Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                        CHAPTER 260-H.F.No. 1283 
           An act relating to insurance; property and casualty; 
          regulating policy provisions, forms, nonrenewals, 
          coverages; regulating trade practices in these and 
          other lines; regulating the Minnesota joint 
          underwriting association; making certain technical 
          changes; amending Minnesota Statutes 1988, sections 
          60A.02, by adding a subdivision; 60A.08, subdivision 
          12, and by adding a subdivision; 60A.09, subdivision 
          1; 60A.17, subdivision 6c; 60A.198, subdivision 3; 
          62I.02, subdivision 2; 62I.16, subdivision 3; 65A.29, 
          subdivision 8, and by adding subdivisions; 65A.33, 
          subdivision 3; 65B.15, subdivision 1; 65B.44, 
          subdivision 3; 65B.49, subdivision 5a; 65B.525, 
          subdivision 1; 72A.20, subdivision 17, and by adding 
          subdivisions; 72A.201, subdivision 5, and by adding 
          subdivisions; and 79.251, by adding a subdivision; 
          repealing Minnesota Statutes 1988, section 62I.12; and 
          Minnesota Rules, part 2780.2700. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1988, section 60A.02, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [CONTINUED.] An insurance policy that is issued 
for a term in excess of one year or that has no specified term 
or that is designated as being continuous is "continued" each 
year on the anniversary date of the issuance of the policy. 
    Sec. 2.  Minnesota Statutes 1988, section 60A.08, 
subdivision 12, is amended to read: 
    Subd. 12.  [EXCLUSIONS RENTED VEHICLES.] All commercial 
automobile liability policies must provide coverage for rented 
vehicles as required in chapter 65B. 
    This subdivision does not apply to liability policies that 
the commissioner has exempted by order. 
    This coverage can be excess over any and all specific motor 
vehicle coverage that is applicable. 
    Sec. 3.  Minnesota Statutes 1988, section 60A.08, is 
amended by adding a subdivision to read: 
    Subd. 13.  [REDUCTION OF LIMITS BY COSTS OF DEFENSE 
PROHIBITED.] (a) No insurer shall issue or renew a policy of 
liability insurance in this state that reduces the limits of 
liability stated in the policy by the costs of legal defense. 
    (b) This subdivision does not apply to:  
    (1) professional liability insurance with limits of 
liability greater than $100,000, including directors' and 
officers' and errors and omissions liability insurance; 
    (2) environmental impairment liability insurance; 
    (3) insurance policies issued to large commercial risks; or 
    (4) coverages that the commissioner determines to be 
appropriate which will be published in the manner prescribed for 
surplus lines insurance in section 60A.201, subdivision 4.  
    (c) For purposes of this subdivision, "large commercial 
risks" means an insured whose gross annual revenues in the 
fiscal year preceding issuance of the policy were at least 
$10,000,000. 
     Sec. 4.  Minnesota Statutes 1988, section 60A.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MAXIMUM RISK.] No company other than a 
company authorized to transact the kind of business specified in 
section 60A.06, subdivision 1, clause (7), shall insure or 
reinsure in a single risk a larger sum than one-tenth of its net 
assets, and no company authorized to transact the kind of 
business specified in section 60A.06, subdivision 1, clause (7), 
shall insure or reinsure in a single risk a larger sum than 
one-half two-thirds of its net assets; provided, that in the 
case of a company with net assets of more than $50,000, any 
portion of the risk which has been reinsured, as authorized by 
the laws of this state, shall be deducted before determining the 
limitation of risk prescribed by this subdivision; and, 
provided, that a mutual insurance company organized under clause 
(2)(a) of section 66A.08, subdivision 2, may insure in a single 
risk, consisting of a creamery or a cheese factory, a sum equal 
to one percent of its insurance in force. 
