Minnesota’s Good Faith Law has been on the books for slightly more than a decade, and it still stands as one of the best pro-consumer laws on the books in terms of getting a person compensation they rightfully deserve. Essentially, it mandates that insurance companies must have a legitimate and credible basis for denying a claim to someone that they insure. It requires that they act in good faith towards the people they insure.
The Good Faith Law sets the standard of conduct in settling no fault, underinsured and uninsured motorist policy claims. However, just because the law is in place, doesn’t mean that insurance companies always act in good faith. This is why it is so important to have legal representation if you have been involved in an automobile accident with damages.
Minnesota Good Faith Law Explained
According to Minnesota Statute 604.18, courts can legally award damages and costs to an insured person if they can prove that the insurance company:
- Lacked a reasonable basis for denying the benefits guaranteed in an insurance policy; and
- Was aware of the lack of reasonable basis to deny benefits or they acted in reckless disregard of the lack of reasonable basis for denying benefits guaranteed in the insurance policy.
If the court finds the insurance company in violation of the Good Faith Law, they can award damages that are equal to one-half of the the difference between the insurance company’s offer and the court’s judgment, plus there will be an adjustment of the original payout. This is better explained with an example.
Let’s say you have an insurance policy that offers $150,000 in coverage. After an accident, the insurance company offers you $50,000 for your damages and injuries. You take them to court, and the judge rules that damages actually should have been set at $170,000. This means you will be awarded $150,000 based on your policy limit, plus you would receive half the difference between the two judgments, which is $60,000. In total, you would receive $210,000. If the judge had ruled that you were entitled to $90,000, you’d receive $90,000 plus half the difference between the two awards, or an additional $20,000.
Total awards are capped at $250,000, but the insurer would also be on the hook for attorney fees. Clearly it is in their best interest to act in good faith when dealing with insurance claims, but again, that doesn’t mean they always will.
Regardless of whether you believe you’re being shortchanged by the insurance company or you just want a lawyer to help with the claims process, please don’t hesitate to reach out to Hey Workers. The single best way to maximize your award and protect your interests is to hire a law firm that specializes in car accident awards. We’ve been doing that for decades, and we can do the same for you. Contact us today for more information.
