Insurance bill expanding policyholder rights OK'd

Last update: April 14, 2008 - 8:30 PM

The Minnesota Legislature approved a compromise bill giving consumers more clout in court when they disagree with their home and auto insurance companies.

The bill passed the Senate 47-15 and the House 93-39. It now goes to Gov. Tim Pawlenty.

A House-Senate conference committee came up with a plan to limit insurance policyholders to recovering $250,000 in damages and $100,000 in attorneys' fees if they could show that their claim was denied unreasonably.

The so-called good faith legislation would require consumers to show that their insurer knowingly denied a reasonable claim or acted recklessly -- in other words, failed to act "in good faith."

Senate Minority Leader David Senjem, R-Rochester, predicted that the changes will push up premiums.

"Higher caps -- more litigation. More litigation -- higher premiums. Higher premiums -- bad for people," said Senjem.

But Sen. Tarryl Clark, DFL-St. Cloud, said her bill should deter insurance companies from offering policyholders less than their damages.

"It is good for consumers," said Clark. "It will help them get what they paid for, which is our goal. But it also recognizes the industry's needs. It gives them ... some predictability of what their costs will be in the future."

Pawlenty said he hadn't seen the legislation yet, but had it described to him after negotiations with House and Senate conference committee members.

"It seems like it's the basis of a compromise solution, but I need to go through it," Pawlenty said.

ASSOCIATED PRESS

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Governor: Tim Pawlenty
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