Minn. Senate approves compromise on suing home, auto insurers

04/14/2008

ST. PAUL (AP) -- The Minnesota Senate approved a compromise bill giving consumers more clout in court when they disagree with their home and auto insurance companies.

The legislation passed 47-15 and headed to the House for a vote.

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."

GOP Senate Minority Leader David Senjem predicted the changes will push up premiums and hurt consumers.

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

But Sen. Tarryl Clark said her bill should deter insurance companies from offering policyholders less than their damages.

"It is good for consumers," said Clark, DFL-St. Cloud. "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 ability to have some understanding and some predictability of what their costs will be in the future."

Gov. Tim 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.