    Sec. 5.  Minnesota Statutes 1988, section 60A.17, 
subdivision 6c, is amended to read: 
    Subd. 6c.  [REVOCATION OR SUSPENSION OF LICENSE.] (a) The 
commissioner may by order suspend or revoke an insurance agent's 
or agency's license issued to a natural person or impose a civil 
penalty appropriate to the offense, not to exceed $5,000 upon 
that licensee, or both, if, after notice and hearing, the 
commissioner finds as to that licensee any one or more of the 
following conditions: 
    (1) any materially untrue statement in the license 
application; 
    (2) any cause for which issuance of the license could have 
been refused had it then existed and been known to the 
commissioner at the time of issuance; 
    (3) violation of, or noncompliance with, any insurance law 
or violation of any rule or order of the commissioner or of a 
commissioner of insurance of another state or jurisdiction; 
    (4) obtaining or attempting to obtain any license through 
misrepresentation or fraud; 
    (5) improperly withholding, misappropriating, or converting 
to the licensee's own use any money belonging to a policyholder, 
insurer, beneficiary, or other person, received by the licensee 
in the course of the licensee's insurance business; 
    (6) misrepresentation of the terms of any actual or 
proposed insurance contract; 
      (7) conviction of a felony or of a gross misdemeanor or 
misdemeanor involving moral turpitude; 
    (8) that the licensee has been found guilty of any unfair 
trade practice, as defined in chapters 60A to 72A, or of fraud; 
    (9) that in the conduct of the agent's affairs under the 
license, the licensee has used fraudulent, coercive, or 
dishonest practices, or the licensee has been shown to be 
incompetent, untrustworthy, or financially irresponsible; 
    (10) that the agent's license has been suspended or revoked 
in any other state, province, district, territory, or foreign 
country; 
    (11) that the licensee has forged another's name to an 
application for insurance; or 
    (12) that the licensee has violated subdivision 6b. 
    (b) The commissioner may by order suspend or revoke an 
insurance agent's or insurance agency's license issued to a 
partnership or corporation or impose a civil penalty not to 
exceed $5,000 as provided for in section 45.027, subdivision 6, 
upon that licensee, or both, if, after notice and hearing, the 
commissioner finds as to that licensee, or as to any partner, 
director, shareholder, officer, or employee of that licensee, 
any one or more of the conditions set forth in paragraph (a). 
    (c) A revocation of a license shall prohibit the licensee 
from making a new application for a license for at least one 
year.  Further, the commissioner may, as a condition of 
relicensure, require the applicant to file a reasonable bond for 
the protection of the citizens of this state, which bond shall 
be maintained by the licensee in full force for a period of five 
years immediately following issuance of the license, unless the 
commissioner at the commissioner's discretion shall after two 
years permit the licensee to sooner terminate the maintenance 
filing of the bond. 
    (d) The commissioner may, in the manner prescribed by 
chapter 14, impose a civil penalty not to exceed $5,000 upon a 
person whose license has lapsed, or been suspended, revoked, or 
otherwise terminated, for engaging in conduct prohibited by 
paragraph (a) before, during, or after the period of licensure. 
    Sec. 6.  Minnesota Statutes 1988, section 60A.198, 
subdivision 3, is amended to read:  
    Subd. 3.  [PROCEDURE FOR OBTAINING LICENSE.] A person 
licensed as an agent in this state pursuant to other law may 
obtain a surplus lines license by doing the following:  
    (a) filing an application in the form and with the 
information the commissioner may reasonably require to determine 
the ability of the applicant to act in accordance with sections 
60A.195 to 60A.209; 
    (b) maintaining an agent's license in this state; 
    (c) delivering to the commissioner a financial guarantee 
bond from a surety acceptable to the commissioner for the 
greater of the following:  
    (1) $5,000; or 
    (2) the largest semiannual surplus lines premium tax 
liability incurred by the applicant in the immediately preceding 
five years; and 
    (d) agreeing to file with the commissioner of revenue no 
later than February 15 and August 15 annually, a sworn statement 
of the charges for insurance procured or placed and the amounts 
returned on the insurance canceled under the license for the 
preceding six-month period ending December 31 and June 30 
respectively, and at the time of the filing of this statement, 
paying the commissioner a tax on premiums equal to three percent 
of the total written premiums less cancellations; and 
    (e) annually paying a fee as prescribed by section 60A.14, 
subdivision 1, paragraph (c), clause (11) (10). 
