Bill Text: MN HF859 | 2011-2012 | 87th Legislature | Engrossed
Bill Title: Auto insurers required to inform insureds of the right to select any rental vehicle, and advisory required.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-05-16 - HF indefinitely postponed [HF859 Detail]
Download: Minnesota-2011-HF859-Engrossed.html
1.2relating to insurance; requiring auto insurers to inform certain insureds of the
1.3right to select any rental vehicle; requiring an advisory;amending Minnesota
1.4Statutes 2010, section 72A.201, subdivision 6.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 72A.201, subdivision 6, is amended to
1.7read:
1.8 Subd. 6. Standards for automobile insurance claims handling, settlement offers,
1.9and agreements. In addition to the acts specified in subdivisions 4, 5, 7, 8, and 9, the
1.10following acts by an insurer, adjuster, or a self-insured or self-insurance administrator
1.11constitute unfair settlement practices:
1.12(1) if an automobile insurance policy provides for the adjustment and settlement
1.13of an automobile total loss on the basis of actual cash value or replacement with like
1.14kind and quality and the insured is not an automobile dealer, failing to offer one of the
1.15following methods of settlement:
1.16(a) comparable and available replacement automobile, with all applicable taxes,
1.17license fees, at least pro rata for the unexpired term of the replaced automobile's license,
1.18and other fees incident to the transfer or evidence of ownership of the automobile paid, at
1.19no cost to the insured other than the deductible amount as provided in the policy;
1.20(b) a cash settlement based upon the actual cost of purchase of a comparable
1.21automobile, including all applicable taxes, license fees, at least pro rata for the unexpired
1.22term of the replaced automobile's license, and other fees incident to transfer of evidence
1.23of ownership, less the deductible amount as provided in the policy. The costs must be
1.24determined by:
2.1(i) the cost of a comparable automobile, adjusted for mileage, condition, and options,
2.2in the local market area of the insured, if such an automobile is available in that area; or
2.3(ii) one of two or more quotations obtained from two or more qualified sources
2.4located within the local market area when a comparable automobile is not available in
2.5the local market area. The insured shall be provided the information contained in all
2.6quotations prior to settlement; or
2.7(iii) any settlement or offer of settlement which deviates from the procedure above
2.8must be documented and justified in detail. The basis for the settlement or offer of
2.9settlement must be explained to the insured;
2.10(2) if an automobile insurance policy provides for the adjustment and settlement
2.11of an automobile partial loss on the basis of repair or replacement with like kind and
2.12quality and the insured is not an automobile dealer, failing to offer one of the following
2.13methods of settlement:
2.14(a) to assume all costs, including reasonable towing costs, for the satisfactory repair
2.15of the motor vehicle. Satisfactory repair includes repair of both obvious and hidden
2.16damage as caused by the claim incident. This assumption of cost may be reduced by
2.17applicable policy provision; or
2.18(b) to offer a cash settlement sufficient to pay for satisfactory repair of the vehicle.
2.19Satisfactory repair includes repair of obvious and hidden damage caused by the claim
2.20incident, and includes reasonable towing costs;
2.21(3) regardless of whether the loss was total or partial, in the event that a damaged
2.22vehicle of an insured cannot be safely driven, failing to exercise the right to inspect
2.23automobile damage prior to repair within five business days following receipt of
2.24notification of claim. In other cases the inspection must be made in 15 days;
2.25(4) regardless of whether the loss was total or partial, requiring unreasonable travel
2.26of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate,
2.27to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made
2.28pursuant to policy requirements, or to have the automobile repaired;
2.29(5) regardless of whether the loss was total or partial, if loss of use coverage
2.30exists under the insurance policy, failing to notify an insured at the time of the insurer's
2.31acknowledgment of claim, or sooner if inquiry is made, of the fact of the coverage,
2.32including the policy terms and conditions affecting the coverage and the manner in which
2.33the insured can apply for this coverage;
2.34(6) regardless of whether the loss was total or partial, failing to include the insured's
2.35deductible in the insurer's demands under its subrogation rights. Subrogation recovery
2.36must be shared at least on a proportionate basis with the insured, unless the deductible
3.1amount has been otherwise recovered by the insured, except that when an insurer is
3.2recovering directly from an uninsured third party by means of installments, the insured
3.3must receive the full deductible share as soon as that amount is collected and before any
3.4part of the total recovery is applied to any other use. No deduction for expenses may be
3.5made from the deductible recovery unless an attorney is retained to collect the recovery, in
3.6which case deduction may be made only for a pro rata share of the cost of retaining the
3.7attorney. An insured is not bound by any settlement of its insurer's subrogation claim with
3.8respect to the deductible amount, unless the insured receives, as a result of the subrogation
3.9settlement, the full amount of the deductible. Recovery by the insurer and receipt by the
3.10insured of less than all of the insured's deductible amount does not affect the insured's
3.11rights to recover any unreimbursed portion of the deductible from parties liable for the loss;
3.12(7) requiring as a condition of payment of a claim that repairs to any damaged
3.13vehicle must be made by a particular contractor or repair shop or that parts, other than
3.14window glass, must be replaced with parts other than original equipment parts or engaging
3.15in any act or practice of intimidation, coercion, threat, incentive, or inducement for or
3.16against an insured to use a particular contractor or repair shop. Consumer benefits included
3.17within preferred vendor programs must not be considered an incentive or inducement.
