82nd Legislative Session _ 2007

Committee: Senate Commerce
Thursday, February 01, 2007

                                            P - Present
                                            E - Excused
                                            A - Absent

Roll Call
P    Abdallah
P    Dempster
P    Katus
P    Koetzle
P    Turbak
P    Gray, Vice-Chair
P    McCracken, Chair

OTHERS PRESENT: See Original Minutes

The meeting was called to order by Senator McCracken, Chair.

MOTION:     TO APPROVE THE MINUTES OF TUESDAY, JANUARY 30, 2007.

Moved by:    Katus
Second by:    Koetzle
Action:    Prevailed by voice vote.

         SB 108: provide for the continuation of certain health insurance coverage for dependents.

Presented by:    Kevin Forsch, Governor's Office (Document 1)
Proponents:    Randy Moses, Division of Insurance
        David Hewett, SD Assn. Of Healthcare Organizations

MOTION:     DO PASS SB 108

Moved by:    Abdallah
Second by:    Dempster
Action:    Prevailed by roll call vote.(7-0-0-0)



Voting Yes:    Abdallah, Dempster, Katus, Koetzle, Turbak, Gray, McCracken

         SB 43: provide for the licensing of tobacco retailers.

Presented by:    Tim Weber, Dept of Revenue and Regulation (Document 2)
Proponents:    Ronald Olinger, SD Retailers Assn.
        Dawna Leitzke, SD Petroleum & Propane Marketers Assn.

MOTION:     AMEND SB 43

43fa
     On page 1 of the printed bill, delete lines 4 to 10 , inclusive, and insert:

"      10-50-9.   Each person, except a retailer, engaging in the business of selling cigarettes or tobacco products in this state, including any distributor or wholesaler, shall secure a license therefore from the secretary of revenue and regulation. A separate application and license is required for each wholesale outlet when if a person owns or controls more than one place of business dealing in cigarettes or tobacco products. Each person selling cigarettes or tobacco products at retail shall register with the Department of Revenue and Regulation. A separate registration is required for each retail outlet operated within the state. No fee may be charged for this registration.

     Any person, except a retailer, who sells, offers for sale, or possesses with intent to sell, any cigarettes or tobacco products, without a license or registration commits a petty offense.".

     On page 1 , delete lines 11 to 15 , inclusive.

     On page 2 , delete lines 1 and 2 .

     On page 2 , line 17, delete " or , wholesaler , or dealer " and insert "or wholesaler or the registration of a dealer ".

     On page 3 , delete lines 14 to 17 , inclusive, and insert "possessed in violation of this chapter. Each dealer shall keep documents establishing that the cigarettes and tobacco products in the dealer's inventory were purchased from a distributor or wholesaler licensed by the State of South Dakota. The documents shall be kept for at least three months. If the documents are not stored at the dealer's registered location, the documents shall be made available in physical or electronic form to the secretary within five business days of the receipt of the request from the secretary. ".

     On page 4 , line 14, delete " licensing " and insert " registration ".

     On page 4 , after line 14, insert:

"      Section 8. That § 10-50-16 be amended to read as follows:

     10-50-16.   Any person who sells any cigarettes or tobacco products after such person's license or registration has been revoked commits a petty offense, and all cigarettes or tobacco products in such person's possession shall be seized and forfeited to the state pursuant to chapter 23A-37. ".


Moved by:    Gray
Second by:    Dempster
Action:    Prevailed by voice vote.

MOTION:     DO PASS SB 43 AS AMENDED

Moved by:    Gray
Second by:    Katus
Action:    Prevailed by roll call vote.(6-1-0-0)

Voting Yes:    Dempster, Katus, Koetzle, Turbak, Gray, McCracken

Voting No:    Abdallah

MOTION:     TO AMEND TITLE OF SB 43

43jta
     On page 1, line 1 of the printed bill, delete " licensing " and insert "registration".

Moved by:    Gray
Second by:    Turbak
Action:    Prevailed by voice vote.

         SB 165: repeal and reestablish provisions to regulate mortgage lenders and brokers.

Presented by:    Senator Jason Gant
Proponents:    Craig Marquardt, SD Assn. Of Mortgage Brokers
        Drew Duncan, SD Assn. Of Mortgage Brokers
        Curt Everson, SD Bankers Association
        Cathy Brandner, Division of Banking
        John Brown, SD Consumer Finance Assn.

