Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                        CHAPTER 207-H.F.No. 875 
           An act relating to insurance; modifying provisions 
          relating to agency termination procedures; rental 
          vehicles; increasing property damage liability 
          coverage; providing for the adjustment or settlement 
          of an automobile loss due to damaged window glass; 
          amending Minnesota Statutes 1990, sections 60A.176, 
          subdivision 3; 60A.177, subdivisions 2, 4, 5, and by 
          adding a subdivision; 65B.49, subdivision 5a; and 
          72A.201, subdivision 6; repealing Minnesota Statutes 
          1990, section 60A.176, subdivision 2.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1990, section 60A.176, 
subdivision 3, is amended to read: 
    Subd. 3.  [AGENT.] "Agent" means an agent who is not an 
employee of the insurer, who has an agency contractual 
relationship that has been in effect for five or more years, and 
who writes 80 percent or more of the agent's business through 
one insurer or its subsidiaries. 
    Sec. 2.  Minnesota Statutes 1990, section 60A.177, 
subdivision 2, is amended to read: 
    Subd. 2.  [NOTICE; HEARING.] If an agent is terminated by 
an insurer, the agent may request a hearing before the board of 
review.  If an insurer initiates the termination of an agent's 
agreement, the written notice of termination must advise the 
agent of the agent's right to a hearing before the board of 
review.  Upon receipt of an agent's request for a hearing, the 
commissioner shall establish a hearing date within 30 days of 
the request or longer with the approval of the agent and the 
insurer.  The agent and the insurer shall be notified in writing 
of the date, time, and place of the hearing.  The hearing 
provided for under this section is not subject to Minnesota 
Statutes, chapter 14.  The review board shall provide the 
parties to the hearing with an opportunity to present evidence 
and arguments in support of their respective positions. 
    Sec. 3.  Minnesota Statutes 1990, section 60A.177, 
subdivision 4, is amended to read: 
    Subd. 4.  [BOARD'S DETERMINATION.] Upon completion of the 
hearing, the board of review shall determine if the termination 
of the agent's agreement is justified.  If in the opinion of the 
board of review an involuntary termination is not justified, and 
in the absence of a reasonable contractual financial provision 
for termination as determined by the commissioner board, 
the commissioner board shall order the insurer to pay an amount 
of compensation that the commissioner board considers 
appropriate to the agent. 
    If in the opinion of the board of review a voluntary 
termination was not voluntary and the insurer is not justified 
in terminating the agent's agreement, and in the absence of a 
reasonable contractual financial provision for termination as 
determined by the commissioner board, the commissioner board 
shall order the insurer to pay an amount of compensation that 
the commissioner board considers appropriate to the agent. 
    Sec. 4.  Minnesota Statutes 1990, section 60A.177, 
subdivision 5, is amended to read: 
    Subd. 5.  [APPEAL.] An order of the commissioner or A final 
determination of the board of review under subdivision 4 may be 
appealed to district court by either party for a trial de novo.  
If the insurer appeals and the agent prevails, the insurer is 
responsible for the agent's legal fees as approved by the court. 
    Sec. 5.  Minnesota Statutes 1990, section 60A.177, is 
amended by adding a subdivision to read: 
    Subd. 8.  [ADMINISTRATIVE PENALTIES.] Failure to comply 
with a final order or determination of the review board 
constitutes a basis for disciplinary action under section 
45.027, subdivision 7. 
    Sec. 6.  Minnesota Statutes 1990, 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, and rented trucks with a registered gross vehicle 
weight of 26,000 pounds or less would be covered by the property 
damage liability portion of the plan.  This subdivision does not 
apply to plans of reparation security covering only motor 
vehicles registered under section 168.10, subdivision 1a, 1b, 
1c, or 1d, or recreational equipment as defined under section 
168.011.  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 $35,000, the 
coverage available under the subdivision must be $25,000 $35,000.
