A two year battle between insurers and the trial bar has ended with a compromise that insurers say protects consumers. Minnesota Gov. Tim Pawlenty signed on Friday, April 18th first-party bad faith legislation (S.F. 2822), that places limits on efforts to expand the ability to bring lawsuits when there are disputed insurance claims.
“Gov. Pawlenty recognized that an overly broad bad faith bill was not beneficial to consumers,” said Ann Weber vice president and counsel for the Property Casualty Insurers Association of America (PCI). “Our goal throughout this two year debate over bad faith lawsuits has been to protect consumers from the negative consequences of legislation that would provide the trial bar with a new class of lawsuits that could be filed against insurers based on the way insurers handle claims. This legislation accomplishes much of that goal. We are pleased that the compromise crafted in the conference committee relied heavily upon key principles outlined in the Senate version of the bill and limits the scope of bad faith claims. It strikes a careful balance between consumers and insurers.”
The bill signed by the governor excludes third-party bad faith cases and punitive damages. It places a cap of $250,000 on damages and $100,000 on attorney fees. The bill also requires that there be proof of knowledge that there was a lack of reasonable basis or that the insurer acted in disregard of a lack of a reasonable basis for denying a claim before a bad faith claim can be brought.
Source: PCI
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