    Sec. 7.  Minnesota Statutes 1988, section 62I.02, 
subdivision 2, is amended to read:  
    Subd. 2.  [DIRECTOR.] The association shall have a board of 
directors composed of 11 persons chosen annually as follows:  
five persons elected by members of the association at a meeting 
called by the commissioner; three public members, as defined in 
section 214.02, appointed by the commissioner; and three 
members, appointed by the commissioner representing groups to 
whom coverage has been extended by the association.  The terms 
of the members shall be four years.  Terms may be staggered so 
that no more than six members are appointed or elected every two 
years.  Members may serve until their successors are appointed 
or elected.  If at any time no coverage is currently extended by 
the association, then either additional public members may be 
appointed to fill these three positions or, at the option of the 
commissioner, representatives from groups who had previously 
been covered by the association may serve as directors. 
    Sec. 8.  Minnesota Statutes 1988, section 62I.16, 
subdivision 3, is amended to read:  
    Subd. 3.  [SUPERVISION.] All money paid into the fund shall 
be held in trust escrow by the corporate trustee escrow 
administrator selected by the board of directors.  The corporate 
trustee escrow administrator may invest the money held in trust 
escrow subject to the approval of the board.  All investment 
income shall be credited to the fund.  All expenses of the 
administration of the fund shall be charged against the fund.  
The money held in trust escrow shall be used solely for the 
purpose of discharging when due any retrospective premium 
charges payable by policyholders and any retrospective premium 
refunds payable to policyholders under the group retrospective 
rating plan.  Payment of retrospective premium charges shall be 
made upon certification of the amount due.  If all money 
accruing to the fund is exhausted in payment of retrospective 
premium charges, all liability and obligations of the 
association's policyholders with respect to the payment of 
retrospective premium charges shall terminate and shall be 
conclusively presumed to have been discharged.  Any 
stabilization reserve fund charges from a particular policy year 
not used to pay retrospective premiums must be returned to 
policyholders after all claims and expense obligations from that 
particular policy year are satisfied. 
    Sec. 9.  Minnesota Statutes 1988, section 65A.29, 
subdivision 8, is amended to read: 
    Subd. 8.  [RULES.] (a) The commissioner may adopt rules 
pursuant to chapter 14, to specify the grounds for nonrenewal, 
reduction in limits of coverage, or elimination of coverage of a 
homeowner's policy.  The rules must limit the grounds to the 
following factors:  
    (a) (1) reasons stated for cancellation in section 65A.01, 
subdivision 3a; 
    (b) (2) reasons stated in section 72A.20, subdivision 13; 
    (c) (3) insured's loss experience, not to include natural 
causes; and 
    (d) (4) other factors deemed reasonable by the commissioner.
    The rules may give consideration to the form and content of 
the termination notice to the insured, a statement as to what 
constitutes receipt of the termination notice, and the procedure 
by which the insured may appeal a termination notice.  
    The rules adopted under this subdivision may provide for 
imposition of a monetary penalty not greater than $500 per 
occurrence upon insurers who are found to be in violation of the 
law or the rules.  
    (b) In addition to any rules adopted under this 
subdivision, an insured may appeal any nonrenewal under this 
section to the commissioner of commerce.  If the commissioner 
finds that the nonrenewal is unjustified, arbitrary, or 
capricious, the commissioner shall order the insurer to 
reinstate the insured's policy.  The commissioner's order may be 
appealed pursuant to chapter 14.  The insured's policy shall 
continue in force pending the conclusion of the appeal to the 
commissioner.  The insurer must notify the insured of the 
insured's right to appeal the nonrenewal to the commissioner in 
the notice of nonrenewal required under subdivision 7. 
