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"In 2008, the Minnesota Legislature created a private cause of action for bad faith in first-party insurance." Friedberg v. Chubb & Son, Inc., 800 F. Supp. 2d 1020, 1025 (D. Minn. 2011) (Keyes, United States Magistrate Judge). The Minnesota statute is Minn. Stat. § 604.18 (West; Westlaw current with legislation effective through February 22, 2023 from the 2023 Regular Session. Some statute sections may be more current, check credits under statute on Westlaw for details.).
The Eighth Circuit quickly and clearly summarized the statute in 2022:
To make a bad faith claim, the insured must establish both that the insurer lacked a reasonable basis for denying the insurance benefits and that the insurer knew it lacked a reasonable basis for denying benefits or acted in reckless disregard of the lack of a reasonable basis.
Wobig v. Safeco Ins. Co. of Am., 40 F. 4th 843, 848 (8th Cir. 2022) (construing and applying Minn. Stat. § 604.18 subd. 2(a)).
Or, as the Minnesota Supreme Court put it in a slightly lengthier interpretation, reaching the same result:
Several things are clear from the plain text and structure of the statute. First, the burden rests with the insured to prove that the insurer violated the standard of conduct. Second, to prevail, the insured must establish two independent facts: (1) the insurer did not have a reasonable basis for denying the benefits of the insurance policy, and (2) the insurer either knew it lacked a reasonable basis for denying the benefits or it recklessly disregarded the fact that it lacked a reasonable basis for denying the benefits.
Peterson v. W. Nat'l Mut. Ins. Co., 946 N.W.2d 903, 910 (Minn. 2020).
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