3.18At the time a claim is reported, the insurer must provide the following advisory to the
3.19insured or claimant:
3.20"You have the legal right to choose a repair shop to fix your vehicle. Your policy
3.21will cover the reasonable costs of repairing your vehicle to its pre-accident condition no
3.22matter where you have repairs made. Have you selected a repair shop or would you
3.23like a referral?"
3.24After an insured has indicated that the insured has selected a repair shop, the insurer
3.25must cease all efforts to influence the insured's or claimant's choice of repair shop;
3.26(8) where liability is reasonably clear, failing to inform the claimant in an automobile
3.27property damage liability claim that the claimant may have a claim for loss of use of
3.28the vehicle;
3.29(9) failing to make a good faith assignment of comparative negligence percentages
3.30in ascertaining the issue of liability;
3.31(10) failing to pay any interest required by statute on overdue payment for an
3.32automobile personal injury protection claim;
3.33(11) if an automobile insurance policy contains either or both of the time limitation
3.34provisions as permitted by section65B.55, subdivisions 1 and 2 , failing to notify the
3.35insured in writing of those limitations at least 60 days prior to the expiration of that time
3.36limitation;
4.1(12) if an insurer chooses to have an insured examined as permitted by section
4.265B.56, subdivision 1
, failing to notify the insured of all of the insured's rights and
4.3obligations under that statute, including the right to request, in writing, and to receive
4.4a copy of the report of the examination;
4.5(13) failing to provide, to an insured who has submitted a claim for benefits
4.6described in section65B.44 , a complete copy of the insurer's claim file on the insured,
4.7excluding internal company memoranda, all materials that relate to any insurance fraud
4.8investigation, materials that constitute attorney work product or that qualify for the
4.9attorney-client privilege, and medical reviews that are subject to section145.64 , within ten
4.10business days of receiving a written request from the insured. The insurer may charge
4.11the insured a reasonable copying fee. This clause supersedes any inconsistent provisions
4.12of sections72A.49 to
72A.505 ;
4.13(14) if an automobile policy provides for the adjustment or settlement of an
4.14automobile loss due to damaged window glass, failing to provide payment to the insured's
4.15chosen vendor based on a competitive price that is fair and reasonable within the local
4.16industry at large.
4.17Where facts establish that a different rate in a specific geographic area actually served
4.18by the vendor is required by that market, that geographic area must be considered. This
4.19clause does not prohibit an insurer from recommending a vendor to the insured or from
4.20agreeing with a vendor to perform work at an agreed-upon price, provided, however,
4.21that before recommending a vendor, the insurer shall offer its insured the opportunity to
4.22choose the vendor. If the insurer recommends a vendor, the insurer must also provide
4.23the following advisory:
4.24"Minnesota law gives you the right to go to any glass vendor you choose, and
4.25prohibits me from pressuring you to choose a particular vendor.";
4.26(15) requiring that the repair or replacement of motor vehicle glass and related
4.27products and services be made in a particular place or shop or by a particular entity, or by
4.28otherwise limiting the ability of the insured to select the place, shop, or entity to repair or
4.29replace the motor vehicle glass and related products and services;or
4.30(16) engaging in any act or practice of intimidation, coercion, threat, incentive, or
4.31inducement for or against an insured to use a particular company or location to provide
4.32the motor vehicle glass repair or replacement services or products. For purposes of this
4.33section, a warranty shall not be considered an inducement or incentive; or
4.34(17) failing to inform an insured making a claim under collision or comprehensive
4.35coverage, that includes rental vehicle reimbursement coverage, of the insured's right to
4.36select any rental vehicle company. If the insurer recommends a rental vehicle company to
5.1their insured, the insurer must also provide the following advisory: "Minnesota law gives
5.2you the right to choose any rental vehicle company, and prohibits me from requiring you
5.3to choose a particular vendor."