     Sec. 10.  Minnesota Statutes 1988, section 65A.29, is 
amended by adding a subdivision to read: 
    Subd. 11.  [NONRENEWAL PLAN.] Every insurer shall establish 
a plan that sets out the minimum number and amount of claims 
during an experience period that may result in a nonrenewal.  A 
clear and concise written statement of this plan must be 
provided to the insured at the time claim forms and instructions 
are provided to the insured or a claimant under section 72A.201, 
subdivision 4. 
    The plan must, at a minimum, comply with the requirements 
of subdivision 8 and the rules adopted by the commissioner. 
    Sec. 11.  Minnesota Statutes 1988, section 65A.29, is 
amended by adding a subdivision to read: 
    Subd. 12.  [DEFINITION.] For purposes of this section, 
"homeowner's insurance" includes mobile home insurance. 
    Sec. 12.  Minnesota Statutes 1988, section 65A.33, 
subdivision 3, is amended to read: 
    Subd. 3.  "Property or liability insurance" means the 
coverage against direct loss to real or tangible personal 
property at a fixed location that is provided in the standard 
fire policy, extended coverage endorsement, homeowners 
insurance, as defined in section 65A.27, subdivision 4, 
cooperative housing insurance, condominium insurance, builders 
risk, and such vandalism and malicious mischief insurance and 
such other classes of insurance as may be added to the program 
with respect to said property by amendment as hereinafter 
provided.  Property or liability insurance does not include 
automobile, farm, commercial liability, or such manufacturing 
risks as may be excluded by the commissioner.  
    Sec. 13.  Minnesota Statutes 1988, section 65B.15, 
subdivision 1, is amended to read:  
    Subdivision 1.  No cancellation or reduction in the limits 
of liability of coverage during the policy period of any policy 
shall be effective unless notice thereof is given and unless 
based on one or more reasons stated in the policy which shall be 
limited to the following: 
    1.  Nonpayment of premium; or 
    2.  The policy was obtained through a material 
misrepresentation; or 
    3.  Any insured made a false or fraudulent claim or 
knowingly aided or abetted another in the presentation of such a 
claim; or 
    4.  The named insured failed to disclose fully motor 
vehicle accidents and moving traffic violations of the named 
insured for the preceding 36 months if called for in the written 
application; or 
    5.  The named insured failed to disclose in the written 
application any requested information necessary for the 
acceptance or proper rating of the risk; or 
    6.  The named insured knowingly failed to give any required 
written notice of loss or notice of lawsuit commenced against 
the named insured, or, when requested, refused to cooperate in 
the investigation of a claim or defense of a lawsuit; or 
    7.  The named insured or any other operator who either 
resides in the same household, unless the other operator is 
identified by name in any other policy as an insured; or 
customarily operates an automobile insured under such policy, 
unless the other operator is identified as a named insured in 
another policy as an insured: 
    (a) has, within the 36 months prior to the notice of 
cancellation, had that person's driver's license under 
suspension or revocation; or 
    (b) is or becomes subject to epilepsy or heart attacks, and 
such individual does not produce a written opinion from a 
physician testifying to that person's medical ability to operate 
a motor vehicle safely, such opinion to be based upon a 
reasonable medical probability; or 
    (c) has an accident record, conviction record (criminal or 
traffic), physical condition or mental condition, any one or all 
of which are such that the person's operation of an automobile 
might endanger the public safety; or 
    (d) has been convicted, or forfeited bail, during the 24 
months immediately preceding the notice of cancellation for 
criminal negligence in the use or operation of an automobile, or 
assault arising out of the operation of a motor vehicle, or 
operating a motor vehicle while in an intoxicated condition or 
while under the influence of drugs; or leaving the scene of an 
accident without stopping to report; or making false statements 
in an application for a driver's license, or theft or unlawful 
taking of a motor vehicle; or 
    (e) has been convicted of, or forfeited bail for, one or 
more violations within the 18 months immediately preceding the 
notice of cancellation, of any law, ordinance, or rule which 
justify a revocation of a driver's license.  
