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CHAPTER 65A. FIRE AND RELATED INSURANCE

Table of Sections
SectionHeadnote

STANDARD FIRE INSURANCE POLICY

65A.01MINNESOTA STANDARD FIRE INSURANCE POLICY.

PROVISIONS RELATING TO OPERATIONS

65A.02JOINT POLICY.
65A.03BINDERS, TEMPORARY INSURANCE.
65A.04EFFECT ON SECTION 65A.08.
65A.05NUCLEAR REACTION, RADIATION OR RADIOACTIVE CONTAMINATION; ENDORSEMENT.
65A.06MOTOR VEHICLE, OCEAN AND INLAND MARINE POLICIES.
65A.061CREDITORS LIMITED TO EXISTING INSURANCE.
65A.07CANCELLATION OF FIRE POLICY.
65A.08SPECIAL PROVISIONS.
65A.09INSURANCE IN EXCESS OF REPLACEMENT COST.
65A.10LIMITATION.
65A.11PAYMENT TO MORTGAGEE.
65A.12WAIVER OF RIGHT TO ARBITRATION.
65A.13LIABILITY OF COMPANY.
65A.14PERSON WHO PROCURES AN APPLICATION AGENT OF ISSUING COMPANY.
65A.15VIOLATION.

OPTIONAL SPECIAL RESERVE FUND

65A.16GUARANTY SURPLUS AND SPECIAL RESERVE FUND.
65A.17ACTION OF STOCKHOLDERS FILED WITH COMMISSIONER.
65A.18DIVIDENDS DECLARED OUT OF SURPLUS PROFITS.
65A.19EXAMINATION.
65A.20ITEMS CONSIDERED IN ESTIMATING PROFIT.
65A.21INVESTMENT OF GUARANTY SURPLUS.
65A.22INVESTMENT OF SPECIAL RESERVE FUND.
65A.23WHEN CLAIMS EXCEED GUARANTY SURPLUS AND CAPITAL STOCK.
65A.24STOCKHOLDERS TO MAKE UP IMPAIRMENT.
65A.25Repealed, 1996 c 446 art 1 s 72; 1998 c 339 s 72

HAIL INSURANCE

65A.26HAIL INSURANCE, POLICIES, LOSS ADJUSTMENT.

HOMEOWNER'S INSURANCE

65A.27DEFINITIONS.
65A.28DISCLOSURE AND FILING REQUIREMENTS.
65A.29CANCELLATION; NONRENEWAL; REFUSAL TO WRITE.
65A.295HOMEOWNER'S INSURANCE COVERAGE.
65A.296PROOF OF LOSS.
65A.297ACTIVE DUTY MEMBER OF ARMED SERVICES RESERVE OR NATIONAL GUARD; USE IN UNDERWRITING PROHIBITED.
65A.30DAY CARE SERVICES; COVERAGE.
65A.30165A.301 ADULT FOSTER CARE SERVICES; COVERAGE.

MINNESOTA FAIR PLAN ACT

65A.31MINNESOTA FAIR PLAN ACT.
65A.32PURPOSES.
65A.33DEFINITIONS.
65A.34PLAN COVERAGE.
65A.35ADMINISTRATION.
65A.36UNDERWRITING.
65A.37POLICY FORMS.
65A.375RATES.
65A.38POLICY CANCELLATION.
65A.39APPEALS.
65A.40EDUCATION PROGRAMS.
65A.41AGENTS.
65A.42IMMUNITY FROM LIABILITY.
65A.43Repealed, 1993 c 248 s 17

RESIDENTIAL RENTER'S POLICIES

65A.44DEFINITIONS.
65A.45RESIDENTIAL RENTER'S INSURANCE POLICY.

REAL PROPERTY FIRE LOSS ESCROW ACCOUNT

65A.50TRUST OR ESCROW ACCOUNTS; INSURED REAL PROPERTY FIRE OR EXPLOSION LOSS PROCEEDS.

