Navigating Home Insurance Claims in Minnesota: A Guide

Filing an insurance claim after property damage or loss can be a frustrating and confusing process. Minnesota has laws in place to protect homeowners and renters during the claims process. This article provides an overview of key Minnesota laws related to home insurance claims that policyholders should understand.

Proof of Loss Requirements

Minnesota Statute 65A.296 establishes proof of loss requirements for home insurance claims. Here are some key points:

• Insurance companies may require the policyholder to submit a completed proof of loss form within 60 days of receiving written notice of the claim.

• The notice from the insurer must be sent by certified mail and include the proof of loss form and instructions.

• If the insurer properly notified the insured but they failed to submit timely proof of loss without good cause, this can bar recovery of the claim.

• If the insurer did not properly notify the insured, the failure to submit timely proof of loss does not bar recovery unless the insurer can prove prejudice.

• The proof of loss form and instructions must meet “readability standards” under Minnesota law.

The bottom line is that insurers cannot deny a claim simply because the homeowner missed the 60 day deadline, unless they properly notified the insured and have evidence that the delay harmed their interests.

Prompt Claim Handling

Minnesota Statute 72A.201 requires insurance companies to handle claims promptly and in good faith. Key provisions include:

• Claims must be paid or denied within 30 business days of receiving a completed proof of loss form.

• If all or part of the claim is denied, the insurer must provide written notice explaining the basis for the denial.

• Insurers cannot deny a claim based on the insured’s failure to exhibit property unless it was reasonably requested by the insurer.

This statute gives the Minnesota Department of Commerce enforcement powers over unfair claims practices. Homeowners can file complaints with the department if they believe the insurer is unlawfully delaying resolution of their claim.

Recovering Damage Estimates

Minnesota law gives policyholders the right to copies of damage estimates related to their insurance claim. Under Statute 72A.201, subd. 4(2):

• Insurers must provide copies of their damage estimates, repair bids, cost estimates, and justification for betterment deductions if requested by the insured.

• Estimates must be provided within 10 business days of receiving the request.

• Insurers must also give the insured written notice detailing their right to receive damage estimate information.

Having access to the insurer’s estimates allows policyholders to verify the accuracy of claim payments.

Recovering Depreciation Holdbacks

Many insurance policies include depreciation holdbacks, where the insurer deducts money from claim payments to account for depreciation of damaged property. Minnesota law requires insurers to pay out depreciation holdbacks once repairs are made. Key provisions under Statute 65A.01, subd. 3:

• If the insurer’s payment was reduced based on depreciation of the damaged property, additional payments must be made as repairs are completed.

• The insurer cannot require that repairs be made by a specific vendor or contractor.

• The total claim payments including depreciation holdback cannot exceed the policy limits.

Understanding these requirements can help homeowners fully recover the cost of repairs after covered losses.

Recovering for Code Upgrades

Insurance policies typically only cover repairs that restore a home to its original condition. However, Minnesota law requires coverage for certain code-related upgrades under Statute 65A.01, subd. 3:

• If the insured is required to comply with building codes when making repairs, the insurer must pay up to $25,000 for upgrades.

• Common code upgrades covered include improved roof sheathing, electrical, plumbing, and insulation requirements.

• The insurer only pays the direct cost of complying with the codes. Upgrades for non-damaged sections are not covered.

This provision provides important protection for policyholders making major repairs after a loss.

Temporary Living Expense Coverage

Homeowners insurance policies in Minnesota generally include coverage for additional living expenses if a covered loss makes a residence uninhabitable. Key provisions under Statute 65A.01, subd. 3:

• Insurers must cover losses up to policy limits for temporary living expenses if a loss makes the property unlivable.

• Covered expenses include costs of relocating, lodging, meal expenses, and other essential purchases.

• The insurer cannot require the insured to relocate more than 200 miles from the residence or pay an arbitrary cap on daily meal expenses.

Understanding the details of temporary living expense coverage is critical for policyholders displaced from their home after a major loss.

Replacement Cost vs. Actual Cash Value

Two key terms related to loss settlement under homeowners policies are replacement cost and actual cash value:

• Replacement cost is the amount required to repair or rebuild damaged property without deducting for depreciation. This provides for full recovery in most cases.

• Actual cash value provides for depreciation and is usually less than the cost to fully repair or replace losses. Insurers may initially pay ACV until repairs are made.

Minnesota law allows policies to be written on either a replacement cost or ACV basis. Policyholders should understand which method their insurer uses to avoid underpayment claims.

Understanding Policy Exclusions

While homeowners policies provide broad property and liability protection, they also contain exclusions that limit coverage in certain scenarios. Common Minnesota policy exclusions include:

• Damage from flooding, earth movement, and groundwater seepage. Separate flood insurance policies are usually required.

• Intentional loss or damage caused by illegal acts of the policyholder.

• Gradual damage from wear and tear, deterioration, rust, or hidden defects.

• Losses occurring when the property has been vacant for a specified period of time (often 30 days or more).

Carefully reviewing the exclusions section of a policy can help avoid unpleasant surprises in the event of a claim.

Summary

The claims process after a damaging home loss can be very stressful. Understanding Minnesota’s home insurance claim laws allows policyholders to effectively assert their rights and obtain fair claim settlements. Key protections include proof of loss requirements, prompt payment rules, access to damage estimates, recovery of depreciation, coverage for code upgrades, and temporary living expense coverage. Homeowners faced with a major insurance claim should take the time to review their policy terms and understand their legal rights under Minnesota statutes.