MOTION:     AMEND SB 165


165ja
     On page 1, line 13 of the printed bill, after " who " insert ", for compensation or gain,".

     On page 2 , line 6, after " person " insert "acting under the supervision of a licensee and".

     On page 2 , line 8, delete " residential " .

     On page 2 , line 10, delete " residential " .

     On page 2 , line 14, delete " residential " .

     On page 3 , delete lines 4 and 5 , and insert:

"
     Section 4. Each applicant for licensure and registration under this Act shall submit to a state and federal criminal background investigation by means of fingerprint checks by the Division of Criminal Investigation and the Federal Bureau of Investigation. Upon application, the Division of Banking shall submit completed fingerprint cards to the Division of Criminal Investigation. Upon completion of the criminal background check, the Division of Criminal Investigation shall forward to the Division of Banking all information obtained as a result of the criminal background check. The Division of Banking may require a state and federal criminal background check for any licensee who is the subject of a disciplinary investigation by the division. Failure to submit or cooperate with the criminal background investigation is grounds for denial of an application or may result in revocation of a license. The applicant shall pay for any fees charged for the cost of fingerprinting or the criminal background investigation. Any applicant who has previously completed a background check in another jurisdiction in anticipation of receiving a license or registration in that jurisdiction may have the results of such a background check forwarded to the division in satisfaction of this requirement.".


     On page 3 , line 11, after " Act " insert "is".

     On page 3 , line 16, after " . " insert "Any license granted by the division prior to the implementation of this Act is valid until December 31, 2007.".

     On page 3 , line 19, after " . " insert "Any licensee or registrant that files for renewal after December first and before January first of the next calendar year shall pay a late fee in addition to the renewal fee. The late fee, not to exceed twenty-five percent of the renewal fee, shall be established by the director by rules promulgated pursuant to chapter 1-26. After January first no license may be issued unless an application is filed pursuant to sections 2 to 5, inclusive, of this Act.".

     On page 4 , line 4, delete " licensing under " and insert "the provisions of".

     On page 5 , line 6, delete " fifty " and insert "twenty-five".

     On page 5 , delete line 13 , and insert "time the bond is in force.".

     On page 5 , line 14, after " The " insert "bond may be continuous, and regardless of how long the bond remains in force, the".

     On page 5 , line 15, after " . " insert "The bond may be cancelled by the surety upon thirty days notice to the licensee and the director, and the surety's liability on the bond shall also terminate upon the effective date of any suspension or revocation of the license.".

     On page 6 , line 14, after " revoked " insert "or cancelled by the surety".

Moved by:    Gray
Second by:    Dempster
Action:    Prevailed by voice vote.

MOTION:     AMEND SB 165

165jb
     On page 4, line 4 of the printed bill, after " entities " insert "and their employees and exclusive agents".

Moved by:    Gray
Second by:    Dempster
Action:    Prevailed by voice vote.

MOTION:     DO PASS SB 165 AS AMENDED

Moved by:    Gray
Second by:    Dempster
Action:    Prevailed by roll call vote.(7-0-0-0)

Voting Yes:    Abdallah, Dempster, Katus, Koetzle, Turbak, Gray, McCracken

         SB 147: revise the definition of wages for unemployment insurance.

Presented by:    Senator Brock Greenfield
Proponents:    Don Kattke, SD Department of Labor


MOTION:     DO PASS SB 147

Moved by:    Dempster
Second by:    Katus
Action:    Prevailed by roll call vote.(6-1-0-0)

Voting Yes:    Abdallah, Dempster, Katus, Turbak, Gray, McCracken

Voting No:    Koetzle

         SB 48: adopt consumer protection standards for property casualty insurance claims.

The committee previously heard testimony on this bill on January 25, 2007.

Proponents:    Merle Scheiber, Division of Insurance (review of bill and amendments)
        Randy Moses, Division of Insurance (review of bill and amendments)
Opponents:    Dave Gerdes, General Motors Corporation
        Dick Tieszen, State Farm Insurance
        Mike Shaw, Property and Casualty Insurance
        Dennis Duncan, SD Assn. Of Mutual Insurance Co. & SD Insurance Alliance
        Larry Nelson, American International Group, Inc.