STANDARD FIRE INSURANCE POLICY

65A.01 MINNESOTA STANDARD FIRE INSURANCE POLICY.
    Subdivision 1. Designation and scope. The printed form of a policy of fire insurance, as set
forth in subdivisions 3 and 3a, shall be known and designated as the "Minnesota standard fire
insurance policy" to be used in the state of Minnesota. No policy or contract of fire insurance shall
be made, issued or delivered by any insurer including reciprocals or interinsurance exchanges
or any agent or representative thereof, on any property in this state, unless it shall provide the
specified coverage and conform as to all provisions, stipulations, and conditions, with such form
of policy, except as provided in sections 60A.08, subdivision 9; 60A.352; 65A.06; 65A.29;
72A.20, subdivision 17; and other statutes containing specific requirements that are inconsistent
with the form of this policy. Any policy or contract otherwise subject to the provisions of this
subdivision, subdivisions 3 and 3a which includes either on an unspecified basis as to coverage or
for a single premium, coverage against the peril of fire and coverage against other perils may be
issued without incorporating the exact language of the Minnesota standard fire insurance policy,
provided: Such policy or contract shall, with respect to the peril of fire, afford the insured all the
rights and benefits of the Minnesota standard fire insurance policy and such additional benefits
as the policy provides; the provisions in relation to mortgagee interests and obligations in said
Minnesota standard fire insurance policy shall be incorporated therein without change; such
policy or contract is complete as to its terms of coverage; and, the commissioner is satisfied that
such policy or contract complies with the provisions hereof.
    Subd. 2. Company information. There shall be printed on the first or front page at the head
of said "Minnesota standard fire insurance policy" the name of the insurer or insurers issuing the
policy, the location of the home office or United States office of the insurer or insurers, a statement
whether said insurer or insurers are stock corporations, mutual corporations, reciprocal insurers or
Lloyds Underwriters; there may be added thereto such device or devices as the insurer or insurers
issuing said policy may desire. Any company organized under special charter provisions may so
indicate upon its policy, and may add a statement of the plan under which it operates in this state.
    Subd. 2a. Facsimile signatures authorized. On any policy of insurance regulated under this
chapter, the signature of an officer or agent of the insurer may be a facsimile signature.
    Subd. 3. Policy provisions. On said policy following such matter as provided in subdivisions
1 and 2, printed in the English language in type of such size or sizes and arranged in such manner,
as is approved by the commissioner of commerce, the following provisions and subject matter
shall be stated in the following words and in the following sequence, but with the convenient
placing, if desired, of such matter as will act as a cover or back for such policy when folded, with
the blanks below indicated being left to be filled in at the time of the issuing of the policy, to wit:
(Space for listing the amounts of insurance, rates and premiums for the basic coverages
provided under the standard form of policy and for additional coverages or perils provided under
endorsements attached. The description and location of the property covered and the insurable
value(s) of any building(s) or structure(s) covered by the policy or its attached endorsements;
also in the above space may be stated whether other insurance is limited and if limited the total
amount permitted.)
In consideration of the provisions and stipulations herein or added hereto and of the premium
above specified this company, for a term of ..... from ..... (At 12:01 a.m. Standard Time) to .....
(At 12:01 a.m. Standard Time) at location of property involved, to an amount not exceeding the
amount(s) above specified does insure ..... and legal representatives ...........................................
(In above space may be stated whether other insurance is limited.) (And if limited the total
amount permitted.)
Subject to form No.(s) ..... attached hereto.
This policy is made and accepted subject to the foregoing provisions and stipulations
and those hereinafter stated, which are hereby made a part of this policy, together with such
provisions, stipulations and agreements as may be added hereto as provided in this policy.
The insurance effected above is granted against all loss or damage by fire originating
from any cause, except as hereinafter provided, also any damage by lightning and by removal
from premises endangered by the perils insured against in this policy, to the property described
hereinafter while located or contained as described in this policy, or pro rata for five days at each
proper place to which any of the property shall necessarily be removed for preservation from the
perils insured against in this policy, but not elsewhere. The amount of said loss or damage, except
in case of total loss on buildings, to be estimated according to the actual value of the insured
property at the time when such loss or damage happens.
If the insured property shall be exposed to loss or damage from the perils insured against, the
insured shall make all reasonable exertions to save and protect same.
This entire policy shall be void if, whether before a loss, the insured has willfully, or after
a loss, the insured has willfully and with intent to defraud, concealed or misrepresented any
material fact or circumstance concerning this insurance or the subject thereof, or the interests of
the insured therein.
This policy shall not cover accounts, bills, currency, deeds, evidences of debt, money or
securities; nor, unless specifically named hereon in writing, bullion, or manuscripts.
This company shall not be liable for loss by fire or other perils insured against in this policy
caused, directly or indirectly by: (a) enemy attack by armed forces, including action taken by
military, naval or air forces in resisting an actual or immediately impending enemy attack; (b)
invasion; (c) insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) usurped power; (h) order
of any civil authority except acts of destruction at the time of and for the purpose of preventing
the spread of fire, providing that such fire did not originate from any of the perils excluded by
this policy.
This company shall not be liable for loss by fire or other perils insured against in a
commercial policy caused, directly or indirectly, by terrorism, unless an endorsement specifically
assuming coverage for loss or damage caused by terrorism is attached to the policy.
Other insurance may be prohibited or the amount of insurance may be limited by so
providing in the policy or an endorsement, rider or form attached thereto.
Unless otherwise provided in writing added hereto this company shall not be liable for
loss occurring:
(a) while the hazard is increased by any means within the control or knowledge of the
insured; or
(b) while the described premises, whether intended for occupancy by owner or tenant, are
vacant or unoccupied beyond a period of 60 consecutive days; or
(c) as a result of explosion or riot, unless fire ensue, and in that event for loss by fire only.
Any other peril to be insured against or subject of insurance to be covered in this policy shall
be by endorsement in writing hereon or added hereto.
The extent of the application of insurance under this policy and the contributions to be made
by this company in case of loss, and any other provision or agreement not inconsistent with the
provisions of this policy, may be provided for in writing added hereto, but no provision may be
waived except such as by the terms of this policy is subject to change.
No permission affecting this insurance shall exist, or waiver of any provision be valid, unless
granted herein or expressed in writing added hereto. No provision, stipulation or forfeiture shall
be held to be waived by any requirements or proceeding on the part of this company relating to
appraisal or to any examination provided for herein.
This policy shall be canceled at any time at the request of the insured, in which case this
company shall, upon demand and surrender of this policy, refund the excess of paid premium
above the customary short rates for the expired time. This policy may be canceled at any time
by this company by giving to the insured a written notice of cancellation with or without tender
of the excess of paid premium above the pro rata premium for the expired time, which excess,
if not tendered, shall be refunded on demand. Notice of cancellation shall state that said excess
premium (if not tendered) will be refunded on demand.
If loss hereunder is made payable, in whole or in part, to a designated mortgagee or contract
for deed vendor not named herein as insured, such interest in this policy may be canceled by
giving to such mortgagee or vendor a ten days' written notice of cancellation.
Notwithstanding any other provisions of this policy, if this policy shall be made payable to a
mortgagee or contract for deed vendor of the covered real estate, no act or default of any person
other than such mortgagee or vendor or the mortgagee's or vendor's agent or those claiming under
the mortgagee or vendor, whether the same occurs before or during the term of this policy, shall
render this policy void as to such mortgagee or vendor nor affect such mortgagee's or vendor's
right to recover in case of loss on such real estate; provided, that the mortgagee or vendor shall on
demand pay according to the established scale of rates for any increase of risks not paid for by
the insured; and whenever this company shall be liable to a mortgagee or vendor for any sum
for loss under this policy for which no liability exists as to the mortgagor, vendee, or owner, and
this company shall elect by itself, or with others, to pay the mortgagee or vendor the full amount
secured by such mortgage or contract for deed, then the mortgagee or vendor shall assign and
transfer to the company the mortgagee's or vendor's interest, upon such payment, in the said
mortgage or contract for deed together with the note and debts thereby secured.
This company shall not be liable for a greater proportion of any loss than the amount hereby
insured shall bear to the whole insurance covering the property against the peril involved.
In case of any loss under this policy the insured shall give immediate written notice to this
company of any loss, protect the property from further damage, and a statement in writing,
signed and sworn to by the insured, shall within 60 days be rendered to the company, setting
forth the value of the property insured, except in case of total loss on buildings the value of said
buildings need not be stated, the interest of the insured therein, all other insurance thereon, in
detail, the purposes for which and the persons by whom the building insured, or containing the
property insured, was used, and the time at which and manner in which the fire originated, so
far as known to the insured.
The insured, as often as may be reasonably required, shall exhibit to any person designated
by this company all that remains of any property herein described, and, after being informed of
the right to counsel and that any answers may be used against the insured in later civil or criminal
proceedings, the insured shall, within a reasonable period after demand by this company, submit
