Bill Text: MN HF930 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Homeowner's insurance coverages and residential contracting claims and practices regulated.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2013-02-25 - Introduction and first reading, referred to Commerce and Consumer Protection Finance and Policy [HF930 Detail]
Download: Minnesota-2013-HF930-Introduced.html
1.2relating to commerce; regulating homeowner's insurance coverages and
1.3residential contracting claims; regulating claims practices;amending Minnesota
1.4Statutes 2012, sections 65A.27, subdivision 1; 72A.201, subdivision 4; 325E.66,
1.5subdivision 2, by adding a subdivision; proposing coding for new law in
1.6Minnesota Statutes, chapter 65A.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2012, section 65A.27, subdivision 1, is amended to read:
1.9 Subdivision 1. Scope. For purposes of sections65A.27 to
65A.302
1.10following terms have the meanings given.
1.11 Sec. 2. [65A.303] ANNUAL SUMMARY STATEMENTS.
1.12 Subdivision 1. Summary statement of coverages and exclusions. (a) An insurer
1.13shall provide a policyholder with an annual statement that summarizes the coverages and
1.14exclusions under the policy issued by the insurer.
1.15(b) The insurer's statement shall be clear and specific.
1.16(c) The insurer's statement shall state whether the coverages under the policy provide
1.17for replacement cost, actual cash value, or other method of loss payment for covered
1.18structures and contents.
1.19(d) The insurer's statement shall include a disclosure that states:
1.20(1) the policyholder should read the policy for complete information on coverages
1.21and exclusions;
1.22(2) the policyholder should refer to the declarations page for a listing of coverages
1.23purchased;
2.1(3) the policyholder should communicate with the insurance producer or the insurer
2.2for any additional information regarding the scope of coverages in the policy;
2.3(4) the statement does not include additional optional coverage purchased by the
2.4policyholder, if any;
2.5(5) the statement is not part of the policy or contract of insurance and does not
2.6create a private right of action;
2.7(6) all rights, duties, and obligations are controlled by the policy and contract of
2.8insurance; and
2.9(7) the standard homeowner's insurance policy does not cover losses from flood.
2.10 Subd. 2. Status of statement. The statement under subdivision 1:
2.11(1) is not part of the policy or contract of insurance; and
2.12(2) does not create a private right of action.
2.13 Subd. 3. Rules. The commissioner may adopt rules to implement the provisions
2.14of this section.
2.15 Sec. 3. [65A.304] STATEMENT OF OPTIONAL COVERAGE AVAILABLE.
2.16 Subdivision 1. Generally. (a) An insurer that sells or negotiates homeowner's
2.17insurance in the state shall provide an applicant, at the time of application for homeowner's
2.18insurance, with a written statement that lists all additional optional coverage available
2.19from the insurer to the applicant.
2.20(b) If an application is made by telephone, the insurer is deemed to be in compliance
2.21with this section if, within seven calendar days after the date of application, the insurer
2.22sends by certificate of mailing the statement to the applicant or insured.
2.23(c) If an application is made using the Internet, the insurer is deemed to be in
2.24compliance with this section if the insurer provides the statement to the applicant prior
2.25to submission of the application.
2.26 Subd. 2. Contents. The statement must:
2.27(1) be on a separate form;
2.28(2) be titled, in at least 12-point type, "Additional Optional Coverage Not Included
2.29in the Standard Homeowner's Insurance Policy";
2.30(3) contain the following disclosure in at least ten-point type:
2.31"Your standard homeowner's insurance policy does not cover all risks. You may
2.32need to obtain additional insurance to cover loss or damage to your home, property, and
2.33the contents of your home or to cover risks related to business or personal activities on
2.34your property.
3.1This statement provides a list of the types of additional insurance coverage that are
3.2available. Contact your insurance company, insurance producer, or insurance agent to
3.3discuss these additional coverages."; and
3.4(4) contain a list of additional optional coverage.
3.5 Subd. 3. Effect of notice. A statement provided under this section does not create
3.6a private right of action.