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. 7.  Minnesota Statutes 1990, section 72A.201, 
subdivision 6, is amended to read: 
    Subd. 6.  [STANDARDS FOR AUTOMOBILE INSURANCE CLAIMS 
HANDLING, SETTLEMENT OFFERS, AND AGREEMENTS.] In addition to the 
acts specified in subdivisions 4, 5, 7, 8, and 9, the following 
acts by an insurer, adjuster, or a self-insured or 
self-insurance administrator constitute unfair settlement 
practices:  
    (1) if an automobile insurance policy provides for the 
adjustment and settlement of an automobile total loss on the 
basis of actual cash value or replacement with like kind and 
quality and the insured is not an automobile dealer, failing to 
offer one of the following methods of settlement:  
    (a) comparable and available replacement automobile, with 
all applicable taxes, license fees, at least pro rata for the 
unexpired term of the replaced automobile's license, and other 
fees incident to the transfer or evidence of ownership of the 
automobile paid, at no cost to the insured other than the 
deductible amount as provided in the policy; 
    (b) a cash settlement based upon the actual cost of 
purchase of a comparable automobile, including all applicable 
taxes, license fees, at least pro rata for the unexpired term of 
the replaced automobile's license, and other fees incident to 
transfer of evidence of ownership, less the deductible amount as 
provided in the policy.  The costs must be determined by:  
       (i) the cost of a comparable automobile, adjusted for 
mileage, condition, and options, in the local market area of the 
insured, if such an automobile is available in that area; or 
       (ii) one of two or more quotations obtained from two or 
more qualified sources located within the local market area when 
a comparable automobile is not available in the local market 
area.  The insured shall be provided the information contained 
in all quotations prior to settlement; or 
       (iii) any settlement or offer of settlement which deviates 
from the procedure above must be documented and justified in 
detail.  The basis for the settlement or offer of settlement 
must be explained to the insured; 
       (2) if an automobile insurance policy provides for the 
adjustment and settlement of an automobile partial loss on the 
basis of repair or replacement with like kind and quality and 
the insured is not an automobile dealer, failing to offer one of 
the following methods of settlement:  
       (a) to assume all costs, including reasonable towing costs, 
for the satisfactory repair of the motor vehicle.  Satisfactory 
repair includes repair of both obvious and hidden damage as 
caused by the claim incident.  This assumption of cost may be 
reduced by applicable policy provision; or 
       (b) to offer a cash settlement sufficient to pay for 
satisfactory repair of the vehicle.  Satisfactory repair 
includes repair of obvious and hidden damage caused by the claim 
incident, and includes reasonable towing costs; 
       (3) regardless of whether the loss was total or partial, in 
the event that a damaged vehicle of an insured cannot be safely 
driven, failing to exercise the right to inspect automobile 
damage prior to repair within five business days following 
receipt of notification of claim.  In other cases the inspection 
must be made in 15 days; 
     (4) regardless of whether the loss was total or partial, 
requiring unreasonable travel of a claimant or insured to 
inspect a replacement automobile, to obtain a repair estimate, 
to allow an insurer to inspect a repair estimate, to allow an 
insurer to inspect repairs made pursuant to policy requirements, 
or to have the automobile repaired; 
     (5) regardless of whether the loss was total or partial, if 
loss of use coverage exists under the insurance policy, failing 
to notify an insured at the time of the insurer's acknowledgment 
of claim, or sooner if inquiry is made, of the fact of the 
coverage, including the policy terms and conditions affecting 
the coverage and the manner in which the insured can apply for 
this coverage; 
     (6) regardless of whether the loss was total or partial, 
failing to include the insured's deductible in the insurer's 
demands under its subrogation rights.  Subrogation recovery must 
be shared at least on a proportionate basis with the insured, 
unless the deductible amount has been otherwise recovered by the 
insured, except that when an insurer is recovering directly from 
an uninsured third party by means of installments, the insured 
must receive the full deductible share as soon as that amount is 
collected and before any part of the total recovery is applied 
to any other use.  No deduction for expenses may be made from 
the deductible recovery unless an attorney is retained to 
collect the recovery, in which case deduction may be made only 
for a pro rata share of the cost of retaining the attorney; 
      (7) requiring as a condition of payment of a claim that 
repairs to any damaged vehicle must be made by a particular 
contractor or repair shop or that parts, other than window 
glass, must be replaced with parts other than original equipment 
parts; 
      (8) where liability is reasonably clear, failing to inform 
the claimant in an automobile property damage liability claim 
that the claimant may have a claim for loss of use of the 
vehicle; 
      (9) failing to make a good faith assignment of comparative 
negligence percentages in ascertaining the issue of liability; 
      (10) failing to pay any interest required by statute on 
overdue payment for an automobile personal injury protection 
claim; 
    (11) if an automobile insurance policy contains either or 
both of the time limitation provisions as permitted by section 
65B.55, subdivisions 1 and 2, failing to notify the insured in 
writing of those limitations at least 60 days prior to the 
expiration of that time limitation; 
    (12) if an insurer chooses to have an insured examined as 
permitted by section 65B.56, subdivision 1, failing to notify 
the insured of all of the insured's rights and obligations under 
that statute, including the right to request, in writing, and to 
receive a copy of the report of the examination.; 
     (13) if an automobile policy provides for the adjustment or 
settlement of an automobile loss due to damaged window glass, 
failing to assume all costs sufficient to pay the insured's 
chosen vendor for the replacement of comparable window glass at 
a price generally available in the area.  This clause does not 
prohibit an insurer from recommending a vendor to the insured or 
from agreeing with a vendor to perform work at an agreed-upon 
price. 
    Sec. 8.  [REPEALER.] 
    Minnesota Statutes 1990, section 60A.176, subdivision 2, is 
repealed. 
     Sec. 9.  [EFFECTIVE DATE.] 
    Sections 1 to 5, 7, and 8 are effective the day following 
final enactment. 
    Presented to the governor May 23, 1991 
    Signed by the governor May 27, 1991, 11:00 p.m.