to examinations under oath by any person named by this company, and subscribe the oath. The
insured, as often as may be reasonably required, shall produce for examination all records and
documents reasonably related to the loss, or certified copies thereof if originals are lost, at a
reasonable time and place designated by this company or its representatives, and shall permit
extracts and copies thereof to be made.
In case the insured and this company, except in case of total loss on buildings, shall fail to
agree as to the actual cash value or the amount of loss, then, on the written demand of either, each
shall select a competent and disinterested appraiser and notify the other of the appraiser selected
within 20 days of such demand. In case either fails to select an appraiser within the time provided,
then a presiding judge of the district court of the county wherein the loss occurs may appoint such
appraiser for such party upon application of the other party in writing by giving five days' notice
thereof in writing to the party failing to appoint. The appraisers shall first select a competent and
disinterested umpire; and failing for 15 days to agree upon such umpire, then a presiding judge of
the above mentioned court may appoint such an umpire upon application of party in writing by
giving five days' notice thereof in writing to the other party. The appraisers shall then appraise
the loss, stating separately actual value and loss to each item; and, failing to agree, shall submit
their differences, only, to the umpire. An award in writing, so itemized, of any two when filed
with this company shall determine the amount of actual value and loss. Each appraiser shall be
paid by the selecting party, or the party for whom selected, and the expense of the appraisal and
umpire shall be paid by the parties equally.
It shall be optional with this company to take all of the property at the agreed or appraised
value, and also to repair, rebuild or replace the property destroyed or damaged with other of like
kind and quality within a reasonable time, on giving notice of its intention so to do within 30 days
after the receipt of the proof of loss herein required.
There can be no abandonment to this company of any property.
The amount of loss for which this company may be liable shall be payable 60 days after
proof of loss, as herein provided, is received by this company and ascertainment of the loss is
made either by agreement between the insured and this company expressed in writing or by the
filing with this company of an award as herein provided. It is moreover understood that there
can be no abandonment of the property insured to the company, and that the company will not in
any case be liable for more than the sum insured, with interest thereon from the time when the
loss shall become payable, as above provided.
No suit or action on this policy for the recovery of any claim shall be sustainable in any court
of law or equity unless all the requirements of this policy have been complied with, and unless
commenced within two years after inception of the loss.
This company is subrogated to, and may require from the insured an assignment of all
right of recovery against any party for loss to the extent that payment therefor is made by this
company; and the insurer may prosecute therefor in the name of the insured retaining such
amount as the insurer has paid.
Assignment of this policy shall not be valid except with the written consent of this company.
IN WITNESS WHEREOF, this company has executed and attested these presents.
.....
.....
(Signature)
(Signature)
.....
.....
(Name of office)
(Name of office)
    Subd. 3a. Cancellation. (1) There shall be printed in the policy or an endorsement attached
to the policy a printed form in the following words:
When this policy has been issued to cover buildings used for residential purposes other than
a hotel or motel and has been in effect for at least 60 days, or if it has been renewed, this policy
shall not be canceled, except for one or more of the following reasons which shall be stated in
the notice of cancellation:
(a) Nonpayment of premium;
(b) Misrepresentation or fraud made by or with the knowledge of the insured in obtaining
the policy or in pursuing a claim thereunder;
(c) An act or omission of the insured which materially increases the risk originally accepted;
(d) Physical changes in the insured property which are not corrected or restored within a
reasonable time after they occur and which result in the property becoming uninsurable; or
(e) Nonpayment of dues to an association or organization, other than an insurance association
or organization, where payment of dues is a prerequisite to obtaining or continuing the insurance.
Provided, however, that this limitation on cancellation shall not apply to additional coverages
in a divisible policy, other than a policy of fire and extended coverage insurance. If this company
cancels the additional coverages, it may issue a new, separate fire policy at a premium calculated
on a pro rata basis for the remaining period of the original policy.
(2) The provisions of clause (1)(e) shall not be included in the language of the policy or
endorsement unless the payment of dues to an association or organization, other than an insurance
association or organization, is a prerequisite to obtaining or continuing the insurance.
    Subd. 3b. Rescission and voidability. This policy must not be rescinded or voided except
where the insured has willfully and with intent to defraud concealed or misrepresented a material
fact or circumstance concerning this insurance or the subject of this insurance or the interests of
the insured in this insurance. This provision must not operate to defeat a claim by a third party or
a minor child of the named insured for damage or loss for which the policy provides coverage.
    Subd. 3c. Time requirements. (a) In the event of a policy less than 60 days old that is
declined, or a policy that it is being canceled for nonpayment of premium, the notice must be
mailed to the insured at least 20 days before the effective cancellation date. If a policy is being
declined or canceled for underwriting considerations, the insured must be informed of the source
from which the information was received.
(b) In the event of a midterm cancellation, for reasons listed in subdivision 3a, or according
to policy provisions, notice must be mailed to the insured at least 30 days before the effective
cancellation date.
(c) In the event of a nonrenewal, notice must be mailed to the insured at least 60 days
before the effective date of nonrenewal, containing the specific underwriting or other reason for
the indicated actions.
(d) This subdivision does not apply to commercial policies regulated under sections 60A.36
and 60A.37.
    Subd. 4. Additional provisions permitted. (1) There may be printed in the policy or an
endorsement attached to the policy, in case the assured desires liability to attach to several
buildings, divisions or locations under one item, a printed form filed with and approved by the
commissioner of commerce.
(2) There may be printed in the policy or an endorsement attached to the policy, a printed
form in the following words, to wit:
The insured has relinquished all rights to recover for loss or damage by fire from ..... (here
insert name of individual, partnership, association or corporation).
(3) There may be printed upon a policy issued in compliance herewith the words "Minnesota
standard fire insurance policy."
(4) A company, if incorporated or formed in this state, may print in the policy any provisions
which it is authorized or required by law to insert therein, if not incorporated in this state, it may,
with the approval of the commissioner of commerce, print in the policy any provision required
by its charter or deed of settlement, or by the laws of its own state or country, not contrary to
the laws of this state.
(5) Appropriate forms of other contracts or endorsements, whereby the property described
in such policy shall be insured against one or more of the additional perils which the insurer is
empowered to assume, and forms of provisions or endorsements which serve to modify the
policy or premium in favor of the insured, may be attached to, used in or in connection with the
Minnesota standard fire insurance policy when approved by the commissioner of commerce.
Such forms of other contracts, provisions or endorsements attached to or printed thereon may
contain provisions and stipulations inconsistent with the Minnesota standard fire insurance policy
if applicable only to such other perils. There may be placed upon the Minnesota standard fire
insurance policy, in such manner and form as is approved by the commissioner of commerce, such
data as may be conveniently included for duplication on the daily reports for the office records
of the company writing the policy.
(6) A company may print or use on its policy, printed forms covering the maintenance or
supervision of security guard's service, automatic sprinkler service or the maintenance of a clear
space in lumber yards, when approved by the commissioner of commerce, but no such clause
shall contain any provision calling for the lapse or the suspension of the insurance coverage.
(7) A company may print or use in its policy printed forms for insurance against loss of
rents and rental value, leasehold values, use and occupancy, and indirect or consequential loss
or damage caused by change of temperature resulting from the destruction of refrigeration or
cooling apparatus, or any of its connections. It may also use a form specifically excluding the
last mentioned hazard.
All contracts of insurance against loss of rents or rental values, use and occupancy, shall
contain the following provisions:
The period of indemnity under this contract shall be limited to such length of time
(commencing with the date of the fire or lightning and not limited by the date of the expiration of
the policy) as would be required through the exercise of due diligence and dispatch to rebuild,
repair or replace such part of the property described in said policy as may be destroyed or
damaged.
(8) There may be printed in the policy in a convenient place approved by the commissioner
of commerce, or on an endorsement attached to the policy, a printed form providing that in
the case of loss, such loss shall be payable to the mortgagee, or other persons, as their interest
may appear, to wit:
Subject to the stipulations, provisions and conditions contained in this policy, the loss, if any,
is payable to ....., mortgagee, as the mortgagee's interest may appear.
    Subd. 5. Provision prohibited, total loss; limiting amount to be paid. No provision shall
be attached to or included in such policy limiting the amount to be paid in case of total loss on
buildings by fire, lightning or other hazard to less than the amount of insurance on the same.
    Subd. 6. Clear statement of reasons for cancellation. When policies covered by this
section are subject to limitations or cancellation as provided in subdivision 3a, the notice of
cancellation shall include a statement of the reason for cancellation in a sufficiently clear and
specific form so that an insured of reasonable intelligence will be able to identify the basis for the
company's cancellation without making further inquiry.
History: 1967 c 395 art 6 s 1; 1978 c 769 s 1-3; 1979 c 115 s 2; 1983 c 208 s 1; 1983 c
289 s 114 subd 1; 1984 c 592 s 50; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 337 s 89; 1994
c 435 s 1; 1994 c 485 s 51,65; 1995 c 258 s 46; 1996 c 446 art 1 s 53; 1999 c 177 s 61-63;
2003 c 10 s 1; 2004 c 202 s 1

