Governor Pawlenty signed the Minnesota Good Faith Law on April 18, 2008. It sets guidelines for insurance companies’ standard of conduct when settling no fault (NF), underinsured (UIM), and uninsured (UM) policy claims. These are claims filed against your own insurance company. The new law is fairly straight forward. It requires insurers to have a reasonable cause for denying a claim by its insured. How judges interpret and rule on this law is yet to be seen. The law became effective August 1, 2008 and cases governed by the good faith law are just now making their way to court.
Good Faith Law: Minnesota Statute 604.18
This Good Faith Law may well be the most significant pro-consumer insurance legislation passed in Minnesota in decades. The basics of the law are:
Subdivision 2. Liability.
- The court may award as taxable costs to an insured against an insurer amounts as provided in subdivision 3 if the insured can show:
- the absence of a reasonable basis for denying the benefits of the insurance policy; and
- that the insurer knew of the lack of a reasonable basis for denying the benefits of the insurance policy or acted in reckless disregard of the lack of a reasonable basis for denying the benefits of the insurance policy
Subd. 3. Damages and Costs.
- In addition to prejudgment and postjudgment interest and costs and disbursements allowed under law, the court may award an insured the following taxable costs for a violation of subdivision 2:
- an amount equal to one-half of the proceeds awarded that are in excess of an amount offered by the insurer at least ten days before the trial begins or $250,000, whichever is less; and
- reasonable attorney fees actually incurred to establish the insurer’s violation of this section.
The insurance industry lobbied extensively to defeat this Good Faith Law. Rep. Joe Atkins (D-Inver Grove Heights) noted that the insurance industry spent over $2 million on statewide radio and newspaper ads, a massive direct mail and email campaign, and a huge lobbying contingent at the Capitol. “The insurance companies literally spent more money [attempting] to defeat this bill than any group has ever spent to defeat any bill in Minnesota history,” according to Rep. Atkins.
It is the hope of all personal injury attorneys in the state that the Good Faith Law will cause insurers to be more inclined to treat their clients fairly and to provide them the compensation they deserve.
This information is provided as a service of TSR Injury Law, a personal injury law firm serving Bloomington, Minneapolis, and the entire state of Minnesota. If you have questions about the Good Faith Law or any personal injury issue from a car accident or other accident, call 612-362-0000 or submit a comment.
Many people buy an inadequate amount of liability insurance coverage — not nearly enough to cover the damage done by most collisions. Underinsured Motorist Coverage (UIM) is necessary because of the skyrocketing costs of medical care and the high costs of vehicle repair / replacement. UIM is optional, typically not required by law, but it can be a financial lifesaver.