    8.  The insured automobile is: 
    (1) so mechanically defective that its operation might 
endanger public safety; or 
    (2) used in carrying passengers for hire or compensation, 
provided however that the use of an automobile for a car pool 
shall not be considered use of an automobile for hire or 
compensation; or 
    (3) used in the business of transportation of flammables or 
explosives; or 
    (4) an authorized emergency vehicle; or 
    (5) subject to an inspection law and has not been inspected 
or, if inspected, has failed to qualify within the period 
specified under such inspection law; or 
    (6) substantially changed in type or condition during the 
policy period, increasing the risk substantially, such as 
conversion to a commercial type vehicle, a dragster, sports car 
or so as to give clear evidence of a use other than the original 
use. 
    Sec. 14.  Minnesota Statutes 1988, section 65B.44, 
subdivision 3, is amended to read:  
    Subd. 3.  [DISABILITY AND INCOME LOSS BENEFITS.] Disability 
and income loss benefits shall provide compensation for 85 
percent of the injured person's loss of present and future gross 
income from inability to work proximately caused by the nonfatal 
injury subject to a maximum of $250 per week.  Loss of income 
includes the costs incurred by a self-employed person to hire 
substitute employees to perform tasks which are necessary to 
maintain the income of the injured person, which are normally 
performed by the injured person, and which cannot be performed 
because of the injury.  
    If the injured person is unemployed at the time of injury 
and is receiving or is eligible to receive unemployment benefits 
under chapter 268, but the injured person loses eligibility for 
those benefits because of inability to work caused by the 
injury, disability and income loss benefits shall provide 
compensation for the lost benefits in an amount equal to the 
unemployment benefits which otherwise would have been payable, 
subject to a maximum of $250 per week.  
    Compensation under this subdivision shall be reduced by any 
income from substitute work actually performed by the injured 
person or by income the injured person would have earned in 
available appropriate substitute work which the injured person 
was capable of performing but unreasonably failed to undertake. 
    For the purposes of this section "inability to work" means 
disability which prevents the injured person from engaging in 
any substantial gainful occupation or employment on a regular 
basis, for wage or profit, for which the injured person is or 
may by training become reasonably qualified.  If the injured 
person returns to employment and is unable by reason of the 
injury to work continuously, compensation for lost income shall 
be reduced by the income received while the injured person is 
actually able to work.  The weekly maximums may not be prorated 
to arrive at a daily maximum, even if the injured person does 
not incur loss of income for a full week.  
    For the purposes of this section, an injured person who is 
"unable by reason of the injury to work continuously" includes, 
but is not limited to, a person who misses time from work, 
including reasonable travel time, and loses income, vacation, or 
sick leave benefits, to obtain medical treatment for an injury 
arising out of the maintenance or use of a motor vehicle. 
    Sec. 15.  Minnesota Statutes 1988, section 65B.49, 
subdivision 5a, is amended to read: 
    Subd. 5a.  [RENTAL VEHICLES.] (a) Every plan of reparation 
security insuring a natural person as named insured, covering 
private passenger vehicles as defined under section 65B.001, 
subdivision 3, and pickup trucks and vans as defined under 
section 168.011 must provide that all of the obligation for 
damage and loss of use to a rented private passenger vehicle, 
including pickup trucks and vans as defined under section 
168.011, would be covered by the property damage liability 
portion of the plan.  The obligation of the plan must not be 
contingent on fault or negligence.  In all cases where the 
plan's property damage liability coverage is less than $25,000, 
the coverage available under the subdivision must be $25,000.  
Other than as described in this paragraph, nothing in this 
section amends or alters the provisions of the plan of 
reparation security as to primacy of the coverages in this 
section. 
