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Does Minnesota Need a "Good Faith" Law?

February 27, 2007

Legislation under consideration in St. Paul would establish a "Good Faith" law in Minnesota, requiring insurance companies to pay legitimate claims in full, rather than offering less, delaying a payment, or going to court.

Tim Adams, with the Minnesota Trial Lawyers Association, says the regulation would require insurance companies to pay legitimate claims in full. He says some companies now try to "low-ball" consumers or delay making payments.

"Insurance companies should be required to honor, rather than deny, a policyholders' legitimate claim. Consumers should get what they pay for. "Good Faith" is a fundamental consumer protection that Minnesotans deserve."

Adams says the legislation would ensure a homeowner receives the full amount of insurance coverage in the event of a covered loss promptly, and would help policyholders avoid having to accept less or hire a lawyer to get what they deserve.

Mike Bryant owns the Bradshaw and Bryant law firm of St. Cloud. He says the bill would require insurance firms to operate in good faith, rather than make those who have suffered losses suffer more.

"Insurance companies do a cost-benefit analysis that shows them half the people will walk away if they are offered half the money, instead of giving them what they're supposed to get. So, they've kind of got the field rigged by knowing what their 'worst day' is."

Bryant says the practice breaks an agreement with consumers, wastes the time of the judicial system as well as taxpayers' money. Currently 46 other states enforce a "Good Faith" law.

Jim Wishner/Chris Thomas, Public News Service - MN