PROVISIONS RELATING TO OPERATIONS

65A.02 JOINT POLICY.
When two or more authorized companies unite in the issue of a joint policy, the heading
thereof may show the severalty of the contract, and the policy shall show the proportion of
premiums to be paid to each, and the proportion of liability which each assumes, and shall contain
a provision to the effect that service of process, or any notice or proof of loss required by such
policy, upon any of the insurers executing such policy, shall be deemed to be service upon all
such insurers.
History: 1967 c 395 art 6 s 2
65A.03 BINDERS, TEMPORARY INSURANCE.
    Subdivision 1. Generally. Binders or other contracts for temporary insurance may be made
orally or in writing, and shall be deemed to include all the terms of such standard fire insurance
policy and all such applicable endorsements as may be designated in such contract of temporary
insurance; except that the clause specifying the hour of the day at which the insurance shall
commence, may be superseded by the express terms of such contract of temporary insurance.
    Subd. 2. Evidence for property purchase financing. A duly authorized binder shall be
acceptable as evidence of insurance coverage required as a condition of financing the purchase
of real or personal property, provided that a mortgagee or lender shall not be required to accept
renewal or extension thereof. This section does not require the approval of a binder by any person,
firm, corporation, trustee, director, officer, agent, or employee, where there are reasonable grounds
for believing that the insurance evidenced by the binder is unsatisfactory as to placement with an
unauthorized insurer, the financial solvency of the insurer, adequacy of the coverage, adequacy of
the insurer to assume the risk to be insured, the assessment feature to which the policy is subject,
or other grounds which are not arbitrary, unreasonable, or discriminatory, nor does this section
forbid the securing of insurance or a renewal thereof at the request of the borrower or because of
the borrower's failure to furnish necessary insurance or renewal thereof.
    Subd. 3. Penalty. If any person, firm, corporation, trustee, director, officer, agent, or
employee, refuses to accept a duly authorized binder pursuant to subdivisions 1 and 2, the
commissioner of commerce may issue an order requiring acceptance and impose a civil penalty
of $500 per violation.
History: 1967 c 395 art 6 s 3; 1984 c 592 s 51; 1987 c 337 s 90
65A.04 EFFECT ON SECTION 65A.08.
Nothing in the preceding sections of this chapter shall be construed to limit the effect of or
in any way modify or repeal section 65A.08.
History: 1967 c 395 art 6 s 4
65A.05 NUCLEAR REACTION, RADIATION OR RADIOACTIVE CONTAMINATION;
ENDORSEMENT.
Loss or damage caused by nuclear reaction, nuclear radiation or radioactive contamination,
all whether directly or indirectly resulting from an insured peril under the standard policy issued
pursuant to sections 65A.01, 65A.02, 65A.03, and 65A.04, may be insured under said policy
only by a written endorsement providing such insurance, with such endorsement affixed to said
standard policy.
History: 1967 c 395 art 6 s 5
65A.06 MOTOR VEHICLE, OCEAN AND INLAND MARINE POLICIES.
Insurance on automobiles, motorcycles, other motor vehicles, or on property insured by
ocean marine, and inland marine policies as defined by section 70A.03, clause (3), against loss or
damage by fire, when combined in one policy with insurance against one or more of the other
hazards mentioned in section 60A.06, subdivision 1, clause (1), need not be in accordance with
section 65A.01, but in no event shall this section be applicable to insurance on buildings or
structures.
History: 1967 c 395 art 6 s 6; 1971 c 24 s 10
65A.061 CREDITORS LIMITED TO EXISTING INSURANCE.
When a creditor requires a debtor to provide insurance on real or personal property security
against reasonable risks of loss, damage, or destruction, no insurance shall be sold or placed by or
through the creditor if the debtor provides the creditor with a loss payable through existing policies
of insurance that the debtor owns or controls. This section does not apply if the existing insurance
is in an amount less than the amount of indebtedness to be secured on the real or personal property.
This section does not prevent the disapproval of the insurer or a policy of insurance where
there are reasonable grounds for believing that the insurer is insolvent or that the insurance is
unsatisfactory as to placement with an unauthorized insurer, adequacy of the coverage, adequacy
of the insurer to assume the risk to be insured, the assessment features to which the policy is
subject, or other grounds that are based on the nature of the coverage and that are not arbitrary,
unreasonable, or discriminatory. This section does not prevent a mortgage lender or mortgage
servicer from requiring that a policy of insurance or renewal of the policy be in conformance with
standards of the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation, nor does this section forbid the securing of a policy of insurance or a renewal of the
policy at the request of the borrower or because of the borrower's failure to furnish the necessary
insurance or renewal.
This section supersedes any inconsistent provision of law to the contrary.
History: 1989 c 330 s 25
65A.07 CANCELLATION OF FIRE POLICY.
Any fire insurance company which has not collected the premium on its policy at the time of
the delivery thereof may print or endorse, or attach by rider, on its policy the following clause:
"If the insured hereunder shall not have actually paid the premium hereon, or any part
thereof, within 60 days from the date of this policy, then this policy may be canceled by the
insurer by giving five days' written notice to the insured and to the mortgagee, or other person to
whom the policy is made payable, if any, without tendering any part or portion of such premium,
anything to the contrary in the policy contract notwithstanding."
History: 1967 c 395 art 6 s 7
65A.08 SPECIAL PROVISIONS.
    Subdivision 1.[Repealed, 1979 c 175 s 1]
    Subd. 2. Amount collectible. (a) In the absence of any change increasing the risk, without
the consent of the insurer, of which the burden of proof shall be upon it, and in the absence of
intentional fraud on the part of the insured, the insurer shall pay the whole amount mentioned
in the policy or renewal upon which it receives a premium, in case of total loss, and in case of
partial loss, the full amount thereof.
(b) Notwithstanding paragraph (a), on a policy issued by the Minnesota FAIR plan under
section 65A.36, the Minnesota FAIR plan may contest the whole amount set forth in the policy
in the case of a total loss. If the Minnesota FAIR plan takes the position that the value of the
property was less than the whole amount set forth in the policy, the Minnesota FAIR plan has the
burden of proving by clear and convincing evidence that the value was less than that set forth in
the policy. If the Minnesota FAIR plan pays less than the whole amount mentioned in the policy
for a total loss, pursuant to this paragraph, the Minnesota FAIR plan shall refund to the insured
the premium paid attributable to the difference between the whole amount mentioned in the
policy and the amount paid for the total loss.
    Subd. 3. Agreement as to amount of loss. Policies on farm buildings or other structures
may, in consideration of a reduction in the premium by the company, include a provision
determining the amount of loss in connection with repair or replacement of the insured property.
    Subd. 4. Prorating provided. If there are two or more policies upon the property, each shall
contribute to the payment of the whole or partial loss in proportion to the amount specified.
    Subd. 5. Coinsurance provision. Any policy may contain a coinsurance clause, if the
insured requests the same, in writing, of which fact such writing shall be the only evidence, and
if, in consideration thereof, a reduction in the rate of premium is made by the company. When
so demanded and attached to the policy, this agreement shall be binding upon both the insured
and the company, and, in case of loss, the actual cash value of the property so insured at the time
of the loss, including the buildings, shall be the basis for determining the proper amount of the
coinsurance, and the amount of loss, notwithstanding any previous valuation of the building.
    Subd. 6. Term of policies. No company shall knowingly issue any policy upon property
in this state for a longer term than five years.
History: 1967 c 395 art 6 s 8; 2005 c 66 s 1; 1Sp2005 c 7 s 1
65A.09 INSURANCE IN EXCESS OF REPLACEMENT COST.
    Subdivision 1. Insurance limited. No company shall knowingly issue any policy upon
property in this state for an amount which, together with any existing insurance thereon, exceeds
the replacement cost of the buildings and any other covered improvements on the property. Any
company willfully insuring property for more than that amount shall forfeit to the state, for the
benefit of the school fund, double the premium collected on the policy.
    Subd. 2. Lenders; excess insurance. No mortgage company, bank, savings association,
finance company, or other mortgage lender of any kind may require insurance coverage in
violation of section 72A.31, subdivision 1, clause (4). Any lender that willfully violates this
subdivision is subject to penalties available under chapter 45.
History: 1967 c 395 art 6 s 9; 2002 c 295 s 1
65A.10 LIMITATION.
    Subdivision 1. Buildings. Nothing contained in sections 65A.08 and 65A.09 shall be
construed to preclude insurance against the cost, in excess of actual cash value at the time
any loss or damage occurs, of actually repairing, rebuilding or replacing the insured property.
Subject to any applicable policy limits, where an insurer offers replacement cost insurance: (i)
the insurance must cover the cost of replacing, rebuilding, or repairing any loss or damaged
property in accordance with the minimum code as required by state or local authorities; and (ii)
the insurance coverage may not be conditioned on replacing or rebuilding the damaged property
at its original location on the owner's property if the structure must be relocated because of
zoning or land use regulations of state or local government. In the case of a partial loss, unless
more extensive coverage is otherwise specified in the policy, this coverage applies only to the
damaged portion of the property.
    Subd. 2. Personal property. Subject to applicable policy limits, replacement cost insurance
coverage for personal property must cover the cost of replacing or repairing any loss or damaged
property. In the case of a partial loss, unless more extensive coverage is otherwise specified in the
policy, this coverage applies only to the damaged portion of the property. If a homeowner's policy
does not provide replacement cost coverage for personal property, the declarations page of the
policy shall so indicate by containing the term "nonreplacement cost."
History: 1967 c 395 art 6 s 10; 1987 c 337 s 91; 1991 c 244 s 1; 1996 c 446 art 1 s 54
65A.11 PAYMENT TO MORTGAGEE.
When the whole, or any part, of the loss is payable, in terms or otherwise, to or for one or
more mortgagees, upon proof before payment of the rights of the parties, the company shall pay
the same in the order of priority to the extent of its liability and every such payment to such extent
shall be payment and satisfaction of its liability under the policy.
History: 1967 c 395 art 6 s 11
65A.12 WAIVER OF RIGHT TO ARBITRATION.
    Subdivision 1. Right to arbitration. Any person who shall not, within 20 days after written
request, appoint a qualified appraiser, as provided in the policy, shall at the election of the other
party be deemed to have waived the right to appraisal, and, if it be the insurer, shall be liable to suit.
    Subd. 2. Appraiser. No person shall be a qualified appraiser who is not a resident of the
state, disinterested, and willing to act.
History: 1967 c 395 art 6 s 12
65A.13 LIABILITY OF COMPANY.
Notwithstanding any penalty prescribed for the making, issuing, or delivery of any policy in
violation of any provision of law, every such policy shall be binding upon the company issuing
the same.
History: 1967 c 395 art 6 s 13
65A.14 PERSON WHO PROCURES AN APPLICATION AGENT OF ISSUING
COMPANY.
Every person who solicits insurance and procures an application therefor shall be held to be
the agent of the party afterward issuing insurance thereon or a renewal thereof.
History: 1967 c 395 art 6 s 14
65A.15 VIOLATION.
Every company and every agent who shall willfully make, issue, or deliver a policy in
violation of sections 65A.01, 65A.02, and 65A.03 shall be guilty of a gross misdemeanor; but
every stipulation of the policy in favor of the insured shall, nevertheless, be binding upon the
company issuing the same.
History: 1967 c 395 art 6 s 15

