One of our top priorities this legislative session was to respond to your concerns about the negative impact storm chasers are having on consumers and Minnesota’s tightening property insurance market. We are thrilled to report that we successfully worked with legislators and our insurance company partners to enact two new laws that will protect consumers and the overall market.
The first new law will prevent consumers from unwittingly getting stuck with large repair or replacement bills because they assigned their insurance benefits to a storm-chasing contractor. We accomplish this by 1) providing more time for a consumer to cancel an assignment of benefits contract; 2) requiring contractors to inform consumers about the risk that their repairs may not be covered by their insurance company; and 3) requiring contractors to disclose in the AOB an itemized description of the work and the cost of materials and labor.
Over the strong objections of contractors, the second new law includes storm chasers in the new price gouging prevention law. Specifically, the bill prevents contractors, after a severe thunderstorm, from charging excessive prices for labor or materials, and from charging insurers a price that is higher than what is charged to the general public. The new law will be enforced by the Attorney General and violators are subject to a fine of up to $25,000 per day.
We were successful in defeating a bill that would have required agents to offer a new, “low-cost” auto insurance policy with reduced minimum limits (20/40/10) to income qualified drivers. The bill will likely be back next session and we will continue to talk with legislators and advocates about meaningful cost reforms that will not leave drivers exposed to significant financial risk.
One of the trial bar’s top priorities this session was to enact the so-called boat bill which would prohibit family exclusions in boat and umbrella policies. Thanks to Big I MN members reaching out to their legislators, we were able to amend the boat bill, so it no longer contains an absolute prohibition on the family exclusion. Instead, the bill allows the consumer to add the family exclusion by endorsement. We were also able to include some procedural improvements to the exclusion election process. While the language isn’t perfect, it was no small feat to defeat the absolute prohibition on family exclusions in a Legislature that is far more hospitable to trial lawyers than it is for business. This new law takes effect for policies issued on or after January 1, 2024.
Powerful Committee Chairs brought forth a bill from the American Society for the Prevention of Cruelty of Animals which would have prohibited insurers from excluding or limiting coverage or rating a homeowners policy based on the breed of a dog. We were able to reach a compromise that still prohibits underwriting based on dog breed, however, allows insurers to charge an actuarially justified rate for the coverage. The underwriting prohibition doesn't apply if a dog is considered a dangerous dog. The new law takes effect for policies issued on or after January 1, 2024.
The new Paid Family and Medical Leave law will require employers to provide 12 weeks of family and 12 weeks of medical leave starting on January 1, 2026. Annual leave is capped at 20 weeks. Given the inevitability of a PFML law becoming law, we focused our efforts on making the program less onerous for our members to implement. While the Legislature would not exempt small businesses, the new law does provide a premium reduction for businesses with fewer than 30 employees (income tested) and it establishes a grant program to help small businesses replace employees on leave. The program is funded by a .7% payroll tax increase that may be shared with employees. The bill also allows employers to offer a private equivalent plan instead of joining the state pool. Benefits and the payroll tax increases do not kick in until January 1, 2026.
As you know, the Legislature legalized adult use cannabis, but licenses (and, therefore, legal retail sales) will not be issued for 18 months. We, therefore, deferred the discussion of possible minimum insurance limits for cannabis retailers until next session to defeat the efforts of a Michigan-based insurer to limit the emerging insurance market to admitted carriers (there are currently only 2 admitted carriers and over 30 non-admitted) and, more importantly, to ensure meaningful coverage is available for these new businesses.
As we also know, legalization brings numerous challenges to the workplace for employers and comp carriers. While the new law allows employers to ban use and possession in the workplace and to take disciplinary action against employees that are using or are impaired due to cannabis at work, there is still no objective measurement or accepted standard of what constitutes impairment; current tests only measure the presence of THC and not the level of impairment. Unfortunately, the legalization proponents did not feel this issue was worth holding up legalization for. Partnering with our insurer partners, we will be back next session with legislation to provide protections for employers and comp carriers.
The DOC’s “Strengthen MN Homes” Program also became law this session. The Legislature set aside $30 million dollars in grants to be awarded by the DOC to help homeowners install resilient roofs that meet the IBHS Fortified standards for wind and hail. The program prioritizes low-income populations that are disproportionately impacted by climate change and have the fewest resources to protect their homes or rebuild after a storm. As a corollary to the new program, insurers will be required to offer actuarially justified premium discounts for homes that meet the Fortified standards. The Strengthen MN Homes program embodies the DOC’s philosophy that “mitigating the risks posed by extreme weather events prioritizes the legitimate interests of both homeowners and insurance companies in responding effectively to the climate crisis without causing economic hardship”.
Lastly, you may also be interested in a new law championed by the Minnesota State Bar Assoc that makes unfair defense obligations in construction contracts unenforceable, except to the extent of “your own acts and omissions”. The new law also limits the “project-specific" insurance loophole to claims arising out of “your own acts and omissions”. The new law is already in effect.
