HF4422

Purpose

To require property insurance policies in Minnesota to use a formal appraisal process to determine damages and loss values, creating an alternative dispute resolution path before possible court action, and to repeal a prior appraisal-related statute.

Main Provisions

• Applies to fire and allied lines of insurance as defined in Minnesota law.
• Requires the insured and the insurer to choose two independent appraisers within 20 days of a written demand if they disagree on actual cash value or the amount of loss (with an exception noted for total losses on buildings).
• If either party does not appoint an appraiser on time, a district court judge can appoint an appraiser for the party that failed to appoint.
• Appraisers must first select an umpire; if they cannot agree on an umpire within 15 days, a district court judge can appoint one.
• The appraisers must independently appraise the loss and state separately the actual value and the loss for each item.
• If appraisers disagree on the value and loss for an item, they only submit the differences to the umpire.
• An itemized written award from any two appraisers, filed with the insurer, determines the amount of actual value and loss.
• Each appraiser is paid by the party that selected them; the costs of the appraisal and umpire are shared equally by both parties.
• A lawsuit to recover a claim may not proceed in court or equity unless all policy requirements are met and the suit is filed within two years after the loss begins.

Process and Procedures

• Written demand required to trigger appraisal; timelines are set for appointing appraisers (20 days) and for appointing an umpire (after appraisers select one, if no agreement within 15 days).
• If disagreements occur, the umpire resolves differences to produce a final determination.
• The appraisal process is designed to resolve loss amounts without immediate litigation, through an agreed-upon sequence of appraisers and umpire.

Changes to Existing Law

• Establishes a new loss adjustment process under Minnesota Statutes chapter 65A, Section 65A.261.
• Repeals Minnesota Statutes 2024 section 65A.26, removing the prior framework and replacing it with the appraisal-based approach in 65A.261.

Scope and Implementation

• Applies to fire and allied lines of insurance as defined by statute.
• Targets disputes over actual cash value and loss amounts per item, not settlements of other policy terms.

Potential Impacts

• Shifts dispute resolution from court battles to an in-depth appraisal process.
• Could affect timelines, costs, and outcomes for property loss claims.
• Provides a structured mechanism to determine loss amounts and may reduce litigation, though costs are shared.

Relevant Terms - appraisal - appraisers - umpire - actual cash value - loss - itemized award - loss adjustment - district court - presiding judge - timelines (20 days, 5 days, 15 days) - fire and allied lines of insurance - Minnesota Statutes chapter 65A - 65A.261 - 65A.26 (repealed) - written demand - insurer - insured - loss amount per item - court action within two years