MOTION:     AMEND SB 48

48jc
     On the printed bill, delete everything after the enacting clause and insert:

"      Section 1. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Terms used in this Act mean:

             (1)    "Agent," any person, corporation, association, partnership, or other legal entity authorized to represent an insurer with respect to a claim;
             (2)    "Claim file," any retrievable electronic file, paper file, or combination of both related to a claim arising under an insurance policy or contract;
             (3)    "Claimant," an insured or legal representative of an insured, including a member of the insured's immediate family designated by the insured, making a claim under a policy. Unless otherwise specified, claimant does not include a third party claimant;
             (4)    "Comparable motor vehicle," when compared to the insured motor vehicle, a motor vehicle that is of the same manufacturer, same or newer year, similar body style, similar options and mileage, in as good or better overall condition, available for inspection at a

licensed dealer within a reasonable distance of the insured's residence;

             (5)    "Days," calendar days;
             (6)    "Documentation," includes all pertinent communications, transactions, notes, work papers, claim forms, bills, and explanation of benefits forms relative to the claim;
             (7)    "First party claimant," any person, corporation, association, partnership, or other legal entity asserting a right to payment under an insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by the policy or contract;
             (8)    "Investigation," any activity of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract;
             (9)    "Notification of claim," any notification, whether in writing or other means acceptable under the terms of an insurance policy, to an insurer or its agent by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim;
             (10)    "Proof of loss," written proofs, such as claim forms, medical bills, medical authorizations, or other reasonable evidence of the claim that is customarily required of all insureds or beneficiaries submitting the claims;
             (11)    "Reasonable explanation," information sufficient to enable the insured to compare the allowable benefits with policy provisions and determine whether proper payment has been made;
             (12)    "Replacement crash part," sheet metal or plastic parts which generally constitute the exterior of a motor vehicle, including inner and outer panels;
             (13)    "Written communications," includes all correspondence, regardless of source or type that is materially related to the handling of the claim.

     Section 2. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The provisions of this Act set forth minimum standards for the investigation and disposition of first party property and casualty claims arising under contracts or certificates issued to residents of this state and do not apply to claims involving workers' compensation, fidelity, suretyship, or boiler and machinery insurance. Nothing in this Act may be construed to create or imply a private cause of action for violation of this Act nor may be construed to create or imply third party bad faith.

     Section 3. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     No insurer may fail to fully disclose to claimants all pertinent benefits, coverages, or other provisions of a policy or contract under which a claim is presented.

     Section 4. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:


     No claim may be denied on the basis of failure to exhibit property unless there is documentation of breach of the policy provisions in the claim file. No insurer may deny a claim based upon the failure of a claimant to give written notice of loss within a specified time limit unless the written notice is a written policy condition, or claimant's failure to give written notice after being requested to do so is so unreasonable as to constitute a breach of the claimant's duty to cooperate with the insurer.

     Section 5. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     No insurer may indicate to a claimant on a payment draft, check, or in any accompanying letter that the payment is final or a release of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the claimant and the insurer as to coverage and amount payable under the contract.

     No insurer may issue any check or draft in partial settlement of a loss or claim under a specific coverage that contains language purporting to release the insurer or its insured from total liability.

     Any payment of a claim to a claimant shall be made payable to the claimant only and may not include other persons unless either there is written permission given by the claimant or the additional payee is listed as loss payee or mortgagee on the policy. If a claimant or third party claimant requests in writing the inclusion of an additional payee, the insurer shall honor that request.

     Section 6. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Every insurer, upon receiving notification of a claim, shall acknowledge the receipt of the notice within a reasonable period of time. Payment of the claim may be made in lieu of an acknowledgment. If an acknowledgment is made by means other than writing, an appropriate notation of the acknowledgment shall be made in the claim file of the insurer and dated. Notification of a claim given to an agent of an insurer is notification to the insurer.

     A reply shall be made within a reasonable period of time on all other pertinent communications from a claimant which reasonably suggest that a response is expected. The reply must acknowledge receipt of the claim communication and include what steps the insurer intends to take in response to the communication and what steps the claimant needs to take.

     Every insurer, upon receiving notification of claim, shall within a reasonable period of time provide necessary claim forms, instructions, and reasonable assistance to allow the claimant to comply with the policy conditions and the insurer's reasonable requirements.

     Section 7. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as

follows:

     Upon receipt by the insurer of properly executed proofs of loss, the claimant shall, within a reasonable period of time, be advised of the acceptance or denial of the claim by the insurer. No insurer may deny a claim on the grounds of a specific policy provision, condition, or exclusion unless reference to such provision, condition, or exclusion is included in the denial. Any denial shall be given to the claimant in writing and the claim file of the insurer shall contain documentation of the denial as required by §  58-3-7.4.

