.  
  6.8   The insurer shall pay the vendor an amount that falls within the 
  6.9   range of fair and reasonable market prices within 30 days of 
  6.10  receiving the invoice.  Payment according to this subdivision 
  6.11  constitutes satisfaction of the claim unless arbitration under 
  6.12  subdivision 3 is initiated by the vendor within 30 days of 
  6.13  receiving payment. 
  6.14     Subd. 2.  [DETERMINATION.] The range of fair and reasonable 
  6.15  market prices must be established by the commissioner after 
  6.16  conducting a market survey to determine the average price range 
  6.17  of the following components of automobile glass repair or 
  6.18  replacement:  (1) glass; (2) adhesive; and (3) labor.  The sum 
  6.19  of the ranges of each of these components are added together to 
  6.20  determine the range of fair and reasonable market prices.  The 
  6.21  range of fair and reasonable market prices includes one standard 
  6.22  deviation at the low end of the range and one standard deviation 
  6.23  at the high end of the range. 
  6.24     The commissioner may assess insurers and auto glass vendors 
  6.25  for the cost of conducting the survey on any reasonable basis 
  6.26  determined by the commissioner in the commissioner's sole 
  6.27  discretion. 
  6.28     Subd. 3.  [ARBITRATION.] (a) An insurer may arbitrate an 
  6.29  invoice claim under subdivision 1 by sending by certified mail a 
  6.30  demand for arbitration to the vendor and the designated 
  6.31  arbitrator. 
  6.32     (b) A vendor may arbitrate an invoice payment under 
  6.33  subdivision 1 by sending by certified mail a demand for 
  6.34  arbitration to the insurer and the designated arbitrator. 
  6.35     (c) Failure to initiate arbitration within the time limits 
  6.36  specified in subdivision 1 bars the party from disputing the 
  7.1   invoice amount or payment. 
  7.2      Subd. 4.  [SELECTION OF ARBITRATOR.] The arbitrator shall 
  7.3   be selected by agreement between the insurance and automobile 
  7.4   glass industries.  In the event the interested industries are 
  7.5   unable to reach agreement on an arbitrator by August 1, 2002, 
  7.6   the commissioner of commerce shall appoint a retired Minnesota 
  7.7   district court judge who is willing to serve as the arbitrator. 
  7.8      Subd. 5.  [TIMING AND FORM OF ARBITRATION.] The arbitration 
  7.9   must be conducted within 14 days of the demand for arbitration 
  7.10  and is based solely on the written submissions of the parties.  
  7.11  The written submissions are limited to the forms provided by the 
  7.12  commissioner for the arbitrations and any accompanying exhibits. 
  7.13     Subd. 6.  [TIMING AND DECISION OF AWARD.] The arbitrator 
  7.14  shall issue and mail to the parties an award within ten days of 
  7.15  the submission of the arbitration materials according to 
  7.16  subdivision 5.  The award must consist of a simple statement of 
  7.17  which party prevails in the arbitration.  The arbitrator shall 
  7.18  also mail a written fee statement to the losing party at the 
  7.19  time the award is issued. 
  7.20     Subd. 7.  [PAYMENT OF ARBITRATOR'S FEES.] The loser of the 
  7.21  arbitration is responsible for paying the arbitrator's fees 
  7.22  within ten days of the receipt of the arbitration award and the 
  7.23  written fee statement.  In addition, if the loser is obligated 
  7.24  to pay the prevailing party any amount following the issuance of 
  7.25  the award, that amount must be paid within ten days of the 
  7.26  receipt of the award. 
  7.27     Subd. 8.  [ONE-YEAR BAR ON ARBITRATION.] If the party 
  7.28  initiating the arbitration loses, that party is precluded from 
  7.29  submitting any further demands for arbitration against the same 
  7.30  party against whom the arbitration was initiated for a period of 
  7.31  one year from the issuance of the award. 
  7.32     Subd. 9.  [SANCTION ON GLASS COMPANY.] If a vendor does not 
  7.33  comply with this section, that vendor is barred from initiating 
  7.34  arbitration procedures according to this section until the 
  7.35  vendor comes into compliance.  Invoices submitted or payments 
  7.36  received by the vendor during the time the vendor is barred from 
  8.1   using the provisions of this section are not subject to this 
  8.2   section. 
  8.3      Subd. 10.  [SANCTION ON INSURANCE COMPANY.] If an insurer 
  8.4   does not comply with this section, the insurer is subject to the 
  8.5   penalties and procedures provided for by section 72A.201, 
  8.6   subdivision 1. 
  8.7      Sec. 3.  [REPEALER.] 
  8.8      Minnesota Statutes 2000, section 72A.202, is repealed.