3.7 Sec. 4. Minnesota Statutes 2012, section 72A.201, subdivision 4, is amended to read:
3.8 Subd. 4. Standards for claim filing and handling. The following acts by an
3.9insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair
3.10settlement practices:
3.11 (1) except for claims made under a health insurance policy, after receiving
3.12notification of claim from an insured or a claimant, failing to acknowledge receipt of the
3.13notification of the claim within ten business days, and failing to promptly provide all
3.14necessary claim forms and instructions to process the claim, unless the claim is settled
3.15within ten business days. The acknowledgment must include the telephone number of the
3.16company representative who can assist the insured or the claimant in providing information
3.17and assistance that is reasonable so that the insured or claimant can comply with the policy
3.18conditions and the insurer's reasonable requirements. If an acknowledgment is made by
3.19means other than writing, an appropriate notation of the acknowledgment must be made in
3.20the claim file of the insurer and dated. An appropriate notation must include at least the
3.21following information where the acknowledgment is by telephone or oral contact:
3.22 (i) the telephone number called, if any;
3.23 (ii) the name of the person making the telephone call or oral contact;
3.24 (iii) the name of the person who actually received the telephone call or oral contact;
3.25 (iv) the time of the telephone call or oral contact; and
3.26 (v) the date of the telephone call or oral contact;
3.27 (2) failing to reply, within ten business days of receipt, to all other communications
3.28about a claim from an insured or a claimant that reasonably indicate a response is
3.29requested or needed;
3.30 (3)(i) unless provided otherwise by clause (ii) or (iii), other law, or in the policy,
3.31failing to complete its investigation and inform the insured or claimant of acceptance or
3.32denial of a claim within 30 business days after receipt of notification of claim unless
3.33the investigation cannot be reasonably completed within that time. In the event that the
3.34investigation cannot reasonably be completed within that time, the insurer shall notify
3.35the insured or claimant within the time period of the reasons why the investigation is not
4.1complete and the expected date the investigation will be complete. For claims made under
4.2a health policy the notification of claim must be in writing;
4.3 (ii) for claims submitted under a health policy, the insurer must comply with all of
4.4the requirements of section62Q.75 ;
4.5 (iii) for claims submitted under a health policy that are accepted, the insurer must
4.6notify the insured or claimant no less than semiannually of the disposition of claims of the
4.7insured or claimant. Notwithstanding the requirements of section72A.20, subdivision
4.837, this notification requirement is satisfied if the information related to the acceptance of
4.9the claim is made accessible to the insured or claimant on a secured Web site maintained
4.10by the insurer. For purposes of this clause, acceptance of a claim means that there is no
4.11additional financial liability for the insured or claimant, either because there is a flat
4.12co-payment amount specified in the health plan or because there is no co-payment,
4.13deductible, or coinsurance owed;
4.14 (4) where evidence of suspected fraud is present, the requirement to disclose their
4.15reasons for failure to complete the investigation within the time period set forth in clause
4.16(3) need not be specific. The insurer must make this evidence available to the Department
4.17of Commerce if requested;
4.18 (5) failing to notify an insured who has made a notification of claim of all available
4.19benefits or coverages which the insured may be eligible to receive under the terms of a
4.20policy and of the documentation which the insured must supply in order to ascertain
4.21eligibility;
4.22 (6) unless otherwise provided by law or in the policy, requiring an insured to give
4.23written notice of loss or proof of loss within a specified time, and thereafter seeking to
4.24relieve the insurer of its obligations if the time limit is not complied with, unless the
4.25failure to comply with the time limit prejudices the insurer's rights and then only if the
4.26insurer gave prior notice to the insured of the potential prejudice;
4.27 (7) advising an insured or a claimant not to obtain the services of an attorney or
4.28an adjuster, or representing that payment will be delayed if an attorney or an adjuster
4.29is retained by the insured or the claimant;
4.30 (8) failing to advise in writing an insured or claimant who has filed a notification of
4.31claim known to be unresolved, and who has not retained an attorney, of the expiration of
4.32a statute of limitations at least 60 days prior to that expiration. For the purposes of this
4.33clause, any claim on which the insurer has received no communication from the insured
4.34or claimant for a period of two years preceding the expiration of the applicable statute
4.35of limitations shall not be considered to be known to be unresolved and notice need not
4.36be sent pursuant to this clause;
5.1 (9) demanding information which would not affect the settlement of the claim;
5.2 (10) unless expressly permitted by law or the policy, refusing to settle a claim of an
5.3insured on the basis that the responsibility should be assumed by others;
5.4 (11) failing, within 60 business days after receipt of a properly executed proof of loss,
5.5to advise the insured of the acceptance or denial of the claim by the insurer. No insurer
5.6shall deny a claim on the grounds of a specific policy provision, condition, or exclusion
5.7unless reference to the provision, condition, or exclusion is included in the denial. The
5.8denial must be given to the insured in writing with a copy filed in the claim file;
5.9 (12) denying or reducing a claim on the basis of an application which was altered or
5.10falsified by the agent or insurer without the knowledge of the insured;
5.11 (13) failing to notify the insured of the existence of the additional living expense
5.12coverage when an insured under a homeowners policy sustains a loss by reason of a
5.13covered occurrence and the damage to the dwelling is such that it is not habitable;
5.14 (14) failing to inform an insured or a claimant that the insurer will pay for an
5.15estimate of repair if the insurer requested the estimate and the insured or claimant had
5.16previously submitted two estimates of repair.;
5.17(15) refusing to discuss a claim with the contractor with whom the claimant has
5.18contracted to provide goods and services in connection with the loss.