5.4EFFECTIVE DATE.This section is effective August 1, 2011, and applies to claims
5.5incurred on or after that date under policies issued or renewed on or after that date.
1.3right to select any rental vehicle; requiring an advisory;amending Minnesota
1.4Statutes 2010, section 72A.201, subdivision 6.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 72A.201, subdivision 6, is amended to
1.7read:
1.8 Subd. 6. Standards for automobile insurance claims handling, settlement offers,
1.9and agreements. In addition to the acts specified in subdivisions 4, 5, 7, 8, and 9, the
1.10following acts by an insurer, adjuster, or a self-insured or self-insurance administrator
1.11constitute unfair settlement practices:
1.12(1) if an automobile insurance policy provides for the adjustment and settlement
1.13of an automobile total loss on the basis of actual cash value or replacement with like
1.14kind and quality and the insured is not an automobile dealer, failing to offer one of the
1.15following methods of settlement:
1.16(a) comparable and available replacement automobile, with all applicable taxes,
1.17license fees, at least pro rata for the unexpired term of the replaced automobile's license,
1.18and other fees incident to the transfer or evidence of ownership of the automobile paid, at
1.19no cost to the insured other than the deductible amount as provided in the policy;
1.20(b) a cash settlement based upon the actual cost of purchase of a comparable
1.21automobile, including all applicable taxes, license fees, at least pro rata for the unexpired
1.22term of the replaced automobile's license, and other fees incident to transfer of evidence
1.23of ownership, less the deductible amount as provided in the policy. The costs must be
1.24determined by:
2.1(i) the cost of a comparable automobile, adjusted for mileage, condition, and options,
2.2in the local market area of the insured, if such an automobile is available in that area; or
2.3(ii) one of two or more quotations obtained from two or more qualified sources
2.4located within the local market area when a comparable automobile is not available in
2.5the local market area. The insured shall be provided the information contained in all
2.6quotations prior to settlement; or
2.7(iii) any settlement or offer of settlement which deviates from the procedure above
2.8must be documented and justified in detail. The basis for the settlement or offer of
2.9settlement must be explained to the insured;
2.10(2) if an automobile insurance policy provides for the adjustment and settlement
2.11of an automobile partial loss on the basis of repair or replacement with like kind and
2.12quality and the insured is not an automobile dealer, failing to offer one of the following
2.13methods of settlement:
2.14(a) to assume all costs, including reasonable towing costs, for the satisfactory repair
2.15of the motor vehicle. Satisfactory repair includes repair of both obvious and hidden
2.16damage as caused by the claim incident. This assumption of cost may be reduced by
2.17applicable policy provision; or
2.18(b) to offer a cash settlement sufficient to pay for satisfactory repair of the vehicle.
2.19Satisfactory repair includes repair of obvious and hidden damage caused by the claim
2.20incident, and includes reasonable towing costs;
2.21(3) regardless of whether the loss was total or partial, in the event that a damaged
2.22vehicle of an insured cannot be safely driven, failing to exercise the right to inspect
2.23automobile damage prior to repair within five business days following receipt of
2.24notification of claim. In other cases the inspection must be made in 15 days;
2.25(4) regardless of whether the loss was total or partial, requiring unreasonable travel
2.26of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate,
2.27to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made
2.28pursuant to policy requirements, or to have the automobile repaired;
2.29(5) regardless of whether the loss was total or partial, if loss of use coverage
2.30exists under the insurance policy, failing to notify an insured at the time of the insurer's
2.31acknowledgment of claim, or sooner if inquiry is made, of the fact of the coverage,
2.32including the policy terms and conditions affecting the coverage and the manner in which
2.33the insured can apply for this coverage;
2.34(6) regardless of whether the loss was total or partial, failing to include the insured's
2.35deductible in the insurer's demands under its subrogation rights. Subrogation recovery
2.36must be shared at least on a proportionate basis with the insured, unless the deductible
3.1amount has been otherwise recovered by the insured, except that when an insurer is
3.2recovering directly from an uninsured third party by means of installments, the insured
3.3must receive the full deductible share as soon as that amount is collected and before any
3.4part of the total recovery is applied to any other use. No deduction for expenses may be
3.5made from the deductible recovery unless an attorney is retained to collect the recovery, in
3.6which case deduction may be made only for a pro rata share of the cost of retaining the
3.7attorney. An insured is not bound by any settlement of its insurer's subrogation claim with
3.8respect to the deductible amount, unless the insured receives, as a result of the subrogation
3.9settlement, the full amount of the deductible. Recovery by the insurer and receipt by the
3.10insured of less than all of the insured's deductible amount does not affect the insured's
3.11rights to recover any unreimbursed portion of the deductible from parties liable for the loss;
3.12(7) requiring as a condition of payment of a claim that repairs to any damaged
3.13vehicle must be made by a particular contractor or repair shop or that parts, other than
3.14window glass, must be replaced with parts other than original equipment parts or engaging
3.15in any act or practice of intimidation, coercion, threat, incentive, or inducement for or
3.16against an insured to use a particular contractor or repair shop. Consumer benefits included
3.17within preferred vendor programs must not be considered an incentive or inducement.
