Minnesota Session Laws - 1999, Regular Session

                            CHAPTER 120-H.F.No. 1708 
                  An act relating to insurance; property and liability; 
                  regulating FAIR plan coverage; amending Minnesota 
                  Statutes 1998, sections 65A.32; 65A.33, subdivision 3, 
                  and by adding a subdivision; 65A.34, subdivisions 1, 
                  4, and 5; 65A.36, subdivisions 1 and 5; 65A.37; 
                  65A.38, subdivision 1; and 65A.42. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 65A.32, is 
        amended to read: 
           65A.32 [PURPOSES.] 
           The purposes of sections 65A.31 to 65A.42 are: 
           (1) to encourage stability in the property and liability 
        insurance market for property located in this state; 
           (2) to encourage maximum use, in obtaining property and 
        liability insurance, as defined in sections 65A.31 to 65A.42, of 
        the normal insurance market provided by the private property and 
        casualty insurance industry; 
           (3) to encourage the improvement of the condition of 
        properties located in this state and to further orderly 
        community development generally; 
           (4) to provide for an organization known as the Minnesota 
        property insurance placement facility, which will assure fair 
        access to insurance requirements (FAIR plan) in order that no 
        property shall be denied property or liability insurance through 
        the normal insurance market provided by the private property and 
        casualty insurance industry FAIR plan except after a physical 
        inspection of such property and a fair evaluation of its 
        individual underwriting characteristics; 
           (5) to publicize the purposes and procedures of the FAIR 
        plan to the end that no one may fail to seek its assistance 
        through lack of knowledge of its existence; and 
           (6) to provide for the formulation and administration by 
        the Minnesota property insurance placement facility of a 
        reinsurance arrangement whereby property and casualty insurers 
        shall share equitably the responsibility for insuring insurable 
        property for which property and liability insurance cannot be 
        obtained through the normal insurance markets. 
           Sec. 2.  Minnesota Statutes 1998, 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 unit owners 
        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, commercial liability, or such 
        manufacturing risks as may be excluded by the commissioner.  
           Sec. 3.  Minnesota Statutes 1998, section 65A.33, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [BOARD.] "Board" means the governing board of 
        directors of the Minnesota property insurance placement facility.
           Sec. 4.  Minnesota Statutes 1998, section 65A.34, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Any person having an insurable interest in 
        real or tangible personal property who has been canceled, 
        nonrenewed, or otherwise rejected for coverage in the private 
        market shall be entitled upon written to submit an 
        application therefor for coverage to the facility to a prompt.  
        If an inspection of the property by the inspection bureau 
        without premises is performed, it must be done at no cost to the 
        applicant. 
           Sec. 5.  Minnesota Statutes 1998, section 65A.34, 
        subdivision 4, is amended to read: 
           Subd. 4.  During the inspection, the inspector shall point 
        out features of structure and occupancy to the applicant or the 
        applicant's representative and shall indicate those features 
        which may result in condition charges if the risk is 
        accepted.  Either during the inspection or immediately 
        thereafter, an employee of the FAIR plan shall inform the 
        applicant as to the features that result in a condition charge 
        if the risk is accepted.  The No inspector shall have no 
        authority to advise whether the facility will provide the 
        coverage.  
           Sec. 6.  Minnesota Statutes 1998, section 65A.34, 
        subdivision 5, is amended to read: 
           Subd. 5.  Within five business days after the inspection, a 
        copy of the completed inspection report, and any photograph, 
        indicating the pertinent features of building, construction, 
        maintenance, occupancy, and surrounding property shall be sent 
        to the facility.  Included with the report shall be a rate 
        make-up statement, including any conditions which are subject to 
        a condition charge under the rating plan approved by the 
        commissioner.  A copy of the inspection report shall be made 
        available to the applicant or the applicant's agent upon request.
