A petition has been filed with the Office of Administrative Hearings to stop the Minnesota Department of Commerce from seeking to enforce an unadopted rule in violation of state law, according to several insurance groups.
The National Association of Independent Insurers (NAII) and three other insurance trade associations recently filed the petition regarding the department’s Bulletin 2002-3 on mold coverage.
The bulletin prohibited companies from excluding coverage for loss or damage arising out of mold unless an unrestricted exception is made for cases in which the loss or damage from mold directly results from a covered loss. Partial or restricted exceptions that cap or limit the amount of coverage for losses resulting from mold are not permitted. If a company already had an absolute exclusion for mold or a restricted exception, it had to be withdrawn or revised to conform to the department’s new criteria.
For liability coverage for bodily injury and property damage, the department only applied its new criteria to homeowners, mobile homeowners, dwelling owners, personal liability and farm dwelling liability. Companies could not exclude coverage for bodily injury or property damage. If a company already had an absolute exclusion for mold or a cap or sub-limit, it had to be withdrawn or revised to conform to the department’s new criteria.
NAII argued that the wording of this bulletin should be more accurately termed a rule and be made to follow the rulemaking process that involves public input and a comment period.
“The department has inappropriately and unjustifiably circumvented Minnesota’s rulemaking requirements under the Minnesota Administrative Procedure Act,” Laura Kotelman, counsel for NAII, remarked. “The department is not authorized to adopt far-reaching interpretive rules without public input and debate. We are asking that the bulletin be declared an unpromulgated rule and invalidated.”
Minnesota statues governing the Department of Commerce do not provide or imply that the department may regulate insurers through policy pronouncements instead of through promulgated rules. “The department has skirted the rules laid out by the administrative procedures act and should be required to withdraw the bulletin and promulgate it according to the process outlined in the act,” Kotelman added.
Topics Minnesota
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