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Senate passes 'good faith' insurance bill

ST. PAUL -- Minnesotans could sue insurance companies that don't pay claims under a bill senators preliminarily approved Tuesday.

The measure -- called the "good faith" bill by supporters because it requires insurance companies to act in good faith when dealing with claims -- "makes that consumer whole, that they do get what they pay for," bill sponsor Sen. Tarryl Clark, DFL-St. Cloud, said.

Final Senate approval is expected today. The House is considering a similar bill.

Sen. Linda Scheid, DFL-Brooklyn Park, convinced senators to change Clark's bill, leaving some in confusion about how much protection the measure would offer Minnesotans.

Sen. Marry Olson, DFL-Bemidji, said it appears the amended bill will provide less consumer protection than the original Clark version.

But Sen. Julianne Ortman, R-Chanhassen, disagreed: "A lawyer can win the lottery under Sen. Clark's bill."

Most senators debating the issue also are lawyers, illustrating the confusion over the bill since they could not agree on what various provisions would do.

"There are enough loopholes to drive a truck through," Olson said of Scheid's plan.

The issue has been one of the most lobbied ones this session, with insurance companies and trial lawyers taking opposite sides.

Clark said that while her bill already was a compromise, work will continue in a House-Senate conference committee once the House passes its version.

Minnesota is the only state in which homeowner and automobile insurance policyholders have limited ability to sue insurance companies over claim disputes, Olson said.

"It isn't because of attorneys we are bringing this legislation forward," she said. "It is for injured people."

Bill supporters said that under current law insurance companies can pay less on a claim than a customer deserves, and the customer has few ways to fight back.

The bill specifically targets insurers who knowingly short their customers, not those who truly feel claims are not legitimate.

Under the Clark bill, which is similar to the House measure, a policyholder would be required to contact their insurance company two months before filing a lawsuit and make an effort to resolve a claim.

The bill does not apply to workers' compensation, dental and health policies; it also makes some other exceptions.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.