3.18At the time a claim is reported, the insurer must provide the following advisory to the
3.19insured or claimant:
3.20"You have the legal right to choose a repair shop to fix your vehicle. Your policy
3.21will cover the reasonable costs of repairing your vehicle to its pre-accident condition no
3.22matter where you have repairs made. Have you selected a repair shop or would you
3.23like a referral?"
3.24After an insured has indicated that the insured has selected a repair shop, the insurer
3.25must cease all efforts to influence the insured's or claimant's choice of repair shop;
3.26(8) where liability is reasonably clear, failing to inform the claimant in an automobile
3.27property damage liability claim that the claimant may have a claim for loss of use of
3.28the vehicle;
3.29(9) failing to make a good faith assignment of comparative negligence percentages
3.30in ascertaining the issue of liability;
3.31(10) failing to pay any interest required by statute on overdue payment for an
3.32automobile personal injury protection claim;
3.33(11) if an automobile insurance policy contains either or both of the time limitation
3.34provisions as permitted by section
3.35insured in writing of those limitations at least 60 days prior to the expiration of that time
3.36limitation;
4.1(12) if an insurer chooses to have an insured examined as permitted by section
4.3obligations under that statute, including the right to request, in writing, and to receive
4.4a copy of the report of the examination;
4.5(13) failing to provide, to an insured who has submitted a claim for benefits
4.6described in section
4.7excluding internal company memoranda, all materials that relate to any insurance fraud
4.8investigation, materials that constitute attorney work product or that qualify for the
4.9attorney-client privilege, and medical reviews that are subject to section
4.10business days of receiving a written request from the insured. The insurer may charge
4.11the insured a reasonable copying fee. This clause supersedes any inconsistent provisions
4.12of sections
4.13(14) if an automobile policy provides for the adjustment or settlement of an
4.14automobile loss due to damaged window glass, failing to provide payment to the insured's
4.15chosen vendor based on a competitive price that is fair and reasonable within the local
4.16industry at large.
4.17Where facts establish that a different rate in a specific geographic area actually served
4.18by the vendor is required by that market, that geographic area must be considered. This
4.19clause does not prohibit an insurer from recommending a vendor to the insured or from
4.20agreeing with a vendor to perform work at an agreed-upon price, provided, however,
4.21that before recommending a vendor, the insurer shall offer its insured the opportunity to
4.22choose the vendor. If the insurer recommends a vendor, the insurer must also provide
4.23the following advisory:
4.24"Minnesota law gives you the right to go to any glass vendor you choose, and
4.25prohibits me from pressuring you to choose a particular vendor.";
4.26(15) requiring that the repair or replacement of motor vehicle glass and related
4.27products and services be made in a particular place or shop or by a particular entity, or by
4.28otherwise limiting the ability of the insured to select the place, shop, or entity to repair or
4.29replace the motor vehicle glass and related products and services;
4.30(16) engaging in any act or practice of intimidation, coercion, threat, incentive, or
4.31inducement for or against an insured to use a particular company or location to provide
4.32the motor vehicle glass repair or replacement services or products. For purposes of this
4.33section, a warranty shall not be considered an inducement or incentive; or
4.34(17) failing to inform an insured making a claim under collision or comprehensive
4.35coverage, that includes rental vehicle reimbursement coverage, of the insured's right to
4.36select any rental vehicle company. If the insurer recommends a rental vehicle company to
5.1their insured, the insurer must also provide the following advisory: "Minnesota law gives
5.2you the right to choose any rental vehicle company, and prohibits me from requiring you
5.3to choose a particular vendor."
5.4EFFECTIVE DATE.This section is effective August 1, 2011, and applies to claims
5.5incurred on or after that date under policies issued or renewed on or after that date.