        Within ten business days after the inspection, the FAIR plan 
        shall prepare or have prepared a completed inspection report 
        that includes conditions that are subject to a condition charge 
        under the rating plan approved by the commissioner.  A copy of 
        the inspection report must be made available to the applicant or 
        the applicant's agent upon request. 
           Sec. 7.  Minnesota Statutes 1998, section 65A.36, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The facility may bind coverage following 
        receipt of the completed application if the risk meets the 
        preliminary underwriting requirements of the facility and if the 
        appropriate binder fee accompanies the application.  Agents are 
        not permitted to bind coverage.  The facility shall issue a 
        policy if the risk meets preliminary underwriting requirements.  
        The facility may request an inspection report to obtain further 
        underwriting information.  If the inspection reveals that the 
        applicant is not eligible for the coverage applied for, the 
        facility shall inform the applicant within 59 days of the 
        inception of the policy that the policy will be rescinded under 
        section 65A.01, subdivision 3, paragraph (b), or canceled under 
        section 65A.38.  If the applicant is eligible for other coverage 
        provided by the facility, the facility will replace the 
        rescinded or canceled policy with a policy providing coverage 
        for which the applicant is eligible. 
           Before the expiration of the binder, the facility may 
        request an inspection report to obtain further underwriting 
        information.  At least 15 days before the expiration of the 
        binder Before the 60th day after the inception of the policy, 
        the facility shall advise the applicant that: 
           (a) The risk is acceptable with or without a condition 
        charge.  If a condition charge applies, the facility will tell 
        the insured what improvements are necessary in order to remove 
        the charge; 
           (b) The risk is not acceptable unless improvements noted by 
        the facility are made by the applicant and confirmed by the 
        facility; or 
           (c) The risk is not acceptable for the reasons stated by 
        the facility.  
           Sec. 8.  Minnesota Statutes 1998, section 65A.36, 
        subdivision 5, is amended to read: 
           Subd. 5.  The facility must within five business days of 
        the receipt of a completed application advise the applicant that 
        the risk has been declined, the risk has been accepted, or that 
        the risk meets preliminary underwriting standards and a binder 
        policy has been issued. 
           Sec. 9.  Minnesota Statutes 1998, section 65A.37, is 
        amended to read: 
           65A.37 [POLICY FORMS.] 
           All policies, except homeowners policies, shall be on 
        standard policy forms at rates loss costs published by Insurance 
        Services Office and shall be, issued for a term of one year, and 
        approved by the commissioner.  All homeowners, cooperative 
        housing insurance, and condominium unit owners insurance 
        policies must be on forms published by Insurance Services Office 
        and approved by the commissioner. 
           Sec. 10.  Minnesota Statutes 1998, section 65A.38, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The facility shall not cancel a policy or 
        binder issued under sections 65A.31 to 65A.42 except for: 
           (a) cause which would have been grounds for nonacceptance 
        of the risk under the program had the cause been known to the 
        facility at the time of acceptance; 
           (b) nonpayment of premium; or 
           (c) with the approval of the governing committee board. 
           Sec. 11.  Minnesota Statutes 1998, section 65A.42, is 
        amended to read: 
           65A.42 [IMMUNITY FROM LIABILITY.] 
           There shall be no civil or criminal liability on the part 
        of, and no cause of action of any nature shall arise against 
        insurers, the inspection bureau, the facility, or their agents 
        the governing board, or employees of the facility or the 
        commissioner or the commissioner's authorized representatives, 
        for any statements made in good faith acts or omissions by them 
        in any reports or communications concerning the property to be 
        insured, or at the time of any hearings conducted in connection 
        therewith, or in the findings required by the provisions of if 
        the acts or omissions were in good faith and within the scope of 
        their responsibilities under sections 65A.31 to 65A.42.  The 
        inspection reports and communications of the inspection bureau 
        vendors and the facility are not public documents. 
           Presented to the governor April 30, 1999 
           Signed by the governor May 4, 1999, 11:20 a.m.