1.1                          A bill for an act 
  1.2             relating to insurance; regulating claims; providing 
  1.3             remedies for the bad faith actions of certain 
  1.4             insurers; proposing coding for new law in Minnesota 
  1.5             Statutes, chapter 72A. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [72A.136] [INSURER BAD FAITH; REMEDY.] 
  1.8      Subdivision 1.  [CAUSE OF ACTION.] An insured under a fire 
  1.9   or homeowner's insurance policy issued pursuant to section 
  1.10  60A.06, subdivision 1, clause (1), may bring an action against 
  1.11  the insurer issuing the policy alleging that the insurer refused 
  1.12  in bad faith to pay a claim made by the insured under the 
  1.13  provisions of the policy.  An insurer has refused to pay a claim 
  1.14  in bad faith if the insurer refused to pay the claim without 
  1.15  having a reasonable basis for the refusal, and, at the time of 
  1.16  the refusal, the insurer knew there was no reasonable basis for 
  1.17  the refusal or acted in reckless disregard of the lack of a 
  1.18  reasonable basis for the refusal.  An insurer has not acted in 
  1.19  bad faith in refusing to pay an insured's claim if the claim is 
  1.20  fairly debatable, in law or in fact.  This section does not 
  1.21  apply to an action by an insured or a third party against an 
  1.22  insurer for wrongful failure to provide a defense or to settle a 
  1.23  third-party claim under a liability insurance contract. 
  1.24     Subd. 2.  [DAMAGES.] In an action under this section, an 
  1.25  insured may recover compensatory damages in excess of the policy 
  2.1   limits and also may recover punitive damages pursuant to 
  2.2   sections 549.191 and 549.20.  An insured shall not recover 
  2.3   punitive damages in excess of $100,000 under this section.  
  2.4      Subd. 3.  [ATTORNEY FEES AND COSTS.] Reasonable attorney 
  2.5   fees and costs are recoverable by the prevailing party in an 
  2.6   action under this section. 
  2.7      Subd. 4.  [LIMITATION PERIOD.] An action under this section 
  2.8   must be commenced within three years of the bad faith act, 
  2.9   notwithstanding any policy provision to the contrary. 
  2.10     Sec. 2.  [EFFECTIVE DATE; APPLICATION.] 
  2.11     Section 1 is effective August 1, 1999, and applies to 
  2.12  actions arising from incidents occurring on or after that date.