     If there is a reasonable basis supported by specific information available for review by the division that the claimant has fraudulently caused or contributed to the loss, the insurer is relieved from the requirements of this section. After receipt by the insurer of a properly executed proof of loss, the claimant shall be advised of the acceptance or denial of the claim within a reasonable time for full investigation.

     Section 8. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     If the insurer needs more time to determine whether a claim should be accepted or denied, the insurer shall, within a reasonable period of time, notify the claimant after receipt of the proofs of loss, giving the reasons more time is needed. If the investigation remains incomplete, the insurer shall correspond with the claimant at reasonable intervals and include in that correspondence the reason for needing additional time.

     If there is a reasonable basis supported by specific information available for review by the division for suspecting that the claimant has fraudulently caused or contributed to the loss, the insurer is relieved from the requirements of this section. After receipt by the insurer of a properly executed proof of loss, the claimant shall be advised of the acceptance or denial of the claim by the insurer within a reasonable time for full investigation.

     No insurer may fail to settle claims on the basis that responsibility for payment should be assumed by others except as may be provided by policy provisions.

     Section 9. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     An insurer shall provide written notice to a claimant and a third party claimant of the statute of limitations if the claimant or third party claimant is not represented by counsel and if the claim remains open until sixty days prior to the expiration of the statute of limitations. The notice must be provided no earlier than sixty days prior to and no later than thirty days prior to the expiration of the statute of limitations.

     Section 10. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The insurer shall affirm or deny liability on claims within a reasonable time and shall, within a reasonable period of time, tender payment after affirmation of liability, if the amount of the claim is determined and not in dispute. In claims where multiple coverages are involved, payments which are not in dispute and where the payee is known shall be made within a reasonable period of time.

     Section 11. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     No insurer may require any claimant to submit to a polygraph examination.

     Section 12. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     No insurer may pay or offer to pay a claimant an amount less than what is required under the terms of the policy or any applicable legal requirement. If, after an insurer denies a claim, the claimant objects to the denial, the insurer shall notify the claimant in writing that the claimant may have the matter reviewed by the division and provide the address and phone number of the division.

     Section 13. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Any insurer covering motor vehicles shall provide for settlement of a claim, less any applicable deductible, using one of the following methods:

             (1)    Cost of the repairs;
             (2)    Actual cash value; or
             (3)    Replacement cost.

     If the settlement of a claimant's motor vehicle total loss is on the basis of actual cash value or replacement with a comparable motor vehicle, one of the methods provided in sections 14 to 18, inclusive, of this Act shall apply.

     Section 14. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The insurer may elect to offer a replacement motor vehicle that is a comparable motor vehicle. The insurer shall pay all applicable taxes, license fees, and other fees incident to transfer of evidence of ownership of the motor vehicle paid, at no cost other than any deductible provided in the policy. The offer and any rejection by the claimant shall be documented in the claim file.

     Section 15. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The insurer may, as a means of determining the actual cash value of the motor vehicle, elect a cash settlement based upon the actual cost, less any deductible provided in the policy, to purchase a comparable motor vehicle including all applicable taxes, license fees, and other fees incident to transfer of evidence of ownership of a comparable motor vehicle. Any differences in the claimant's motor vehicle compared to a similar motor vehicle in the local market area that are attributable to normal cleaning and similar minor appearance alterations by a dealer to make the motor vehicle ready for sale may not be used to determine that the vehicle is not comparable. Actual cost may be derived from:

             (1)    The cost of two or more comparable motor vehicles in the local market area if the motor vehicles are available or were available within the last ninety days to consumers in the claimant's local market area;
             (2)    One of two or more quotations obtained by the insurer from two or more licensed dealers located within the local market area if the cost of comparable motor vehicles are not available pursuant to subdivision (1); or
             (3)    Any source for determining statistically valid fair market values that meet all of the following criteria:
             (a)    The source shall give primary consideration to the values of motor vehicles in the local market area and may consider data on motor vehicles outside the area;
             (b)    The source's database shall produce values for at least eighty-five percent of all makes and models for the last fifteen model years taking into account the values of all major options for such motor vehicles; and
             ©)    The source shall produce fair market values based on current data available from the area surrounding the location where the insured motor vehicle was principally garaged, or add data as is necessary, to assure statistical validity.

