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Minnesota's bad faith insurance statute empowers homeowners

A law passed by the Minnesota Legislature in 2010 requires insurance companies to consider claims, including claims made on homeowners insurance policies, in good faith. If they don’t, victims can take action to collect damages.

You can read the text of the statute here, but we will summarize it for our readers. If an insurance company denies a claim, the insured has a cause of action if he or she can prove the following:

1. There is no reasonable basis for denying the benefits of the insurance policy, and

2. The insurer was aware of the lack of reasonable basis for denial, or acted in reckless disregard of that fact.

The statute makes an exception for denied claims when the insurance company is “conducting or cooperating with” an arson or fraud investigation.

If the plaintiff prevails in court on a bad-faith lawsuit, he or she is entitled to damages. In addition, the statute allows the court to award reasonable attorney fees; prejudgment and postjudgment interests and costs; and an amount equal to half the proceeds awarded in excess of any amount offered by the insurer at least 10 days before trial, or $250,000, whichever is less.

Nobody wants to go to court, but when an insurance company acts in bad faith, there may be no other option to get your home repairs paid for. The best way to deal with a bad-faith insurer is to have an experienced and vigorous lawyer on your side. This gives you the best possible chance of getting justice.

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