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What if the Insurance Company Does Not Pay Benefits?

Posted by: euser
January 11, 2007
Topic: Minnesota No-Fault Law

According to the provisions of Minn. Stat. § 65B.54, Subd. 1, basic economic loss benefits are paid monthly as loss accrues, with loss denoting the incurrence of income loss, replacement services loss, and survivors’ loss. Basic economic loss benefits are overdue "if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding 31 days and pays them within 15 days after the period of accumulation."

An important consideration in determining whether benefits are overdue is what constitutes "reasonable proof of the fact and amount of loss realized." Typically, the reasonable proof requirement is satisfied when the claimant provides some form of evidence to the insurance company that the claimant’s loss was directly related to the motor vehicle accident, such as medical records or wage loss reports. The reasonable proof requirement is not satisfied if the claimant only notifies the insurer that there is a claim.

If basic economic loss benefits are overdue, Minn. Stat. § 65B.54, Subd. 2 provides that "overdue payments shall bear simple interest at the rate of 15 percent per annum." This interest penalty is in addition to payment of the benefits that the insurance company did not pay. Subsequent case law has held that this 15% interest penalty is not part of the $20,000 in coverage for either medical expense benefits or disability and income loss benefits.

The No-Fault Act does allow an insurance company to terminate benefits if there is a lapse in treatment or disability for twelve consecutive months. However, termination is proper only if the insurer provides language in its insurance contract explaining its right to terminate because of a lapse of treatment.