Capitol Notes  
The Legislative and Political Newsletter of the 
MN Independent Insurance Agents & Brokers Association

March 27, 2018
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Legislative Alert  - Contact Your Legislators


Bills at the state capitol to eliminate the resident family exclusion under watercraft liability and umbrella policies have gained momentum.  The bills are sponsored by Republicans who control the House and Senate and have the support of House and Senate leadership. 

The MIIAB is working with the Insurance Federation of Minnesota to let legislators know about concerns with this legislation including unintended consequences of its passage.  Below is a legislative alert from the Insurance Federation on the bill.

We encourage you to contact your state legislators and ask them to oppose this problematic legislation.  
 
Family Exclusions
H.F. 4047 (Fenton, R-Woodbury)/S.F. 3610 (Anderson, R-Plymouth )

The Bill:   The bill prohibits the use of family exclusion clauses in boat liability and umbrella policies and does not allow insurers to proactively price policies to anticipate claim risks.

Points to Consider:
  • This bill is based on the story of a local news anchor's personal comeback from a tragic boating accident, but the proposed change to Minnesota's insurance laws is misguided and would cause alarming consequences. 
  • Liability insurance generally provides coverage to the insured for injury or damage the insured causes to other persons or property. For example, the liability coverage in a boat insurance policy covers damage you cause to other boats, injuries you cause to other people on boats or in the water, damage you cause to a dock or a marina, etc.  However, across the country, and in Minnesota, a very common exclusion in the policy excludes liability coverage for injuries you cause to family members that live with you. 
  • Most standard liability insurance policies exclude coverage for injuries to resident relatives who live together in the same house.  The reasoning is simple.  If you allow relatives to sue each other for the proceeds of a liability insurance policy, there's a strong incentive to commit fraud.  Under this proposal, the number of questionable claims will likely rise dramatically. 
  • Most other states recognize the negative aspects of allowing resident relatives to sue each other, which is why only one state legislature in the U.S. has allowed them. 
  • Minnesota courts have long upheld family exclusions in insurance policies. 
  • Most standard liability insurance policies exclude coverage for injuries to resident relatives who live together in the same house.  The reasoning is simple.  If you allow relatives to sue each other for the proceeds of a liability insurance policy, there's a strong incentive to commit fraud.  Under this proposal, the number of questionable claims will likely rise dramatically.
 
Action:   Tell your lawmakers to VOTE NO on H.F. 4047/S.F. 3610 and ANY other legislation that attempts to eliminate family exclusion clauses.
 
Insurance Federation of Minnesota
 
Dominic Sposeto
MIIAB Lobbyist