OPTIONAL SPECIAL RESERVE FUND

65A.16 GUARANTY SURPLUS AND SPECIAL RESERVE FUND.
Any insurance company organized under the laws of this state authorized to transact a fire
insurance business may create the funds herein provided for, to be known and designated as the
guaranty surplus fund and the special reserve fund, and may avail itself of the provisions of
sections 65A.16 to 65A.24, upon complying with the requirements thereof.
History: 1967 c 395 art 6 s 16; 1997 c 7 art 1 s 19
65A.17 ACTION OF STOCKHOLDERS FILED WITH COMMISSIONER.
Any such insurance company, desiring to create such funds, may do so if such action is
authorized by its stockholders, upon the adoption of a resolution to that effect by its board of
directors at a regular meeting of the board, or at any special meeting called for that purpose, and
filing with the commissioner a copy thereof, declaring the intention of the company to create these
funds and to do business under the provisions of sections 65A.16 to 65A.24; and, as soon after
the filing of a copy of the resolution as convenient, the commissioner shall make, or cause to be
made, an examination of the company, and shall make a certificate of the result thereof, which
shall particularly set forth the amount of surplus funds held by the company at the date of the
examination, the whole or any part of which, under the provisions of sections 65A.16 to 65A.24,
may be equally divided between and set apart to constitute guaranty surplus and special reserve
funds, which certificate shall be recorded in the Department of Commerce.
History: 1967 c 395 art 6 s 17; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986
c 444; 1997 c 7 art 1 s 19
65A.18 DIVIDENDS DECLARED OUT OF SURPLUS PROFITS.
After the date of filing any such resolution with the commissioner, the company shall not
make or declare or pay in any form any dividend upon its capital stock, exceeding eight percent
per annum thereupon and six percent per annum upon the surplus funds to be formed hereunder,
until after its guaranty surplus fund and its special reserve fund shall have together accumulated
to an amount equal to its capital stock or to the sum of $2,000,000; and any part of the surplus
profits of the company above this annual dividend may be equally divided between and set apart
to constitute the guaranty surplus fund and the special reserve fund, which funds shall be held and
used as hereinafter provided, and not otherwise. Any company doing business under sections
65A.16 to 65A.24, whose guaranty surplus fund and special reserve fund shall have together
accumulated to an amount equal to its capital stock or to the sum of $2,000,000, may, from time
to time, declare dividends out of its surplus profits in such amounts as its board of directors may
prescribe, subject only to the limitation that the payment of these dividends shall not deplete its
capital, nor reduce the aggregate amount of the guaranty surplus and special reserve funds to an
amount less than the amount of its capital stock, or if its capital stock exceeds $2,000,000, to an
amount less than $2,000,000; and, subject to the further limitation that no dividends exceeding
ten percent upon the capital stock shall be declared in any year if the payment thereof would
reduce the aggregate amount of all surplus funds, including guaranty surplus and special reserve
funds, below an amount equal to 30 percent of its unearned premiums. Any company doing
business under sections 65A.16 to 65A.24, which shall declare or pay any dividend contrary to
the provisions herein contained, shall be liable to be proceeded against under chapter 60B for
its dissolution.
History: 1967 c 395 art 6 s 18; 1969 c 708 s 63; 1997 c 7 art 1 s 19
65A.19 EXAMINATION.
When the company shall notify the commissioner that it has fulfilled the requirements
already expressed in sections 65A.16 to 65A.24, and that its guaranty surplus fund and its special
reserve fund, taken together, equal its capital stock or amount to the sum of $2,000,000, the
commissioner shall make an examination of the company and make a certificate of the result
thereof, and file the same in the commissioner's office and, if the commissioner shall find that the
combined funds shall equal the capital stock of the company or amount to the sum of $2,000,000,
thereafter the company may continue, out of any subsequent profits of its business, to add to
these funds; provided, that when any addition is made to the special reserve fund, an equal sum
shall be carried to the guaranty surplus fund.
History: 1967 c 395 art 6 s 19; 1986 c 444; 1997 c 7 art 1 s 19
65A.20 ITEMS CONSIDERED IN ESTIMATING PROFIT.
In estimating the profit of any such company for the purpose of making a division thereof
between the guaranty surplus fund and the special reserve fund, until these funds shall together
amount to a sum equal to the capital stock of the company or amount to the sum of $2,000,000,
there shall be deducted from the gross assets of the company, including for this purpose the
amount of the special reserve fund, the sum of the following items:
(1) the amount of all outstanding claims;
(2) an amount sufficient to meet the liability of the company for the unearned premiums
upon its unexpired policies, which amount shall at least equal one-half the premiums received on
policies having one year or less to run from the date of policy, and a pro rata proportion of the
premiums received on the policies having more than one year to run from the date of policy, and
shall be known as the reinsurance liability;
(3) the amount of its guaranty surplus fund and of its special reserve fund;
(4) the amount of the capital of the company; and
(5) interest at the rate of eight percent per annum upon the amount of capital, and six percent
per annum upon the amount of the said funds for whatever time shall have elapsed since the last
preceding cash dividend. The balance shall constitute the net surplus of the company, any portion
of which is subject to an equal division between these funds, as herein provided.
History: 1967 c 395 art 6 s 20
65A.21 INVESTMENT OF GUARANTY SURPLUS.
The guaranty surplus shall be held and be invested by the company in the same manner as
its capital stock and surplus accumulation may be held and be invested, and shall be liable and
applicable in the same manner as the capital stock to the payment generally of the losses of the
company.
History: 1967 c 395 art 6 s 21
65A.22 INVESTMENT OF SPECIAL RESERVE FUND.
The special reserve fund shall be invested according to existing laws relating to investments
of capital by fire insurance companies and shall be deposited, from time to time, as the same
shall accumulate and be invested, with the commissioner in accordance with section 60A.10,
subdivision 4
, who shall permit the company depositing the same to change these deposits by
substituting for those withdrawn others of equal amount and value, and to collect and receive
the interest or dividends upon these securities as the same may accrue; and this fund shall not be
regarded as any part of the assets in possession of the company, so as to be or render the same
liable for any claim for loss by fire, or otherwise, except as provided in sections 65A.16 to 65A.24.
History: 1967 c 395 art 6 s 22; 1974 c 425 s 7; 1997 c 7 art 1 s 19
65A.23 WHEN CLAIMS EXCEED GUARANTY SURPLUS AND CAPITAL STOCK.
(1) When the claims upon the company shall exceed the amount of its capital stock and of
guaranty surplus fund, provided for by sections 65A.16 to 65A.24, and of its surplus funds, other
than the special reserve fund, the company shall notify the commissioner of the fact, who shall
then make, or cause to be made, an examination of the company, and issue a certificate of the
result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of
reinsurance liability, and of other assets, and upon the commissioner's issuing this certificate, in
duplicate, one copy to be given to the company and one to be recorded in the Department of
Commerce, the special reserve fund shall be immediately held to protect all policyholders of the
company, other than such as are claimants upon it at the date of the certificate, and the special
reserve fund, together with other assets, certified by the commissioner as equal in value to the
amount of the unearned premiums of the company, to be ascertained, as hereinbefore provided,
shall constitute the capital and assets of the company for the protection of policyholders, other
than these claimants, and for the further conduct of its business, and any official certificate of the
commissioner, herein provided for, shall be binding and conclusive upon all parties interested
in the company, whether as stockholders, creditors, or policyholders, and upon the payment to
claimants who are such at the date of the certificate, of the full amount of the capital of the
company and of its guaranty surplus fund and of its assets at that date, excepting only the special
reserve fund and an amount of its assets equal to the liability of the company for unearned
premiums, as so certified by such commissioner of commerce, the company shall be forever
discharged from any and all further liability to these claimants, and to each of them, and the
commissioner shall, after issuing a certificate, upon the demand of the company, transfer to it all
such securities as shall have been deposited by the company as a special reserve fund and, if the
amount of this special reserve fund be less than 50 percent of the full amount of the capital of
the company, if the capital be $2,000,000, or less, or if the amount of the special reserve fund
be less than $1,000,000, if the capital be over $2,000,000, a requisition shall be issued by the
commissioner upon the stockholders, to make up the capital to that proportion of its full amount,
not exceeding $1,000,000; provided, that any capital so impaired shall be made up at least to the
sum of $100,000, and in case the company, after this requisition, shall fail to make up its capital at
least to the sum of $100,000, as therein directed, the special reserve fund shall still be held as
security and liable for any and all losses occurring upon policies of the company.
(2) If, after this application of the special reserve fund and requisition on the stockholders,
the par value of outstanding shares of stock shall exceed the new amount of capital so established,
outstanding shares, to the amount of the excess, shall be surrendered by the stockholders pro rata.
(3) The company shall, in its annual statement to the commissioner, set forth the amount of
the special reserve fund and of its guaranty surplus fund.
(4) If, in consequence of the payment of losses by fires, or of the expenses of the business,
or of the interest or dividends payable under the provisions of sections 65A.16 to 65A.24 to
stockholders, or from any cause, the guaranty surplus fund shall be reduced in amount below the
amount of the special reserve fund, the directors of the corporation shall make no additions to the
special reserve fund until the guaranty surplus fund is equal to the special reserve fund.
(5) The policy registers, insurance maps, books of record, and other books in use by the
company in its business, and its policy and other blanks, office furniture, fixtures, and supplies
are not to be considered as assets, but shall be held by the company for its use in the protection
of its policyholders.
(6) If any amount greater than a sum equal to one-half of its capital stock shall, by the
company under the provisions of sections 65A.16 to 65A.24, have been deposited with the
commissioner, the commissioner shall retain of these securities an amount equal to one-half of
what amount the commissioner shall so hold thereof in excess of a sum equal to such one-half of
such capital stock if the capital be $2,000,000, or less, or in excess of $3,000,000 if the capital
be over $2,000,000, and the commissioner shall transfer the balance thereof to the company, as
herein provided, and the amount so transferred to the company shall, from the time of the transfer,
provided the amount thereof shall not be less than $100,000, constitute the capital stock of the
company for the further conduct of its business, as hereinbefore provided, and the securities so
retained shall be regarded as the special reserve fund of the company, to which additions may be
made, as herein provided, and shall be held in the same manner, and for the same purpose, and
under the same conditions, as the original special reserve fund of the company was held. The
provisions of this section, providing for discharge of the company from further liability to existing
claimants upon application to the payment of such claims of its capital, surplus, and assets,
excepting the special reserve fund, and an amount equal to the liability for unearned premiums,
shall not be construed to relieve the stockholders of the corporation from any liability imposed by
the constitution of this state.
History: 1967 c 395 art 6 s 23; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986
c 444; 1997 c 7 art 1 s 19
65A.24 STOCKHOLDERS TO MAKE UP IMPAIRMENT.
If, at any time after the special reserve fund shall have been accumulated by any company,
the directors of the company shall present evidence satisfactory to the commissioner that the
capital of the company has become impaired, the commissioner shall order the directors to call
upon the stockholders to make up this impairment, and the board of directors may thereupon
require the necessary payment by the stockholders to make good the whole of the impairment,
or they may apply for that purpose the whole or any part of the special reserve fund and require
of the stockholders payment of such amount as may be necessary to make up the balance of the
impairment not made up out of the special reserve fund. The stock of every stockholder shall
be pledged and liable for the amount assessed to make up the impairment, either in whole or in
part, and in case any stockholder refuses to pay the assessment, the stock standing in that person's
name may be sold at public auction, after 30 days' notice, in such manner as the directors may
provide. If the board of directors elect to make good the impairment, or any part thereof, out of the
special reserve fund, the commissioner shall, upon request of the board, transfer to the company
so much of the special reserve fund as is necessary for the purpose. No company doing business
under sections 65A.16 to 65A.24 shall insure any larger amount upon any single risk than is
permitted by law to a company possessing the same amount of capital, irrespective of the fund
provided for in sections 65A.16 to 65A.24.
History: 1967 c 395 art 6 s 24; 1986 c 444; 1997 c 7 art 1 s 19

