Good Faith Fracas

A change would allow successful first-party claimants to recover court costs and attorneys’ fees, in addition to incident-related damages. First-party plaintiffs would also become eligible to receive consequential damages, which are intended to compensate a claimant for opportunities missed because of an insurance company’s incorrect decision. If an insurance company incorrectly fails to pay for a crop damaged by hail, for instance, the farmer who bought crop insurance from that company could win both the value of the hail-damaged crop and the value of the next year’s crop, if the absence of an insurance payment made it impossible for the farmer to buy seeds.

Consumer Protection . . . ?

The Minnesota Association for Justice—an industry group for trial lawyers—says the new legislation would give individuals and businesses badly needed leverage. They say unfair treatment from insurance companies is a common problem among their clients.

“Insurers routinely cut off people’s benefits when they should not,” says Terry Bishop, a shareholder at the Bloomington-based law firm of Larkin Hoffman Daly & Lindgren, Ltd. “I think it’s a cost-saving measure.”

"This would level the playing field and regulate behavior." -Chris Messerly, Robins Kaplan Miller & Ciresi

Insurance companies often make improperly low settlement offers, lawyers say, betting that claimants won’t go to court to recover the difference. “It’s common for insurance companies to make low offers, because they know they’ll never have to pay more than the limits of the policy,” says Joe Crumley, a shareholder at Bradshaw & Bryant, a law firm in Waite Park.

Lawyers say the new law might change how insurers respond to claims. “The threat of a lawsuit—and of higher damages—would provide insurance companies with an incentive to treat customers fairly, and give customers legal resource if that fair treatment doesn’t happen,” Crumley says.

Attorneys point to the 46 other states, including Wisconsin, that have some form of good faith law. “Wisconsin insurance companies with Wisconsin cases deal more fairly with claimants, because they have a good faith law,” Crumley says.

Minnesota needs similar protection, the lawyers say. “This would level the playing field and regulate behavior,” says Chris Messerly, a partner at Minneapolis-based law firm Robins Kaplan Miller & Ciresi.