Minnesota Has a New "Good Faith" Insurance Law
4/28/2008
Effective August 1, 2008, Minnesota law will allow a policyholder to sue his or her insurance company for not settling a claim in “good faith,” meaning that the policyholder may prevail if he or she can prove that the insurance company did not have a reasonable basis for denying their claim.
The new law has been widely described as one of the most significant pro-consumer pieces of insurance legislation passed in Minnesota in decades. It applies to any first-party auto or homeowners claim, as well as to some other property and casualty claims. If an insurance company fails to have a reasonable basis for denying a claim, the insured may be awarded up to $100,000 in attorneys fees and up to $250,000 in additional damages. The goal of the legislation is to prevent wrongful denials of claims from happening in the first place and to ultimately lower the necessity for litigation.
Making the actual claim is done by amendment of the pleadings, as part of the original lawsuit. For more information about the new "good faith" law, contact one of the firm's litigation practice leaders: Barry O'Neil, 612-336-9342, barry@lommen.com or Bob King, 612-336-9348, bob@lommen.com.