    (b) A vehicle is rented for purposes of this subdivision if 
the rate for the use of the vehicle is determined on a weekly or 
daily basis.  A vehicle is not rented for purposes of this 
subdivision if the rate for the vehicle's use is determined on a 
monthly or longer period. 
    (c) The policy or certificate issued by the plan must 
inform the insured of the application of the plan to private 
passenger rental vehicles, including pickup trucks and vans as 
defined under section 168.011, and that the insured may not need 
to purchase additional coverage from the rental company. 
    (d) Where an insured has two or more vehicles covered by a 
plan or plans of reparation security containing the rented motor 
vehicle coverage required under paragraph (a), the insured may 
select the plan the insured wishes to collect from and that plan 
is entitled to a pro rata contribution from the other plan or 
plans based upon the property damage limits of liability.  If 
the person renting the motor vehicle is also covered by the 
person's employer's insurance policy or the employer's 
automobile self-insurance plan, the reparation obligor under the 
employer's policy or self-insurance plan has primary 
responsibility to pay claims arising from use of the rented 
vehicle. 
     (e) A notice advising the insured of rental vehicle 
coverage must be given by the reparation obligor to each current 
insured with the first renewal notice after January 1, 1989.  
The notice must be approved by the commissioner of commerce.  
The commissioner may specify the form of the notice.  
     (f) When a motor vehicle is rented or leased in this state 
on a weekly or daily basis, there must be attached to the rental 
contract a separate form containing a written notice in at least 
10-point bold type, if printed, or in capital letters, if 
typewritten, which states: 
 Under Minnesota law, a personal automobile insurance policy 
issued in Minnesota must cover the rental of this motor 
vehicle against damage to the vehicle and against loss of 
use of the vehicle.  Therefore, purchase of any collision 
damage waiver or similar insurance affected in this rental 
contract is not necessary if your policy was issued in 
Minnesota. 
No collision damage waiver or other insurance offered as part of 
or in conjunction with a rental of a motor vehicle may be sold 
unless the person renting the vehicle provides a written 
acknowledgment that the above consumer protection notice has 
been read and understood. 
     (g) When damage to a rented vehicle is covered by a plan of 
reparation security as provided under paragraph (a), the rental 
contract must state that payment by the reparation obligor 
within the time limits of section 72A.201 is acceptable, and 
prior payment by the renter is not required. 
      (h) To be compensated for the loss of use of a damaged 
rented motor vehicle, the car rental company must prove: 
     (1) that had the vehicle been available, it would have been 
rented; and 
     (2) that no other vehicle was available for rental in place 
of the damaged vehicle. 
     The standard of proof set forth in this paragraph does not 
limit the responsibility of a reparation obligor to provide an 
insured with coverage for any loss of use for which the 
reparation obligor is otherwise responsible.  A car rental 
company may be compensated for loss of use of a damaged rental 
motor vehicle only for the period when the damaged car actually 
would have been rented. 
    Sec. 16.  Minnesota Statutes 1988, section 65B.525, 
subdivision 1, is amended to read:  
    Subdivision 1.  The supreme court and the several courts of 
general trial jurisdiction of this state shall by rules of court 
or other constitutionally allowable device, provide for the 
mandatory submission to binding arbitration of all cases at 
issue where the claim at the commencement of arbitration is in 
an amount of $5,000 or less against any insured's reparation 
obligor for no-fault benefits or comprehensive or collision 
damage coverage. 
    Sec. 17.  Minnesota Statutes 1988, section 72A.20, 
subdivision 17, is amended to read:  
    Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
surrender of an individual policy of life insurance in the case 
of the insured's death, or in the case of a surrender prior to 
death, of an individual insurance policy not covered by the 
standard nonforfeiture laws under section 61A.24, to refund to 
the estate of the insured owner all unearned premiums paid on 
the policy covering the insured as of the time of the insured's 
death or surrender if the unearned premium is for a period of 
more than one month.  