HAIL INSURANCE

65A.26 HAIL INSURANCE, POLICIES, LOSS ADJUSTMENT.
Every policy of insurance against damage by hail issued by any company, however
organized, must provide as follows: "In case of loss under this policy, and failure of the parties to
agree as to the amount of the loss, it is mutually agreed that, on written demand of either party,
the company and the insured each shall select a competent appraiser and notify the other of the
appraiser selected within ten days of the demand. The appraisers shall first select a competent
and disinterested umpire; and, failing for ten days to agree upon the umpire, then, on request of
either appraiser, the umpire shall be selected by a judge of a court of record in the state in which
the property covered is located. By mutual agreement the two appraisers may agree to have the
umpire selected by a judge of a court of record and waive the ten-day provision.
The appraisers and the umpire shall then appraise the loss. A written award of any two of
these persons determines the amount of loss. The written award of a majority of these referees is
final and conclusive upon the parties as to amount of loss, and this selection, unless waived by
the parties, is a condition precedent to any right of action to recover for a loss. No suit for the
recovery of any claim by virtue of this policy may be sustained unless commenced within one
year after the loss occurred." The policy must also provide the form, manner, and length of notice
to be given to the company by the insured of any loss sustained.
History: 1967 c 395 art 6 s 26; 1973 c 363 s 1; 1974 c 161 s 4; 1983 c 208 s 2

HOMEOWNER'S INSURANCE

65A.27 DEFINITIONS.
    Subdivision 1. Scope. For purposes of sections 65A.27 to 65A.30 the following terms have
the meanings given.
    Subd. 2. Commissioner. "Commissioner" means the commissioner of commerce.
    Subd. 3. Decline or declination. "Decline" or "declination" means an agent's refusal to
accept an application for homeowner's insurance or an insurer's refusal to issue a policy of
homeowner's insurance to a person who has submitted a written application.
    Subd. 4. Homeowner's insurance. "Homeowner's insurance" means insurance coverage,
as provided in section 60A.06, subdivision 1, clause (1)(c), normally written by the insurer as a
standard homeowner's package policy or as a standard residential renter's package policy. This
definition includes, but is not limited to, policies that are generally described as homeowner's
policies, mobile/manufactured homeowner's policies, dwelling owner policies, condominium
owner policies, and tenant policies.
    Subd. 5. Insurer. "Insurer" means any insurer licensed to write insurance, as defined in
section 60A.06, subdivision 1, clause (1), and writing homeowner's insurance in this state.
    Subd. 6. Metropolitan area. "Metropolitan area" means the area defined in section 473.121,
subdivision 2
.
    Subd. 7. Nonpayment of premium. "Nonpayment of premium" means a failure of the
named insured to pay the premium when due on a policy of homeowner's insurance or any
installment of the premium, whether the premium is payable directly to the insurer or its agent or
indirectly under a premium finance plan or an extension of credit.
    Subd. 8. Renewal or renew. "Renewal" or "renew" means an insurer's issuance and delivery
to the insured of a new insurance policy at the end of the policy period of an existing policy
written by the insurer or an insurer's issuance and delivery of a certificate or notice extending the
term of a policy beyond its policy period or term.
History: 1979 c 207 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1996 c 326 s 1;
1999 c 177 s 64
65A.28 DISCLOSURE AND FILING REQUIREMENTS.
    Subdivision 1. Annual report. Each insurer writing homeowner's insurance for property
located in the metropolitan area or a statutory or home rule charter city of the first class shall
compile and file annually with the commissioner on or before May 1 a report for the preceding
calendar year. This report shall contain the following information reported by postal zip code
areas for each zip code area located in a city of the first class which contains property for which
the insurer wrote, declined to write, or canceled homeowner's insurance:
(a) the number of policies written;
(b) the number of policies canceled;
(c) the number of policies nonrenewed; and
(d) the number of applications for homeowner's insurance declined.
If the commissioner determines that additional information is necessary to effectuate the
purposes of sections 65A.27 to 65A.29 and 72A.20, subdivision 13, the commissioner may
require, by rule:
(i) that the required information be reported for additional areas of the state, or
(ii) that additional types of information, including premium and claims data, be reported for
some or all of the areas subject to the reporting requirements.
If the commissioner has reason to believe that an insurance company or insurance agent has
violated section 72A.20, subdivision 13 or 14, the commissioner may issue an order requiring the
company or agent to compile and submit within a reasonable time information on its homeowner's
insurance marketing, underwriting, or rating practices for a specific geographic area or areas. This
information may be in addition to the types and categories of information required to be reported
by this section or rules promulgated under subdivision 4.
    Subd. 2. Reports available for public inspection. The commissioner shall make the reports
filed pursuant to subdivision 1 available for public inspection.
    Subd. 3. Failure to report; penalty. Any insurer required to report under this section
which fails to file a report, containing the data and within the time prescribed by this section
or rules promulgated under subdivision 4, shall be subject to a penalty of $10 for each day in
default. Any penalty imposed under this section may be recovered in a civil action brought by
and in the name of the state.
    Subd. 4. Rules. The commissioner may prescribe rules necessary to carry out the purposes of
this section. The rules may provide for classifications, differentiations, adjustments or exceptions,
as in the judgment of the commissioner are necessary and proper to effectuate the purposes of,
prevent circumvention or evasion of, or to facilitate compliance with this section.
History: 1979 c 207 s 3; 1986 c 444
65A.29 CANCELLATION; NONRENEWAL; REFUSAL TO WRITE.
    Subdivision 1. Cancellation. No insurer may cancel a policy of homeowner's insurance
except for the reasons specified in section 65A.01.
    Subd. 2.[Repealed, 1984 c 602 s 6]
    Subd. 3. Refusal to write. Upon completion in writing of the insurer's application form for
homeowner's insurance, any person having an insurable interest in real or tangible property at a
fixed location shall be entitled upon written request either (a) to the insurer's offer of coverage,
including type, amount and premium cost of coverage, or (b) to a written declination, stating
specifically the underwriting or other reason for the refusal to write. For purposes of this
subdivision, "insurer" means only an insurer writing or offering to write homeowner's insurance
for property in the same statutory or home rule charter city or town in which the applicant's
property is located.
    Subd. 4. Form requirements. Any notice or statement required by subdivisions 1 to 3, or
any other notice canceling a homeowner's insurance policy must be written in language which is
easily readable and understandable by a person of average intelligence and understanding. The
statement of reason must be sufficiently specific to convey, clearly and without further inquiry, the
basis for the insurer's refusal to renew or to write the insurance coverage.
The notice or statement must also inform the insured of:
(1) the possibility of coverage through the Minnesota FAIR plan under sections 65A.31
to 65A.42;
(2) the right to object to the commissioner under subdivision 9; and
(3) the right to the return of unearned premium in appropriate situations under subdivision 10.
    Subd. 5. Inclusion in policies after 1980. Notwithstanding sections 65A.01 and 65A.07,
any policy of homeowner's insurance issued after January 1, 1980 shall contain nonrenewal
provisions consistent with this section.
    Subd. 6. Immunity of insurer or commissioner. There shall be no liability on the part of
and no cause of action of any nature shall arise against the commissioner or against any insurer, its
authorized representative, its agents, its employees or any firm, person or corporation furnishing
to the insured information as to reasons for declination, nonrenewal, or cancellation, for any
statement made by them in any written notice of declination, nonrenewal or cancellation, for the
providing of information relating thereto, or for statements made or evidence submitted at any
hearings or investigations conducted in connection therewith. This subdivision shall not apply to
any action or proceeding arising under section 72A.20.
    Subd. 7. Renewal; notice requirement. No insurer shall refuse to renew, or reduce limits of
coverage, or eliminate any coverage in a homeowner's insurance policy unless it mails or delivers
to the insured, at the address shown in the policy, at least 60 days' advance notice of its intention.
The notice must contain the specific underwriting or other reason or reasons for the indicated
action and must state the name of the insurer and the date the notice is issued.
Proof of mailing this notice to the insured at the address shown in the policy is sufficient
proof that the notice required by this section has been given.
    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:
(1) reasons stated for cancellation in section 65A.01, subdivision 3a;
(2) reasons stated in section 72A.20, subdivision 13;
(3) insured's loss experience, not to include natural causes; and
(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.
    Subd. 9. Notice of right to complain. A named insured who believes a nonrenewal,
reduction in the limits of coverage, elimination of coverage, or cancellation under section 65A.01,
subdivision 3a
, is in violation of the law or the rules may, within 30 days after receipt of the
notice, file in writing an objection to the action with the commissioner.
Upon receipt of a written objection, the commissioner shall notify the insurer of receipt of
the objection and of the right of the insurer to file a written response within ten days of receipt of
the notification. Within 30 days of receipt of written objection by an insured, the commissioner
shall approve or disapprove the insurer's action and shall notify the insured and insurer of the final
decision. A decision which disapproves the insurer's action constitutes a charge that the insurer
has violated the law or the rules. Either party may institute proceedings for judicial review of the
commissioner's decision. The commissioner's decision is binding pending judicial review.
    Subd. 10. Return of unearned premium. Cancellation of a policy of homeowner's insurance
pursuant to this section is not effective unless any unearned premium due the insured is returned
to the insured with the notice of cancellation or is delivered or sent by mail to the insured so as to
be received by the insured not later than the effective date of cancellation. If the premium has
been paid by the insured's agent and debited to the agent's account with the company, upon
cancellation, the unearned premium must be credited to the agent's account with the company.
    Subd. 11. Nonrenewal. 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.
For purposes of the plan, the insurer may not consider as a claim the insured's inquiry about a
hypothetical claim, or the insured's inquiry to the insured's agent regarding a potential claim.
No homeowner's insurance policy may be nonrenewed based on the insured's loss experience
unless the insurer has sent a written notice that any future losses may result in nonrenewal due to
loss experience.
Any nonrenewal of a homeowner's insurance policy must, at a minimum, comply with the
requirements of subdivision 8 and the rules adopted by the commissioner.
    Subd. 12.[Repealed, 1999 c 177 s 88]
History: 1979 c 207 s 4; 1983 c 94 s 1; 1984 c 602 s 2-4; 1986 c 444; 1987 c 337 s 92;
1989 c 260 s 9-11; 1992 c 564 art 4 s 13; 1994 c 485 s 52; 1996 c 337 s 1; 1999 c 177 s 65; 2001
c 215 s 28; 2003 c 40 s 4; 2005 c 132 s 18
65A.295 HOMEOWNER'S INSURANCE COVERAGE.
(a) Every insurer writing homeowner's insurance in this state shall make available at least
one form of homeowner's policy for each level of peril coverage offered by the insurer in which
the insured has the option to specify the dollar amount of coverage provided for structures other
than the dwelling and for personal property. The premium must be reduced to reflect the reduced
risk of lesser coverage.
(b) Coverage for structures other than the dwelling is the coverage provided under "Coverage
B, Other Structures" in the standard homeowner's policy. Coverage for personal property is
the coverage provided under "Coverage C, Personal Property" in the standard homeowner's
package policy.
(c) "Level of peril" refers to basic, broad, and all risk levels of coverage.
History: 1987 c 293 s 1; 1996 c 446 art 1 s 55
65A.296 PROOF OF LOSS.
    Subdivision 1. Notice from insurer. After receiving written notice of a claim by an insured
on a homeowner's insurance policy, the insurer may notify the insured that the insurer may deny
the claim unless a completed proof of loss is received by the insurer within 60 days of the date on
which the written notice under this subdivision was received by the insured. The notice given by
the insurer must be sent by certified mail, return receipt requested, and must include a proof of
loss form to be completed by the insured together with accompanying instructions for completing
the form. The proof of loss form and the accompanying instructions must meet the readability
standards of chapter 72C.
    Subd. 2. Failure to complete timely proof of loss. In an action for the recovery of a
claim on a homeowner's insurance policy, an insured's failure to comply with the 60-day proof
of loss requirement:
(1) is a bar to recovery if the insured received the notice specified in subdivision 1, unless
the insured demonstrates to the court's satisfaction that the insured had good cause for failing
to comply;
(2) is not a bar to recovery if the insured did not receive the notice specified in subdivision 1,
unless the insurer demonstrates to the court's satisfaction that its rights were prejudiced by the
insured's failure to comply.
    Subd. 3. Definitions. For purposes of this section, the terms "insurer" and "homeowner's
insurance" have the meanings given them in section 65A.27.
    Subd. 4. Effect on other law. This section supersedes any inconsistent provision of section
65A.01, 72A.201, or other law.
History: 1996 c 285 s 1; 1997 c 77 s 1
65A.297 ACTIVE DUTY MEMBER OF ARMED SERVICES RESERVE OR NATIONAL
GUARD; USE IN UNDERWRITING PROHIBITED.
No insurer, including the Minnesota FAIR plan, shall refuse to renew, decline to offer or
write, reduce the limits of, cancel, or charge differential rates for equivalent coverage for any
coverage in a homeowner's policy because the dwelling is vacant or occupied by a caretaker if the
insured's absence is caused solely by the insured being called to active duty as a member of the
armed services reserve or the National Guard.
History: 2005 c 132 s 19
65A.30 DAY CARE SERVICES; COVERAGE.
    Subdivision 1. No coverage. There shall be no coverage under a day care provider's
homeowner's insurance for losses or damages arising out of the operation of day care services
unless:
(1) specifically covered in a policy; or
(2) covered by a rider for business coverage attached to a policy.
For purposes of this section, "day care" means "family day care" and "group family day
care" as defined in Minnesota Rules, part 9502.0315. "Day care" does not include care provided
by an individual who is related, as defined in Minnesota Rules, part 9502.0315, to the person
being cared for or care provided by an unrelated individual to persons from a single family of
persons related to each other.
    Subd. 2. Prohibited underwriting practices. No insurer shall refuse to renew, or decline to
offer or write, homeowner's insurance coverage solely because the property to be covered houses
day care services for five or fewer children.
History: 1996 c 326 s 2; 2004 c 239 s 1
65A.301 ADULT FOSTER CARE SERVICES; COVERAGE.
    Subdivision 1. No coverage. There shall be no coverage under a foster care for adults
provider's homeowner's insurance policy for losses or damages arising out of the operation of
foster care for adults services unless:
(1) specifically covered in a policy; or
(2) covered by a rider for business coverage attached to a policy.
For purposes of this section, "foster care for adults" has the meaning given in section
245A.02, subdivision 6c.
    Subd. 2. Prohibited underwriting practices. No insurer shall refuse to renew, or decline to
offer or write, homeowner's insurance coverage solely because the property to be covered houses
foster care for adults services for five or fewer adult residents.
History: 2006 c 215 s 1