5.19 Sec. 5. Minnesota Statutes 2012, section 325E.66, is amended by adding a subdivision
5.20to read:
5.21 Subd. 1a. Payments to residential contractor. (a) The insurer shall make payment
5.22by check or draft directly to the residential contractor providing the covered home repair
5.23or improvement services or, with the consent of the residential contractor, by an electronic
5.24funds transfer to the residential contractor, if the following conditions are met and if
5.25the insured has actual knowledge of them:
5.26(1) the property owner of record has signed or transmitted to the insurer a written
5.27statement of all of the following:
5.28(i) the work completed under the contract is satisfactory;
5.29(ii) the insurer, upon direct payment to the residential contractor, is released from
5.30liability; and
5.31(iii) the written statement was not signed by the owner until all work under the
5.32contract was completed;
5.33(2) the property owner of record, the named insured, and any loss payee have
5.34consented in writing to the direct payment and release from liability; and
6.1(3) the completed work has been approved by the appropriate public official as
6.2conforming to existing building, electrical, and construction codes.
6.3(b) If the insurer has authorized the work and its liability is not in dispute, the
6.4direct payment provided for in paragraph (a) must be made to the residential contractor
6.5performing the work no later than 30 days after the insurer has actual knowledge that the
6.6conditions in paragraph (a) have been satisfied.
6.7(c) For purposes of this subdivision, "loss payee" includes any mortgagee of the
6.8insured real property.
6.9 Sec. 6. Minnesota Statutes 2012, section 325E.66, subdivision 2, is amended to read:
6.10 Subd. 2. Private remedy. (a) If a residential contractor violates subdivision 1, the
6.11insured or the applicable insurer may bring an action against the residential contractor
6.12in a court of competent jurisdiction for damages sustained by the insured or insurer as a
6.13consequence of the residential contractor's violation.
6.14(b) If an insurer violates subdivision 1a, the residential contractor may bring an
6.15action against the insurer in a court of competent jurisdiction for damages sustained as a
6.16result of the insurer's violation.
1.3residential contracting claims; regulating claims practices;amending Minnesota
1.4Statutes 2012, sections 65A.27, subdivision 1; 72A.201, subdivision 4; 325E.66,
1.5subdivision 2, by adding a subdivision; proposing coding for new law in
1.6Minnesota Statutes, chapter 65A.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2012, section 65A.27, subdivision 1, is amended to read:
1.9 Subdivision 1. Scope. For purposes of sections
1.10following terms have the meanings given.
1.11 Sec. 2. [65A.303] ANNUAL SUMMARY STATEMENTS.
1.12 Subdivision 1. Summary statement of coverages and exclusions. (a) An insurer
1.13shall provide a policyholder with an annual statement that summarizes the coverages and
1.14exclusions under the policy issued by the insurer.
1.15(b) The insurer's statement shall be clear and specific.
1.16(c) The insurer's statement shall state whether the coverages under the policy provide
1.17for replacement cost, actual cash value, or other method of loss payment for covered
1.18structures and contents.
1.19(d) The insurer's statement shall include a disclosure that states:
1.20(1) the policyholder should read the policy for complete information on coverages
1.21and exclusions;
1.22(2) the policyholder should refer to the declarations page for a listing of coverages
1.23purchased;
2.1(3) the policyholder should communicate with the insurance producer or the insurer
2.2for any additional information regarding the scope of coverages in the policy;
2.3(4) the statement does not include additional optional coverage purchased by the
2.4policyholder, if any;
2.5(5) the statement is not part of the policy or contract of insurance and does not
2.6create a private right of action;
2.7(6) all rights, duties, and obligations are controlled by the policy and contract of
2.8insurance; and
2.9(7) the standard homeowner's insurance policy does not cover losses from flood.
2.10 Subd. 2. Status of statement. The statement under subdivision 1:
2.11(1) is not part of the policy or contract of insurance; and
2.12(2) does not create a private right of action.
2.13 Subd. 3. Rules. The commissioner may adopt rules to implement the provisions
2.14of this section.
