SF 2173

3rd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to insurance; providing for the award of certain damages and attorney
fees in claims arising from breach of an insurance policy by an insurer; amending
Minnesota Statutes 2006, section 471.982, subdivision 3; proposing coding for
new law in Minnesota Statutes, chapter 60A.

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

Section 1.

new text begin [60A.0811] BREACH OF INSURANCE POLICY; RECOVERY OF
DAMAGES AND ATTORNEY FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions; application. new text end

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

new text begin (1) "insurance policy" means an insurance policy or contract other than:
new text end

new text begin (i) new text end new text begin a workers' compensation insurance policy or contract;
new text end

new text begin (ii) a policy or contract issued, executed, renewed, maintained, or delivered in this
state by a health carrier as defined in section 62A.011, subdivision 2; or
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new text begin (iii) a policy or contract issued by a township mutual fire insurance company or
farmers mutual fire insurance company operating under chapter 65A or 67A;
new text end

new text begin (2) "insured" means a first party to an insurance contract and does not include a
person to whom first-party rights have been assigned; and
new text end

new text begin (3) "insurer" means an insurance company:
new text end

new text begin (i) incorporated or organized in this state; or
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new text begin (ii) admitted to do business in this state but not incorporated or organized in this state.
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new text begin Insurer does not include the joint underwriting association operating under chapter 62F
or 62I; or a township mutual fire insurance company or farmers mutual fire insurance
company operating under chapter 65A or 67A.
new text end

new text begin (b) This section applies to a court action or arbitration proceeding.
new text end

new text begin Subd. 2. new text end

new text begin Damages. new text end

new text begin (a) In addition to other damages or attorney fees allowable
under law or an insurance policy, an insured who prevails in a claim against an insurer
for a breach of an insurance policy based on a denial or delay in payment of benefits is
entitled to recover monetary consequential damages that arise from the denial or delay and
reasonable attorney fees as provided under this section.
new text end

new text begin (b) Punitive damages or damages for nonmonetary losses are not recoverable
under this section.
new text end

new text begin Subd. 3. new text end

new text begin Recovery of attorney fees; effect of settlement offer. new text end

new text begin If an insurer tenders
a written offer to an insured to settle a disputed claim, the insured is not entitled to recover
attorney fees incurred after the offer is made unless the final judgment or award is greater
than the last offer.
new text end

new text begin Subd. 4. new text end

new text begin Factors to consider in awarding attorney fees. new text end

new text begin An award of attorney
fees under this section must bear a reasonable relationship and be proportional to the
damages awarded.
new text end

new text begin Subd. 5. new text end

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

new text begin A licensed insurance producer is
not liable for damages and attorney fees under this section for a breach of an insurance
policy by the insurer that appointed the producer to transact business on its behalf.
new text end

new text begin Subd. 6. new text end

new text begin Fire investigations. new text end

new text begin An insurer is not liable for damages and attorney fees
under this section by conducting or cooperating with a fire investigation to its completion.
new text end

new text begin Subd. 7. new text end

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

new text begin Nothing in this section affects third-party
claims or remedies 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 a
breach of an insurance policy occurring on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2006, section 471.982, subdivision 3, is amended to read:

Subd. 3.

Exemptions.

Self-insurance pools established and open for enrollment
on a statewide basis by the Minnesota League of Cities Insurance Trust, the Minnesota
School Boards Association Insurance Trust, the Minnesota Association of Townships
Insurance and Bond Trust, or the Minnesota Association of Counties Insurance Trust
and the political subdivisions that belong to them are exempt from the requirements of
this section and deleted text begin section deleted text end new text begin sections 60A.0811 and new text end 65B.48, subdivision 3. In addition, the
Minnesota Association of Townships Insurance and Bond Trust and the townships that
belong to it are exempt from the requirement to hold the certificate of surety authorization
issued by the commissioner of commerce as provided in section 574.15.