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Key: (1) language to be deleted (2) new language

                            CHAPTER 140-H.F.No. 1528 
                  An act relating to insurance; regulating claims 
                  practices; amending Minnesota Statutes 2004, section 
                  72A.201, subdivision 6.  
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2004, 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.  An 
        insured is not bound by any settlement of its insurer's 
        subrogation claim with respect to the deductible amount, unless 
        the insured receives, as a result of the subrogation settlement, 
        the full amount of the deductible.  Recovery by the insurer and 
        receipt by the insured of less than all of the insured's 
        deductible amount does not affect the insured's rights to 
        recover any unreimbursed portion of the deductible from parties 
        liable for the loss; 
           (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 or engaging in any act or practice of intimidation, 
        coercion, threat, incentive, or inducement for or against an 
        insured to use a particular contractor or repair shop.  Consumer 
        benefits included within preferred vendor programs must not be 
        considered an incentive or inducement.  At the time a claim is 
        reported, the insurer must provide the following advisory to the 
        insured or claimant: 
           "Minnesota law gives you the right to choose a repair shop 
        to fix your vehicle.  Your policy will cover the reasonable 
        costs of repairing your vehicle to its pre-accident condition no 
        matter where you have repairs made.  Have you selected a repair 
        shop or would you like a referral?" 
           After an insured has indicated that the insured has 
        selected a repair shop, the insurer must cease all efforts to 
        influence the insured's or claimant's choice of repair shop; 
           (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) failing to provide, to an insured who has submitted a 
        claim for benefits described in section 65B.44, a complete copy 
        of the insurer's claim file on the insured, excluding internal 
        company memoranda, all materials that relate to any insurance 
        fraud investigation, materials that constitute attorney 
        work-product or that qualify for the attorney-client privilege, 
        and medical reviews that are subject to section 145.64, within 
        ten business days of receiving a written request from the 
        insured.  The insurer may charge the insured a reasonable 
        copying fee.  This clause supersedes any inconsistent provisions 
        of sections 72A.49 to 72A.505; 
           (14) if an automobile policy provides for the adjustment or 
        settlement of an automobile loss due to damaged window glass, 
        failing to provide payment to the insured's chosen vendor based 
        on a competitive price that is fair and reasonable within the 
        local industry at large.  
        Where facts establish that a different rate in a specific 
        geographic area actually served by the vendor is required by 
        that market, that geographic area must be considered.  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, provided, however, that before 
        recommending a vendor, the insurer shall offer its insured the 
        opportunity to choose the vendor.  If the insurer recommends a 
        vendor, the insurer must also provide the following advisory: 
           "Minnesota law gives you the right to go to any glass 
           vendor you choose, and prohibits me from pressuring you to 
           choose a particular vendor."; 
           (15) requiring that the repair or replacement of motor 
        vehicle glass and related products and services be made in a 
        particular place or shop or by a particular entity, or by 
        otherwise limiting the ability of the insured to select the 
        place, shop, or entity to repair or replace the motor vehicle 
        glass and related products and services; or 
           (16) engaging in any act or practice of intimidation, 
        coercion, threat, incentive, or inducement for or against an 
        insured to use a particular company or location to provide the 
        motor vehicle glass repair or replacement services or products.  
        For purposes of this section, a warranty shall not be considered 
        an inducement or incentive. 
           Presented to the governor May 31, 2005 
           Signed by the governor June 2, 2005, 2:45 p.m.

Official Publication of the State of Minnesota
Revisor of Statutes