2.15 Sec. 3. [65A.304] STATEMENT OF OPTIONAL COVERAGE AVAILABLE.
2.16 Subdivision 1. Generally. (a) An insurer that sells or negotiates homeowner's
2.17insurance in the state shall provide an applicant, at the time of application for homeowner's
2.18insurance, with a written statement that lists all additional optional coverage available
2.19from the insurer to the applicant.
2.20(b) If an application is made by telephone, the insurer is deemed to be in compliance
2.21with this section if, within seven calendar days after the date of application, the insurer
2.22sends by certificate of mailing the statement to the applicant or insured.
2.23(c) If an application is made using the Internet, the insurer is deemed to be in
2.24compliance with this section if the insurer provides the statement to the applicant prior
2.25to submission of the application.
2.26 Subd. 2. Contents. The statement must:
2.27(1) be on a separate form;
2.28(2) be titled, in at least 12-point type, "Additional Optional Coverage Not Included
2.29in the Standard Homeowner's Insurance Policy";
2.30(3) contain the following disclosure in at least ten-point type:
2.31"Your standard homeowner's insurance policy does not cover all risks. You may
2.32need to obtain additional insurance to cover loss or damage to your home, property, and
2.33the contents of your home or to cover risks related to business or personal activities on
2.34your property.
3.1This statement provides a list of the types of additional insurance coverage that are
3.2available. Contact your insurance company, insurance producer, or insurance agent to
3.3discuss these additional coverages."; and
3.4(4) contain a list of additional optional coverage.
3.5 Subd. 3. Effect of notice. A statement provided under this section does not create
3.6a private right of action.
3.7 Sec. 4. Minnesota Statutes 2012, section 72A.201, subdivision 4, is amended to read:
3.8 Subd. 4. Standards for claim filing and handling. The following acts by an
3.9insurer, an adjuster, a self-insured, or a self-insurance administrator constitute unfair
3.10settlement practices:
3.11 (1) except for claims made under a health insurance policy, after receiving
3.12notification of claim from an insured or a claimant, failing to acknowledge receipt of the
3.13notification of the claim within ten business days, and failing to promptly provide all
3.14necessary claim forms and instructions to process the claim, unless the claim is settled
3.15within ten business days. The acknowledgment must include the telephone number of the
3.16company representative who can assist the insured or the claimant in providing information
3.17and assistance that is reasonable so that the insured or claimant can comply with the policy
3.18conditions and the insurer's reasonable requirements. If an acknowledgment is made by
3.19means other than writing, an appropriate notation of the acknowledgment must be made in
3.20the claim file of the insurer and dated. An appropriate notation must include at least the
3.21following information where the acknowledgment is by telephone or oral contact:
3.22 (i) the telephone number called, if any;
3.23 (ii) the name of the person making the telephone call or oral contact;
3.24 (iii) the name of the person who actually received the telephone call or oral contact;
3.25 (iv) the time of the telephone call or oral contact; and
3.26 (v) the date of the telephone call or oral contact;
3.27 (2) failing to reply, within ten business days of receipt, to all other communications
3.28about a claim from an insured or a claimant that reasonably indicate a response is
3.29requested or needed;
3.30 (3)(i) unless provided otherwise by clause (ii) or (iii), other law, or in the policy,
3.31failing to complete its investigation and inform the insured or claimant of acceptance or
3.32denial of a claim within 30 business days after receipt of notification of claim unless
3.33the investigation cannot be reasonably completed within that time. In the event that the
3.34investigation cannot reasonably be completed within that time, the insurer shall notify
3.35the insured or claimant within the time period of the reasons why the investigation is not
4.1complete and the expected date the investigation will be complete. For claims made under
4.2a health policy the notification of claim must be in writing;
4.3 (ii) for claims submitted under a health policy, the insurer must comply with all of
4.4the requirements of section
4.5 (iii) for claims submitted under a health policy that are accepted, the insurer must
4.6notify the insured or claimant no less than semiannually of the disposition of claims of the
4.7insured or claimant. Notwithstanding the requirements of section
4.9the claim is made accessible to the insured or claimant on a secured Web site maintained
4.10by the insurer. For purposes of this clause, acceptance of a claim means that there is no
4.11additional financial liability for the insured or claimant, either because there is a flat
4.12co-payment amount specified in the health plan or because there is no co-payment,
4.13deductible, or coinsurance owed;
4.14 (4) where evidence of suspected fraud is present, the requirement to disclose their
4.15reasons for failure to complete the investigation within the time period set forth in clause
4.16(3) need not be specific. The insurer must make this evidence available to the Department