     If the cost of repair of the motor vehicle is less than the actual cash value of the motor vehicle then the insurer must pay at least the cost of repair. For the purposes of this section, actual cash value may not include an adjustment for salvage. If the claim is paid based upon the cost of repair, the cost of the repair including labor shall be paid to the claimant regardless of whether the motor vehicle is repaired.

     Section 16. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     If the insurer is notified within thirty-five days of the receipt of the claim draft that the claimant cannot purchase a comparable motor vehicle for the market value, the insurer shall reopen its claim file and the following procedures shall apply:

             (1)    The insurer may locate a comparable motor vehicle by the same manufacturer, same year, similar body style, and similar options and price range for the claimant for the market value determined by the insurer at the time of settlement. Any such motor vehicle must be available through licensed dealers;
             (2)    The insurer shall either pay the claimant the difference between the market value before applicable deductions and the cost of the comparable motor vehicle of like kind and quality which the claimant has located, or negotiate and effect the purchase of this motor vehicle for the claimant; or
             (3)    The insurer may elect to offer a replacement in accordance with the provisions set forth in section 14 of this Act.

     Section 17. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The insurer is not required to take action under section 16 of this Act if its documentation to the claimant at the time of settlement included written notification of the availability and location of a specific and comparable motor vehicle. The documentation shall include the motor vehicle identification number.

     Section 18. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Any deductions from actual cash value, including a deduction for salvage if the claimant retains the vehicle, shall be reasonable, measurable, discernible, itemized, and specified as to dollar amount. The basis for the settlement shall be fully explained to the claimant.

     Section 19. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     No insurer may require a claimant to travel an unreasonable distance either to inspect a replacement motor vehicle, to obtain a repair estimate, or to have the motor vehicle repaired at a specific repair shop.

     Section 20. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Each insurer shall include the claimant's deductible, if any, in subrogation demands. Subrogation recoveries shall be shared on a proportionate basis with the claimant, unless the deductible amount has been otherwise recovered. No deduction for expenses may be made from the deductible recovery unless an outside attorney is retained to collect the recovery. The deduction may then be for only a pro rata share of the allocated loss adjustment expense.

     Section 21. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     If partial losses are settled on the basis of a written estimate prepared by or for the insurer, the insurer shall supply the claimant with a copy of the estimate upon which the settlement is based. The estimate prepared by or for the insurer shall be reasonable, in accordance with applicable policy provisions, and in an amount which will allow for repairs to be made in a workmanlike manner. If the claimant subsequently claims, based upon a written estimate which the claimant obtains, that necessary repairs will exceed the written estimate prepared by or for the insurer, the insurer shall pay the difference between the estimates, or, within a reasonable period of time, provide the claimant with the name of at least one repair shop that will make the repairs for the amount of the written estimate. If the insurer designates two or fewer such repairers, the insurer shall assure that the repairs are performed in a workmanlike manner. The insurer shall maintain documentation of all such communications.

     Section 22. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     If the insurer reduces a claim offer or settlement because of betterment or depreciation all information for the reduction shall be documented in the claim file. Each deduction shall be itemized, specified as to dollar amount, and shall be reasonable.

     Section 23. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     If the insurer recommends or offers the repair be done at a specific motor vehicle repair shop, the insurer shall, within a reasonable period of time, cause the damaged motor vehicle to be restored to its condition prior to the loss at no additional cost to the claimant other than as stated in the policy.

     Section 24. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The insurer shall provide reasonable notice to a claimant prior to termination of payment for motor vehicle storage charges. The insurer shall allow reasonable time for the claimant to remove the motor vehicle from storage prior to the termination of payment.

     Section 25. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Unless the insurer has provided a claimant with the name of a specific towing company prior to the claimant's use of another towing company, the insurer shall pay all reasonable towing charges irrespective of the towing company used by the claimant.

     Section 26. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Betterment deductions are allowed only if the betterment deductions reflect the general overall condition of the motor vehicle, considering its age, for either or both of the following:
             (1)    The wear and tear or rust, limited to no more than a deduction of one thousand dollars;
             (2)    Missing parts, limited to no more of a deduction than the replacement costs of the part or parts.

     Betterment is not allowed unless the repairs or replaced parts increase the market value of the motor vehicle as a whole.

     Section 27. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Any deductions set forth in section 25 of this Act shall be measurable, itemized, specified as to dollar amount, and documented in the claim file.

     Section 28. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     No insurer may require the claimant to supply parts for replacement.

