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Looking at MN’s bad faith insurance statute, P.2

In our previous post, we began speaking about Minnesota’s bad faith insurance statute, particularly what it has to say about establishing liability. As we noted, policyholders may base a claim of bad faith insurance on the insurer’s lack of a reasonable basis to deny benefits under a policy, along with either knowledge of or reckless disregard for the lack of a reasonable basis or such a denial.

When an insured can successfully demonstrate both of these elements, he or she is thereby entitled to damages. Minnesota law identifies several types of damages to which an insured may be entitled in bad faith insurance cases. First of all, there are prejudgement and postjudgement interest and costs and disbursements allowed by law. In addition to these, the court may also award certain taxable costs. 

One of these taxable costs is the lesser of either: (a) half of the proceeds awarded which are in excess of an amount offered by the insurer at least ten days before the beginning of trial; or (b) 250,000. Another taxable cost that may be awarded is reasonable attorney fees which are actually incurred to pursue litigation. Such fees must be separately accounted for and must not duplicate any fees incurred by the insured’s attorney in pursuing proceeds for the insured under the insurance policy.

State law explicitly states that an insured is not entitled to punitive damages in bad faith insurance cases. This is true even in situations where it might otherwise be proven that the insurance company knowingly refused to provide benefits for a legitimate claim.

Of course, whenever an insured feels that he or she has become the victim of bad faith on the part of his or her insurer, it is important to work with an experienced advocate. Doing so helps ensure that the insured’s rights and interests receive the zealous advocate they should in court. 

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