4.17of Commerce if requested;
4.18 (5) failing to notify an insured who has made a notification of claim of all available
4.19benefits or coverages which the insured may be eligible to receive under the terms of a
4.20policy and of the documentation which the insured must supply in order to ascertain
4.21eligibility;
4.22 (6) unless otherwise provided by law or in the policy, requiring an insured to give
4.23written notice of loss or proof of loss within a specified time, and thereafter seeking to
4.24relieve the insurer of its obligations if the time limit is not complied with, unless the
4.25failure to comply with the time limit prejudices the insurer's rights and then only if the
4.26insurer gave prior notice to the insured of the potential prejudice;
4.27 (7) advising an insured or a claimant not to obtain the services of an attorney or
4.28an adjuster, or representing that payment will be delayed if an attorney or an adjuster
4.29is retained by the insured or the claimant;
4.30 (8) failing to advise in writing an insured or claimant who has filed a notification of
4.31claim known to be unresolved, and who has not retained an attorney, of the expiration of
4.32a statute of limitations at least 60 days prior to that expiration. For the purposes of this
4.33clause, any claim on which the insurer has received no communication from the insured
4.34or claimant for a period of two years preceding the expiration of the applicable statute
4.35of limitations shall not be considered to be known to be unresolved and notice need not
4.36be sent pursuant to this clause;
5.1 (9) demanding information which would not affect the settlement of the claim;
5.2 (10) unless expressly permitted by law or the policy, refusing to settle a claim of an
5.3insured on the basis that the responsibility should be assumed by others;
5.4 (11) failing, within 60 business days after receipt of a properly executed proof of loss,
5.5to advise the insured of the acceptance or denial of the claim by the insurer. No insurer
5.6shall deny a claim on the grounds of a specific policy provision, condition, or exclusion
5.7unless reference to the provision, condition, or exclusion is included in the denial. The
5.8denial must be given to the insured in writing with a copy filed in the claim file;
5.9 (12) denying or reducing a claim on the basis of an application which was altered or
5.10falsified by the agent or insurer without the knowledge of the insured;
5.11 (13) failing to notify the insured of the existence of the additional living expense
5.12coverage when an insured under a homeowners policy sustains a loss by reason of a
5.13covered occurrence and the damage to the dwelling is such that it is not habitable;
5.14 (14) failing to inform an insured or a claimant that the insurer will pay for an
5.15estimate of repair if the insurer requested the estimate and the insured or claimant had
5.16previously submitted two estimates of repair
5.17(15) refusing to discuss a claim with the contractor with whom the claimant has
5.18contracted to provide goods and services in connection with the loss.
5.19 Sec. 5. Minnesota Statutes 2012, section 325E.66, is amended by adding a subdivision
5.20to read:
5.21 Subd. 1a. Payments to residential contractor. (a) The insurer shall make payment
5.22by check or draft directly to the residential contractor providing the covered home repair
5.23or improvement services or, with the consent of the residential contractor, by an electronic
5.24funds transfer to the residential contractor, if the following conditions are met and if
5.25the insured has actual knowledge of them:
5.26(1) the property owner of record has signed or transmitted to the insurer a written
5.27statement of all of the following:
5.28(i) the work completed under the contract is satisfactory;
5.29(ii) the insurer, upon direct payment to the residential contractor, is released from
5.30liability; and
5.31(iii) the written statement was not signed by the owner until all work under the
5.32contract was completed;
5.33(2) the property owner of record, the named insured, and any loss payee have
5.34consented in writing to the direct payment and release from liability; and
6.1(3) the completed work has been approved by the appropriate public official as
6.2conforming to existing building, electrical, and construction codes.
6.3(b) If the insurer has authorized the work and its liability is not in dispute, the
6.4direct payment provided for in paragraph (a) must be made to the residential contractor
6.5performing the work no later than 30 days after the insurer has actual knowledge that the
6.6conditions in paragraph (a) have been satisfied.
6.7(c) For purposes of this subdivision, "loss payee" includes any mortgagee of the
6.8insured real property.
6.9 Sec. 6. Minnesota Statutes 2012, section 325E.66, subdivision 2, is amended to read:
6.10 Subd. 2. Private remedy. (a) If a residential contractor violates subdivision 1, the
6.11insured or the applicable insurer may bring an action against the residential contractor
6.12in a court of competent jurisdiction for damages sustained by the insured or insurer as a
6.13consequence of the residential contractor's violation.
6.14(b) If an insurer violates subdivision 1a, the residential contractor may bring an
6.15action against the insurer in a court of competent jurisdiction for damages sustained as a
6.16result of the insurer's violation.
