Purpose of the Bill

The bill aims to modify the notice requirements for surplus lines brokers dealing with certain insurance coverages in Minnesota. It seeks to ensure that policyholders are informed about alternative insurance options available to them through the Minnesota FAIR Plan when they cannot secure coverage through normal markets.

Main Provisions

1. Presumption of Coverage Availability:

   • The bill amends existing law to clarify the types of insurance coverages presumed available from licensed insurers. These include:
     • Mandatory automobile insurance.
     • Private passenger automobile physical damage coverage.
     • Homeowners and property insurance for owner-occupied dwellings valued at less than $500,000. This value is adjusted annually in line with the Consumer Price Index for the Minneapolis-St. Paul area.
     • Any coverage readily available from three or more licensed insurers, unless the terms and premiums from these insurers are uncompetitive compared to those from a surplus lines insurer.
     • Workers' compensation insurance except for excess coverage unavailable from the Workers Compensation Reinsurance Association.

2. Notice for FAIR Plan Coverage:

   • The bill requires that if a surplus lines broker places homeowners or property insurance with a nonadmitted insurer, it must include a notice about the Minnesota FAIR Plan. This plan offers property and liability insurance to qualified applicants who cannot obtain insurance through regular channels.
   • The notice must be prominently displayed on the insurance policy in at least ten-point type, informing the insured of potential eligibility for the Minnesota FAIR Plan.

Significant Changes

• The bill introduces a new requirement for surplus lines brokers to inform policyholders of the Minnesota FAIR Plan option on the face of the policy. This was not previously mandated.
• It updates the process for adjusting the valuation threshold for homes eligible for presumed available insurance to align with inflation adjustments.

Relevant Terms

surplus lines brokers, nonadmitted insurer, Minnesota FAIR Plan, property and liability insurance, Consumer Price Index, Minneapolis-St. Paul Metropolitan Area, mandatory automobile insurance, homeowners insurance, Workers Compensation Reinsurance Association.