     Section 29. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     All replacement crash parts shall be identified and be of the same quality as the original part.

     No insurer may require the use of replacement crash parts in the repair of a motor vehicle unless the replacement crash part is at least equal in kind and quality to the original part in terms of fit, quality, and performance. Any insurer specifying the use of replacement crash parts shall consider the cost of any modifications which may become necessary when making the repair.

     Section 30. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     For any motor vehicle that was purchased as new that is less than two years old on the date of the loss and has less than thirty thousand miles on the odometer on the date of loss, the insurer shall offer to use new original equipment manufacturer parts. For any other motor vehicle, the insurer may, at its option, adjust the loss based upon original equipment manufacturer parts, nonoriginal equipment manufacturer parts, or used parts of like kind and quality.

     Section 31. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     In any property coverage for the roof of a structure, the insurer, in reimbursing the insured for the repairs, shall cover the full cost of the repairs less any applicable deductible. The full cost of repairs includes any removal of all old shingles, provided that those shingles must be removed to complete repair or replacement of damaged shingles or other roof parts. If the roof is covered on a replacement basis or actual cash value basis, the post claim existence of prior damage, except damage paid for under a policy or previously known by the claimant to have been damaged but not reported as a claim, may not be used to reduce the claim payment. Nothing in this Act requires a loss to a roof to be paid on a replacement cost basis if the policy provides for the losses to be reimbursed on an actual cash value basis. The insurer may deduct from the amount owed to repair any damage that occurred prior to the inception of the policy unless the covered loss could not be repaired without also repairing the prior damage.

     For any property coverage for fire and extended coverage policies, when a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making such repair or replacement not otherwise excluded by the policy, shall be included in the loss. The claimant may not be required to pay for betterment nor any other cost except for the applicable deductible.

     Section 32. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     Depreciation reductions, where not otherwise prohibited and where provided for in the policy, may be used but shall be based on the life expectancy of the insured property and reduced by the percentage of age of the property to the life expectancy. Generally accepted industry guides may be used for the calculation of life expectancy, but the actual condition of the insured property shall be taken into account.

     Section 33. That chapter 58-33 be amended by adding thereto a NEW SECTION to read as follows:

     The director may promulgate rules pursuant to chapter 1-26 to carry out the purposes of this Act. In promulgating any rules, the director shall consider the impact of the rule on the cost and availability of property casualty insurance in this state and the degree of protection that the rule will have for the insurance buying public in this state. The rules shall be limited to the following areas of property casualty claims:

             (1)    Definition of terms;
             (2)    Claim handling procedures;
             (3)    Timeliness;
             (4)    Appropriateness of repairs;
             (5)    Determining actual cash value;
             (6)    Notices and communications to claimants; and
             (7)    Valuation."

Moved by:    Turbak
Second by:    Dempster
Action:    Prevailed by voice vote.

MOTION:     AMEND SB 48

48jf
     In the previously adopted amendment (48jc), on the last line of section 30, delete "of like kind and quality." and insert". Any nonoriginal equipment manufacturer parts or used parts specified by the insurer shall be of like kind and quality to the original parts in terms of fit, quality, and performance. Nothing in this section may be construed as limiting the right of a third party claimant to have the vehicle repaired with new, original equipment manufacturer parts."

Moved by:    Turbak
Second by:    Katus
Action:    Prevailed by voice vote.

MOTION:     AMEND SB 48

48je
     In the previously adopted amendment (48jc) at the end of section 9 insert "This section does not apply unless there are active negotiations between the parties sixty days prior to the expiration of the statute of limitations."

      In the previously adopted amendment (48jc) at the end of section 21 insert "This section only applies to personal lines property casualty claims."

     In the previously adopted amendment (48jc) at the end insert:
"
     Section 34. Sections 22 to 30, inclusive, of this Act only apply to automobile insurance claims."

Moved by:    Katus
Second by:    Dempster
Action:    Prevailed by voice vote.



MOTION:     DO PASS SB 48 AS AMENDED

Moved by:    Turbak
Second by:    Katus
Action:    Prevailed by roll call vote.(6-0-1-0)

Voting Yes:    Abdallah, Dempster, Katus, Koetzle, Turbak, McCracken

Excused:    Gray

MOTION:     ADJOURN

Moved by:    Abdallah
Second by:    Koetzle
Action:    Prevailed by voice vote.

Cheri Hauschild

____________________________

Committee Secretary
Royal "Mac" McCracken, Chair