ST. PAUL, Minn., March 7 – Insurers and trial lawyers are set for a showdown over legislation that is called good faith or bad faith legislation " depending on which side is giving the description. The bill would impose penalties on insurers who do not act in good faith while assessing claims.

The Property Casualty Insurers Association of America (PCI) describes the bill as authorizing additional legal action against insurers for attempting to investigate questionable insurance claims. The Minnesota Trial Lawyers Association (MTLA) states that the bill would require insurance companies to honor policyholders legitimate claims and for consumers to be treated fairly by insurance companies.

PCI said that it is urging Minnesota lawmakers to defeat the legislation, which the association said is being advanced by the states trial lawyers. If enacted, PCI said the bill would increase the price of health, auto, homeowners, and commercial liability insurance in the state.

These bills are little more than veiled attempts to create a new opportunity for lawyers to file lawsuits and generate revenues for themselves at the expense of consumers, said Ann Weber, vice president and counsel for PCI. Insurers are committed to settling claims in a quick and fair manner and we stand on our track record of consumer satisfaction. The net effect of this legislation would be to discourage insurers from protecting its policyholders interests by investigating suspect claims and effectively fighting against fraud and arson.

PCI contends that Minnesota already has strong laws to address circumstances where there are disputes over claims handling practices. The bill would not add additional consumer protections, PCI said. Acting in good faith means paying legitimate claims and ferreting out those that are fraudulent, said Weber. These measures would make it harder and more costly for insurers to fully perform their duty for consumers.

The MTLA, meanwhile, said that 46 states have first-party good faith laws. Sometimes when a client puts in a clearly legitimate claim, the insurance company tries to low-ball them by offering less than the value of their policy, or just delays making the payment, said Joe Crumley, president-elect of the MTLA. If someone insures their home for $100,000 and it is destroyed by a tornado, they should receive $100,000 from the insurance company, without delay. They should not have to fight for their claim or settle for anything less. They shouldnt be forced to hire a lawyer.

Mike Bryant, owner of the law firm Bradshaw & Bryant PLLC, said that the insurance industry takes on a take-it-or-leave-it attitude that can force claims to go through the court process which can become expensive and time consuming. Insurance companies count on the three Ds " denying a claim, delaying settlement of the claim, and defending against the claim in court, Bryant said. But when insurance companies resort to using the court system instead of paying their claims, it only ties up valuable court resources, wasting taxpayers money.

He added, Consumers pay insurance premiums in good faith to their insurance companies and they should receive fair treatment. A good faith law will hold insurance companies accountable to the hard-working people who pay their premiums and have legitimate claims. Consumers should have the coverage they pay for.