    The insurer may deduct from the premium any previously 
accrued claim for loss or damage under the policy.  
    For the purposes of this section, a premium is unearned 
during the period of time the insurer has not been exposed to 
any risk of loss.  
    (b) Refusing, upon termination or cancellation of a policy 
of automobile insurance under section 65B.14, subdivision 2, or 
a policy of homeowner's insurance under section 65A.27, 
subdivision 4, or a policy of accident and sickness insurance 
under section 62A.01, or a policy of comprehensive health 
insurance under chapter 62E, to refund to the insured all 
unearned premiums paid on the policy covering the insured as of 
the time of the termination or cancellation if the unearned 
premium is for a period of more than one month. 
    The insurer may deduct from the premium any previously 
accrued claim for loss or damage under the policy 
    (c) This subdivision does not apply to policies of 
insurance providing coverage only for motorcycles or other 
seasonally rated or limited use vehicles where the rate is 
reduced to reflect seasonal or limited use. 
    (d) For purposes of this section, a premium is unearned 
during the period of time the insurer has not been exposed to 
any risk of loss.  Except for premiums for motorcycle coverage 
or other seasonally rated or limited use vehicles where the rate 
is reduced to reflect seasonal or limited use, the unearned 
premium is determined by multiplying the premium by the fraction 
that results from dividing the period of time from the date of 
termination to the date the next scheduled premium is due by the 
period of time for which the premium was paid. 
    (e) The owner may cancel a policy referred to in this 
section at any time during the policy period.  This provision 
supersedes any inconsistent provision of law or any inconsistent 
policy provision. 
    Sec. 18.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    Subd. 21.  No insurance company doing business in this 
state shall engage in any selection or underwriting practice 
that is arbitrary, capricious, or unfairly discriminatory.  
    Sec. 19.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    Subd. 22.  [LIMITATIONS ON HEALTH CARE PROVIDERS.] (a) No 
insurer providing benefits under the Minnesota no-fault 
automobile insurance act or a plan authorized by sections 
471.617 or 471.98 to 471.982 may limit the type of licensed 
health care provider who may provide treatment for covered 
conditions under a policy so long as the services provided are 
within the scope of licensure for the provider.  The insurer may 
not exclude a specific method of treatment for a covered 
condition if that exclusion has the effect of excluding a 
specific type of licensed health care provider from treating a 
covered condition.  
    (b) This subdivision does not limit the right of an insurer 
to contract with individual members of any type of licensed 
health care provider to the exclusion of other members of the 
group, nor shall it limit the right to the insurer to exclude 
coverage for a type of treatment if the insurer can show the 
treatment is not medically necessary or is not medically 
appropriate. 
    Sec. 20.  Minnesota Statutes 1988, section 72A.20, is 
amended by adding a subdivision to read: 
    Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
POLICIES.] (a) No insurer that offers an automobile insurance 
policy in this state shall: 
    (1) use the employment status of the applicant as an 
underwriting standard or guideline; or 
    (2) deny coverage to a policyholder for the same reason. 
    (b) No insurer that offers an automobile insurance policy 
in this state shall: 
    (1) use the applicant's status as a tenant, as the term is 
defined in section 566.18, subdivision 2, as an underwriting 
standard or guideline; or 
    (2) deny coverage to a policyholder for the same reason.  
    (c) No insurer that offers an automobile insurance policy 
in this state shall: 
    (1) use the failure of the applicant to have an automobile 
policy in force during any period of time before the application 
is made as an underwriting standard or guideline; or 
    (2) deny coverage to a policyholder for the same reason. 
    This provision does not apply if the applicant was required 
by law to maintain automobile insurance coverage and failed to 
do so. 
    An insurer may require reasonable proof that the applicant 
did not fail to maintain this coverage.  The insurer is not 
required to accept the mere lack of a conviction or citation for 
failure to maintain this coverage as proof of failure to 
maintain coverage. 