MINNESOTA FAIR PLAN ACT

65A.31 MINNESOTA FAIR PLAN ACT.
Sections 65A.31 to 65A.42 shall be known and may be cited as the "Minnesota FAIR Plan
Act."
History: 1969 c 483 s 1; 1993 c 248 s 2
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 FAIR plan, which will assure fair
access to insurance requirements in order that no property is denied property or liability insurance
through the FAIR plan due to the condition of the property, except after a physical inspection of
the 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 FAIR plan of a
reinsurance arrangement whereby property and casualty insurers share equitably the responsibility
for insuring insurable property for which property and liability insurance cannot be obtained
through the normal insurance markets.
History: 1969 c 483 s 2; 1986 c 455 s 42; 1993 c 248 s 3; 1999 c 120 s 1; 2003 c 40 s 5
65A.33 DEFINITIONS.
    Subdivision 1. Scope. As used in sections 65A.31 to 65A.42, unless the context otherwise
requires, the terms defined in this section have the following meanings given to them.
    Subd. 2. Insurer. "Insurer" means any insurance company or other organization licensed to
write and engaged in writing property or liability insurance business, including the property or
liability insurance components of multiperil policies, on a direct basis, in this state, except where
such insurer is specifically exempted by statute from participation in this program.
    Subd. 3. Property or liability insurance. "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.
    Subd. 4. Minnesota FAIR plan. "Minnesota FAIR plan," or "plan," means the organization
formed by insurers to assist applicants in securing property or liability insurance and to administer
the FAIR plan.
    Subd. 5.[Repealed, 2003 c 40 s 21]
    Subd. 5a. Member. "Member" means any insurer as defined in subdivision 2.
    Subd. 6. Premiums written. "Premiums written" means direct written premiums charged
during the second preceding calendar year with respect to property in this state for fire, allied
lines, homeowners, the nonliability component of farm policies, and the nonliability component
of commercial multiperil policies, as reported by the members to the NAIC.
    Subd. 7. Commissioner. "Commissioner" means the commissioner of commerce of the
state of Minnesota.
    Subd. 8.[Repealed, 1993 c 248 s 17]
    Subd. 9. Board. "Board" means the governing board of directors of the Minnesota FAIR plan.
    Subd. 10. NAIC. "NAIC" means the National Association of Insurance Commissioners.
History: 1969 c 483 s 3; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 455 s 43;
1989 c 260 s 12; 1993 c 248 s 4-6; 1994 c 465 art 2 s 1; 1999 c 120 s 2,3; 2003 c 40 s 6-10
65A.34 PLAN COVERAGE.
    Subdivision 1. Application. 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 may submit an application for coverage to the plan. If an inspection of the
premises is performed, it must be done at no cost to the applicant.
    Subd. 2. Inspections. Before the plan may deny coverage due to the condition of the property
or write coverage with a condition charge, it must first inspect the property for which coverage
has been requested. The manner and scope of the inspections of Minnesota FAIR plan business
must be prescribed by the plan with the approval of the commissioner.
    Subd. 3. Initial inspection report. An inspection report must be made for each property
inspected. The report must cover pertinent structural and occupancy features as well as the general
condition of the building and surrounding structures. A representative photograph of the property
may be taken during the inspection.
    Subd. 4. Condition charges. Either during the inspection or immediately after the
inspection, 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. No inspector has the authority to advise whether
the plan will provide the coverage.
    Subd. 5. Completed inspection report. 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.
    Subd. 6.[Repealed by amendment, 2003 c 40 s 11]
History: 1969 c 483 s 4; 1986 c 444; 1986 c 455 s 44; 1993 c 248 s 7; 1999 c 120 s 4-6;
2003 c 40 s 11
65A.35 ADMINISTRATION.
    Subdivision 1. Membership. Each insurer authorized to write and engaged in writing within
this state, on a direct basis, property or liability insurance or any component of this insurance
contained in a multiperil policy, including homeowners and commercial multiperil policies, shall
participate in the plan as a condition of its authority to write such kinds of insurance within
this state.
    Subd. 2. Purposes. The purposes of the Minnesota FAIR plan are:
(1) to formulate and administer, subject to the approval of the commissioner, a plan assuring
fair access to insurance requirements in order that no property is denied property or liability
insurance through the FAIR plan due to the condition of the property, except after a physical
inspection of the property and a fair evaluation of its individual underwriting characteristics; and
(2) to formulate and administer, subject to the approval of the commissioner, a reinsurance
arrangement whereby the members of the Minnesota FAIR plan share equitably the responsibility
for insuring property which is insurable but for which property or liability insurance cannot be
obtained through normal insurance markets.
    Subd. 3. Plan of operation. The plan of operation of the Minnesota FAIR plan, consistent
with the provisions of sections 65A.31 to 65A.42 and the purpose of the plan must provide for
the FAIR plan, the reinsurance arrangement, and the economical and efficient administration of
the Minnesota FAIR plan, including, but not limited to, management of the plan, establishment
of necessary facilities within this state, assessment of members to defray losses and expenses,
commission arrangements, reasonable underwriting standards, acceptance and cession of
reinsurance, and procedures for determining amounts of insurance to be provided.
The plan of operation is subject to approval by the commissioner.
    Subd. 4. Amendment of plan of operation. The Minnesota FAIR plan shall amend the
plan of operation on its own initiative, subject to prior approval by the commissioner, or at the
direction of the commissioner.
    Subd. 5. Administration. (1) The Minnesota FAIR plan is administered by a board of
nine directors, five of whom are elected by the members of the plan and four who represent the
public. Public directors may include licensed insurance agents. Public directors are appointed
by the commissioner. No less than two elected directors must be representatives of domestic
insurers. In the election of directors, each member of the Minnesota FAIR plan is allotted votes
bearing the same ratio to the total number of votes to be cast as its degree of participation in the
plan bears to the total participation.
(2) Any vacancy among the elected directors must be filled by a vote of the other elected
directors.
(3) If at any time the members fail to elect the required number of directors to the board, or
a vacancy remains unfilled for more than 15 days, the commissioner may appoint the directors
necessary to constitute a full board of directors.
(4) Vacancies among directors appointed by the commissioner must be filled by appointment
by the commissioner. A person so appointed serves until the end of the term of the director the
person is replacing.
(5) All public directors serve for a period of two years. The terms of all public directors begin
on July 1 of the year their appointments begin.
(6) The plan of operation must provide for adequate compensation of public directors. A per
diem amount and a procedure for reimbursement of expenses incurred in the discharge of their
duties must be included in the plan. Private directors are not eligible for compensation.
    Subd. 6. Participation. All members of the Minnesota FAIR plan shall participate in its
expenses, losses, and equity distribution in the proportion that the premiums written as defined in
this subdivision, but excluding that portion, if any, of premiums attributable to the reinsurance
arrangement maintained by the facility, by each such member during the second preceding
calendar year bear to the aggregate premiums written in this state by all members of the plan.
Participation by each member in the plan is determined annually by the plan on the basis of such
premiums written during the second preceding calendar year as disclosed in the annual statements
and other reports filed by the member with the NAIC.
History: 1969 c 483 s 5; 1979 c 207 s 5; 1986 c 444; 1986 c 455 s 45,46; 1987 c 337 s
93; 1993 c 248 s 8; 2003 c 40 s 12
65A.36 UNDERWRITING.
    Subdivision 1. Evaluation of risk. Agents are not permitted to bind coverage. The Minnesota
FAIR plan shall issue a policy if the risk meets preliminary underwriting requirements. The plan
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 plan 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 plan, the plan will offer to replace the rescinded or
canceled policy with a policy providing coverage for which the applicant is eligible.
Before the 60th day after the inception of the policy, the FAIR plan shall advise the applicant
that:
(1) the risk is acceptable with or without a condition charge or adjustment of policy limits.
If a condition charge applies, the plan will tell the insured what improvements are necessary in
order to remove the charge;
(2) the risk is not acceptable unless improvements noted by the plan are made by the
applicant and confirmed by the plan; or
(3) the risk is not acceptable for the reasons stated by the plan.
    Subd. 2. Premium invoice. If the risk is accepted, an invoice will be delivered to the
applicant requiring remittance of the appropriate premium.
    Subd. 3. Declining a risk. In the event a risk is declined because it fails to meet reasonable
underwriting standards, the applicant must be so notified. Reasonable underwriting standards
include, but are not limited to:
(1) the physical condition of the property, such as its construction, heating, wiring, evidence
of previous fires, significant unrepaired damage, or general deterioration;
(2) the present use or housekeeping of the property such as vacancy, overcrowding, storage
of rubbish, or flammable materials; or
(3) other specific characteristics of ownership, condition, occupancy, or maintenance which
are violative of public policy and result in increased exposure to loss.
Neighborhood or area location or any environmental hazard beyond the control of the
property owner are not acceptable criteria for declining a risk.
    Subd. 4. Appeal of plan decision. In the event that a risk is declined on the basis that it does
not meet reasonable underwriting standards, or the coverage will be written on condition that
the property be improved, the plan shall, within five business days, send copies of the inspection
report to the applicant and the commissioner, and shall advise the applicant of the right to and the
procedure for an appeal to the governing board and to the commissioner.
    Subd. 5. Action on completed application. The plan 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 limit of coverage has been adjusted to reflect the insurable value of
the subject property.
History: 1969 c 483 s 6; 1986 c 444; 1993 c 248 s 9; 1999 c 120 s 7,8; 2003 c 40 s 13
65A.37 POLICY FORMS.
All policies must be on standard policy forms published by Insurance Services Office, issued
for a term of one year, and approved by the commissioner.
History: 1969 c 483 s 7; 1986 c 455 s 47; 1993 c 248 s 10; 1999 c 120 s 9; 2003 c 40 s 14
65A.375 RATES.
The commissioner shall set the insurance rates for cooperative housing, organized under
chapter 308A, and for neighborhood real estate trusts, characterized as nonprofit ownership of
real estate with resident control. The rates must be actuarially sound. All other rates used by the
Minnesota FAIR plan must be approved by the commissioner prior to use.
History: 1987 c 337 s 94; 1989 c 356 s 5; 1993 c 248 s 11; 2003 c 40 s 15
65A.38 POLICY CANCELLATION.
    Subdivision 1. Reasons. The Minnesota FAIR plan shall not cancel a policy issued under
sections 65A.31 to 65A.42 except:
(1) for cause which would have been grounds for nonacceptance of the risk under the
program had the cause been known to the plan at the time of acceptance;
(2) for nonpayment of premium; or
(3) with the approval of the governing board.
    Subd. 2. Notice and statement of reasons. Except as otherwise required under subdivision 4
or 5, at least 15 days' notice of cancellation together with a statement of the reason therefor shall
be sent to the insured with a copy sent to the commissioner.
    Subd. 3. Statement of appeal rights. Any cancellation notice or notice of refusal to renew
to the insured shall be accompanied by a statement that the insured has a right of appeal as
hereinafter provided.
    Subd. 4. Homeowner's insurance. Cancellation of homeowner's insurance, as defined in
sections 65A.27 to 65A.29, is subject to the provisions of those sections.
    Subd. 5. Commercial property insurance. Cancellation of a commercial property insurance
policy issued by the Minnesota FAIR plan must comply with sections 60A.35 to 60A.38.
History: 1969 c 483 s 8; 1993 c 248 s 12; 1994 c 485 s 65; 1999 c 120 s 10; 2003 c 40 s 16,17
65A.39 APPEALS.
(a) Any applicant or participating insurer shall have the right of appeal to the board of
directors, which shall promptly determine the appeal. A decision of the board may be appealed to
the commissioner within 30 days from notice of the action or decision. The commissioner shall
promptly determine the appeal. Each denial of insurance shall be accompanied by a statement
that the applicant has the right of appeal to the board and the commissioner and setting forth the
procedures to be followed for the appeal. A final action of the commissioner is subject to judicial
review as provided in chapter 14.
(b) In lieu of the appeal to the commissioner under paragraph (a), an applicant or insurer
may seek judicial review of the board's action.
History: 1969 c 483 s 9; 1987 c 337 s 95; 1993 c 248 s 13
65A.40 EDUCATION PROGRAMS.
The plan will undertake a continuing public education program, in cooperation with
producers and others, to assure that the Minnesota FAIR Plan Act receives adequate public
attention.
History: 1969 c 483 s 10; 1993 c 248 s 14; 2003 c 40 s 18
65A.41 AGENTS.
    Subdivision 1. Generally. A person licensed under chapter 60K may submit an application
for coverage to the Minnesota FAIR plan and receive a commission from the plan for premiums
paid for coverage. However, the licensee is not an agent of the Minnesota FAIR plan for purposes
of state law. All checks or similar instruments submitted in payment of plan premiums must be
made payable to the Minnesota FAIR plan and not the agent.
    Subd. 2. Duty to submit application. An agent or broker shall not refuse to submit an
application for basic property insurance coverage to the Minnesota FAIR plan if licensed to write
and actively engaged in writing such insurance.
History: 1969 c 483 s 11; 1986 c 444; 1993 c 248 s 15; 2003 c 40 s 19
65A.42 IMMUNITY FROM LIABILITY.
There is no civil or criminal liability on the part of, and no cause of action of any nature
arises against insurers, the Minnesota FAIR plan, the governing board, or employees of the plan
or the commissioner or the commissioner's authorized representatives, for any acts or omissions
by them 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
vendors and the Minnesota FAIR plan are not public documents.
History: 1969 c 483 s 12; 1971 c 24 s 11; 1986 c 444; 1993 c 248 s 16; 1999 c 120 s 11;
2003 c 40 s 20
65A.43 [Repealed, 1993 c 248 s 17]

RESIDENTIAL RENTER'S POLICIES

65A.44 DEFINITIONS.
    Subdivision 1. Application. The definitions in this section apply to this section and section
65A.45.
    Subd. 2. Insurer. "Insurer" means an insurer licensed to write insurance and writing
residential renter's insurance in this state.
    Subd. 3. Residential renter's insurance policy. "Residential renter's insurance policy"
means insurance coverage normally written by the insurer as a standard residential renter's
package policy.
History: 1991 c 244 s 2
65A.45 RESIDENTIAL RENTER'S INSURANCE POLICY.
No insurer shall refuse to issue a single residential renter's insurance policy for the purpose
of providing coverage to up to four individuals residing in the same household, if all of the
individuals are named insureds on the policy and meet the insurer's normal underwriting
requirements.
History: 1991 c 244 s 3

