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Minnesota Bad Faith Insurance Laws

Nobody really likes dealing with insurance companies. Whether car insurance, life insurance, or homeowner’s insurance, the laws can often be convoluted and consumers often feel they are getting the short end of the stick when making a claim. The state of Minnesota, however, has tried to change that. Under a 2010 law, insurance companies are now mandated to pay or adjust claims in good faith or face serious legal consequences. How does this potentially impact you? Let’s say your insurance company denied your car insurance claim without a reasonable basis, you now have a cause of action to sue under the "bad faith" doctrine.

Minnesota Bad Faith Insurance Overview

Minnesota insurance companies must fulfill a number of important duties and obligations to their policyholders including the duty to investigate, the duty to indemnify, the duty to defend, and much more. If you believe that some of these duties have either been ignored or simply done in bad faith, you may have legal options available to you. Below you will find key information related to state statutes, the definition of "bad faith," and what types of claims may be covered under the law.

Minnesota State Statutes

What Constitute “Bad Faith” by an Insurer?

The United States District Court for Minnesota has found the following two-prong test a claimant must meet in order to prove "bad faith"
  1. an objective standard that asks whether a reasonable insurer would have denied or delayed payment of the claim under the facts and circumstances; and
  2. a subjective standard that turns on what the insurer knew and when.

What Types of Claims are Covered?

Under the statute cited above, bad faith insurance can only occur when there is a written agreement between the parties which puts the insurer under an obligation to pay proceeds directly to an insured.

Not Covered

  • Written agreements to defend an insured;
  • Written agreements to reimburse an insured for defense expenses; or
  • Third party claims.

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

Minnesota Codes and Court of Appeals Opinions

Additional Resources: Minnesota Bad Faith Insurance Laws

If you would like to continue your research on insurance laws and regulations, we can help. Click on the links below to learn more about Minnesota Insurance laws.

Need More Information? Speak with a Minnesota Lawyer

Whether you are a farmer who has been denied a claim or a homeowner confused by the likely "bad faith" denial from an insurance company, you can seek help. You can learn about the law and any remedies that may be open to you. If you have additional questions about Minnesota’s insurance laws, seek the assistance of a Minnesota insurance lawyer today.

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