    Sec. 21.  Minnesota Statutes 1988, section 72A.201, 
subdivision 5, is amended to read:  
    Subd. 5.  [STANDARDS FOR FAIR SETTLEMENT OFFERS AND 
AGREEMENTS.] The following acts by an insurer, an adjuster, a 
self-insured, or a self-insurance administrator constitute 
unfair settlement practices:  
    (1) making any partial or final payment, settlement, or 
offer of settlement, which does not include an explanation of 
what the payment, settlement, or offer of settlement is for; 
    (2) making an offer to an insured of partial or total 
settlement of one part of a claim contingent upon agreement to 
settle another part of the claim; 
    (3) refusing to pay one or more elements of a claim by an 
insured for which there is no good faith dispute; 
    (4) threatening cancellation, rescission, or nonrenewal of 
a policy as an inducement to settlement of a claim; 
    (5) notwithstanding any inconsistent provision of section 
65A.01, subdivision 3, failing to issue payment for any amount 
finally agreed upon in settlement of all or part of any claim 
within five business days from the receipt of the agreement by 
the insurer or from the date of the performance by the claimant 
of any conditions set by such agreement, whichever is later; 
    (6) failing to inform the insured of the policy provision 
or provisions under which payment is made; 
    (7) settling or attempting to settle a claim or part of a 
claim with an insured under actual cash value provisions for 
less than the value of the property immediately preceding the 
loss, including all applicable taxes and license fees.  In no 
case may an insurer be required to pay an amount greater than 
the amount of insurance; 
    (8) except where limited by policy provisions, settling or 
offering to settle a claim or part of a claim with an insured 
under replacement value provisions for less than the sum 
necessary to replace the damaged item with one of like kind and 
quality, including all applicable taxes, license, and transfer 
fees; 
    (9) reducing or attempting to reduce for depreciation any 
settlement or any offer of settlement for items not adversely 
affected by age, use, or obsolescence; 
    (10) reducing or attempting to reduce for betterment any 
settlement or any offer of settlement unless the resale value of 
the item has increased over the preloss value by the repair of 
the damage.  
    Sec. 22.  Minnesota Statutes 1988, section 72A.201, is 
amended by adding a subdivision to read: 
    Subd. 11.  [DISCLOSURE MANDATORY.] An insurer must disclose 
the coverage and limits of an insurance policy within 30 days 
after the information is requested in writing by a claimant. 
    Sec. 23.  Minnesota Statutes 1988, section 72A.201, is 
amended by adding a subdivision to read:  
    Subd. 12.  [PREJUDGMENT INTEREST.] If a judgment is entered 
against an insured, the principal amount of which is within the 
applicable policy limits, the insurer is responsible for their 
insured's share of the costs, disbursements, and prejudgment 
interest, as determined under section 549.09, included in the 
judgment even if the total amount of the judgment is in excess 
of the applicable policy limits. 
    Sec. 24.  Minnesota Statutes 1988, section 79.251, is 
amended by adding a subdivision to read: 
    Subd. 6.  [AGENTS.] A person licensed under section 60A.17 
may submit an application for coverage to the assigned risk plan 
and receive a fee from the assigned risk plan for submitting the 
application.  However, the licensee is not an agent of the 
assigned risk plan for purposes of state law.  All checks or 
similar instruments submitted in payment of assigned risk plan 
premiums must be made payable to the assigned risk plan and not 
the agent.  
    Sec. 25.  [REPEALER.] 
    (a) Minnesota Statutes 1988, section 62I.12, is repealed. 
    (b) Minnesota Rules, part 2780.2700, is repealed. 
    Sec. 26.  [EFFECTIVE DATES.] 
    Sections 1, 4 to 9, 12 to 14, and 16 to 25 are effective 
the day following final enactment. 
    Sections 2, 3, 11, and 15 are effective for policies issued 
or renewed on or after August 1, 1989. 
    Presented to the governor May 23, 1989 
    Signed by the governor May 25, 1989, 6:33 p.m.