REAL PROPERTY FIRE LOSS ESCROW ACCOUNT

65A.50 TRUST OR ESCROW ACCOUNTS; INSURED REAL PROPERTY FIRE OR
EXPLOSION LOSS PROCEEDS.
    Subdivision 1. Definitions. (a) "Municipality" means statutory or home rule charter city or
town.
(b) "Final settlement" means a determination of the amount due and owing to the insured, for
a loss to insured real property, by any of the following means:
(1) acceptance of a proof of loss by the insurer;
(2) execution of a release by the insured;
(3) acceptance of an arbitration award by both the insured and the insurer; or
(4) judgment of a court of competent jurisdiction.
    Subd. 2. Partial withholding from settlement payments; notice. Except as otherwise
provided in this section, with respect to insured real property located in a municipality which
has elected to apply this section as provided in subdivision 12, when a claim is filed for a loss
to insured real property due to fire or explosion and a final settlement is reached on the loss to
the insured real property, an insurer shall withhold from payment 25 percent of the actual cash
value of the insured real property at the time of the loss or 25 percent of the final settlement,
whichever is less. At the time that 25 percent of the settlement or judgment is withheld, the
insurer shall give notice of the withholding to the treasurer of the municipality in which the
insured real property is located, to the insured, and to any mortgagee having an existing lien or
liens against the insured real property, if the mortgagee is named on the policy. In the case of a
judgment, notice shall also be provided to the court in which judgment was entered. The notice
shall include all of the following:
(1) the identity and address of the insurer;
(2) the name and address of each policyholder, including any mortgagee;
(3) location of the insured real property;
(4) the date of loss, policy number, and claim number;
(5) the amount of money withheld;
(6) a statement that the municipality may have the withheld amount paid into a trust
or escrow account established for the purposes of this section if it shows cause, pursuant to
subdivision 3, within 30 days that the money should be withheld to protect the public health and
safety, otherwise the withheld amount shall be paid to the insured at the expiration of 30 days; and
(7) an explanation of the provisions of this section and a verbatim reproduction of
subdivision 16.
    Subd. 3. Escrow procedure. In order for a municipality to escrow the amount withheld by
the insurer, and to retain that amount, the following procedure shall be used.
(a) An affidavit prepared by the chief fire official or another authorized representative of
the municipality designated by the governing body of the municipality that the damaged insured
structure violates existing named health and safety standards requiring the escrow of the withheld
amount as surety for the repair, replacement, or removal of the damaged structure shall constitute
cause for the escrowing of the withheld amount.
(b) In the case of a settlement, the affidavit shall be sent to the insurer, the insured, and
any mortgagees. Upon receipt of the affidavit, the insurer shall forward the withheld amount to
the treasurer of the municipality and shall provide notice of the forwarding to the insured and
any mortgagees.
(c) In the case of a judgment, the affidavit shall be sent to the insurer, the insured, any
mortgagees, and the court in which the judgment was entered. Upon receipt of the affidavit, the
insurer shall forward the withheld amount to the treasurer of the municipality and shall provide
notice of the forwarding to the insured, any mortgagees, and the court in which judgment was
entered.
    Subd. 4. Deposit in trust or escrow account; release of proceeds to mortgagee. Upon
receipt of money and information from an insurer as prescribed in subdivisions 2 and 3, the local
treasurer shall record the information and the date of receipt of the money and shall immediately
deposit the money in a trust or escrow account established for purposes of this section. The
account may be interest-bearing. If the mortgage on the insured property is in default, the treasurer
of the municipality, upon written request from a first mortgagee of property with respect to which
policy proceeds were withheld and placed into a trust or escrow account under subdivisions 2, 3,
and this subdivision, shall release to the mortgagee all or any part of the policy proceeds received
by the municipality with respect to that property, not later than ten days after receipt of the written
request by the mortgagee, to the extent necessary to satisfy any outstanding lien of the mortgagee.
    Subd. 5. Commingling of funds; retention of interest. Except as provided in subdivision 8,
money deposited in an account pursuant to subdivision 4 shall not be commingled with municipal
funds. Any interest earned on money placed in a trust or escrow account shall be retained by the
municipality to defray expenses incurred under this section.
    Subd. 6. Release of deposited proceeds to insured. Except as provided in clause (3), the
policy proceeds deposited under subdivision 4 shall immediately be forwarded to the insured when
the chief fire official or another authorized representative of the municipality designated by the
governing body of the municipality receives or is shown reasonable proof of any of the following:
(1) that the damaged or destroyed portions of the insured structure have been repaired or
replaced, except to the extent that the amount withheld under this subdivision is needed to
complete repair or replacement;
(2) that the damaged or destroyed structure and any and all remnants of the structure have
been removed from the land on which the structure or the remnants of the structure were situated,
by the owner or by any other person, in compliance with the local code requirements of the
municipality in which the structure was located; or
(3) that the insured has entered into a contract to perform repair, replacement, or removal
services with respect to the insured real property and that the insured consents to payment of
funds directly to the contractor performing the services. Funds released under this clause may be
forwarded only to a contractor performing services on the insured property.
    Subd. 7. Reasonable proof. Reasonable proof required under subdivision 6 shall include
any of the following:
(1) originals or copies of pertinent contracts, invoices, receipts, and other similar papers
evidencing both the work performed or to be performed and the materials used or to be used by all
contractors performing repair, replacement, or removal services with respect to the insured real
property, other than a contractor subject to clause (2);
(2) an affidavit executed by the contractor which has performed the greatest amount of
repair or replacement work on the structure, or which has done most of the clearing and removal
work if structure repair or replacement is not to be performed. The contractor shall attach to
the affidavit all pertinent contracts, invoices, and receipts and shall swear that these attached
papers correctly indicate the nature and extent of the work performed to date by the contractor
and the materials used; or
(3) an inspection of the insured real property to verify that repair, replacement, or clearing
has been completed in accordance with subdivision 6.
    Subd. 8. Use of retained proceeds. If with respect to a loss, reasonable proof is not received
by or shown to a fire official or another authorized representative of the municipality designated
by the governing body of the municipality within 45 days after the policy proceeds portion
was received by the treasurer, the municipality shall use the retained proceeds to secure, repair,
or demolish the damaged or destroyed structure and clear the property in question, so that the
structure and property are in compliance with local code requirements and applicable ordinances
of the municipality. If, before the lapse of the 45 days after the proceeds portion was received by
the treasurer, the municipality has secured, repaired, or demolished the damaged or destroyed
structure under chapter 299F or 463 or other applicable law or ordinance, once the 45 days
lapse, the municipality may release the special assessment placed on the property, if any, and
reimburse itself from the retained funds. No more than 15 percent of the policy proceeds used
by the municipality under this subdivision may be attributed to the municipality's administrative
expenses, which must be directly related to the actions authorized under this subdivision. Any
unused portion of the retained proceeds shall be returned to the insured.
    Subd. 9. Proceeds not included. A final settlement shall not include the payment of policy
proceeds for personal property or contents damage or for additional coverage not contained in the
fire coverage portion of the fire insurance policy.
    Subd. 10. Immunity from liability. There shall not be liability on the part of, and a cause of
action shall not arise against, an insurer or an agent or employee of an insurer for withholding or
transferring money in the course of complying or attempting to comply with this section.
    Subd. 11. Application of section; amount of settlement. This section applies only to final
settlements which exceed 49 percent of the insurance on the insured real property.
    Subd. 12. Application of section; election; list of electing municipalities. This section
applies only to property located in a municipality if the municipality, pursuant to a resolution by
the governing body, notifies the commissioner in writing that the municipality has established
a trust or escrow account to be used as prescribed in this section and intends to uniformly
apply this section with respect to all property located within the municipality following written
notification to the commissioner. The commissioner shall prepare and distribute a list of all
municipalities which have elected to apply this section to all insurance companies transacting
property insurance in this state.
    Subd. 13. Retention on list. (a) A municipality shall remain on the list until a written request
for deletion has been received by the commissioner, or until the municipality has failed to comply
with paragraph (b), and the amended list has been prepared pursuant to this subdivision.
(b) Municipalities on the list shall report every two years to the commissioner in writing
regarding the extent of the municipality's use of this section and the effect of this section on arson
fires in that municipality. The report must be filed with the commissioner no later than 90 days
after the two-year anniversary of the municipality's placement on the list and thereafter no later
than 90 days after each subsequent two-year period. If the commissioner has not received a
report required under this paragraph, the commissioner shall promptly provide the municipality
a written reminder notice. If the commissioner has not received the report within 30 days after
providing the written notice, the municipality shall be treated as having made a written request for
deletion under paragraph (a).
    Subd. 14. Addition to list. A municipality may apply to be added to the list by making a
written request for addition to the commissioner. When a written request for addition from a
municipality has been received by the commissioner, an amended list shall be prepared and
distributed indicating the addition. The addition shall be effective on the date specified by the
commissioner in the amendment. The commissioner shall notify the municipality and insurance
companies of the effective date of the addition which shall be effective not less than 30 days after
receipt of notice by the insurance company. A municipality shall not apply this section with
respect to any loss which occurred before the effective date of the addition.
    Subd. 15. Deletion from list. A municipality may cease to apply this section for a period of
not less than six months upon not less than 30 days' written notice to the commissioner. After
receipt of request to be deleted from the list, the commissioner shall prepare and distribute an
amendment to the list indicating the deletion. The deletion shall be effective on the date specified
by the commissioner in the amendment. The commissioner shall notify the municipality and
insurance companies of the effective date of the deletion which shall be effective not less than
30 days after receipt of the notice by the insurance company. A municipality shall continue to
apply this section with respect to any loss which occurred before the effective date of the deletion,
notwithstanding the deletion.
    Subd. 16. Exceptions to withholding requirements. The withholding requirements of this
section do not apply if all of the following occur:
(1) within 30 days after agreement on a final settlement between the insured and the insurer,
the insured has filed with the insurer evidence of a contract to repair as described in subdivision 7;
(2) the insured consents to the payment of funds directly to the contractor performing
the repair services. Funds released under this clause may be forwarded only to a contractor
performing the repair services on the insured property; and
(3) on receipt of the contract to repair, the insurer gives notice to the municipality in which
the property is situated that there will not be a withholding under this section because of the
repair contract.
    Subd. 17. Demolition costs or debris removal costs as part of final settlement;
withholding. If the insured and the insurer have agreed on the demolition costs or the debris
removal costs as part of the final settlement of the real property insured claim, the insurer shall
withhold one of the following sums, whichever sum is the largest, and shall pay that sum in
accordance with this section:
(1) the agreed cost of demolition or debris removal;
(2) 25 percent of the actual cash value of the insured real property at the time of loss; or
(3) 25 percent of the final settlement of the insured real property claim.
History: 1995 c 170 s 1; 1997 c 47 s 1-5; 1997 c 77 s 2