Short-term rental guarantees and reimbursement insurance policies provision and regulation

A bill for an act

relating to insurance; providing for and regulating short-term rental guarantees

and reimbursement insurance policies; proposing coding for new law as Minnesota

Statutes, chapter 59E.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

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[59E.01] SHORT TITLE.

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This chapter shall be known and cited as the "Rental Home Marketplace Guarantees

Act."

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Sec. 2.

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[59E.02] DEFINITIONS.

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(a) For purposes of this chapter, the following terms have the meanings given.

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(b) "Commissioner" means the commissioner of commerce.

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(c) "Person" means an individual or an entity, excluding a state or local governmental

entity.

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(d) "Platform contract holder" means a platform user who is the beneficiary or holder

of a rental home marketplace guarantee.

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(e) "Provider" means:

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(1) a rental home marketplace; or

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(2) a rental home marketplace affiliate or representative who issues or offers as well as

administers, either directly or through a third party, a rental home marketplace guarantee.

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(f) "Reimbursement insurance policy" means an insurance policy issued to a provider,

pursuant to which the insurer agrees, for the benefit of a platform contract holder, to discharge

the provider's obligations and liabilities under the terms of the rental home marketplace

guarantee in the event of the provider's default or nonperformance under the rental home

marketplace guarantee.

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(g) "Rental home marketplace" means a person that:

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(1) provides an online application, software, website, system, or other medium that: (i)

is used to advertise or offer available property to the public, and (ii) connects and enables

platform users' property;

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(2) provides, directly or indirectly, or maintains an online platform by:

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(i) transmitting or otherwise communicating the offer or acceptance of a transaction

between two platform users; or

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(ii) owning or operating the electronic infrastructure or technology that connects two or

more platform users; and

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(3) if the person offers rental home marketplace guarantees, the person offers rental

home marketplace guarantees only in a manner that is ancillary to the conduct of the person's

primary legitimate business or activity.

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(h) "Rental home marketplace guarantee" means a contract or agreement issued in

connection with a rental home marketplace, whether or not the contract or agreement includes

a separate consideration, to reimburse a user sharing property for damages the renter is

responsible for under the rental home marketplace's terms of service, with or without

additional provision for incidental payment of indemnity.

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Sec. 3.

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[59E.03] REQUIREMENTS FOR DOING BUSINESS.

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(a) A provider is prohibited from issuing or offering a rental home marketplace guarantee

unless the provider has made the rental home marketplace guarantee terms available on the

provider's website and complied with this chapter.

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(b) A provider that offers rental home marketplace guarantees must file a registration

with the commissioner on a form prescribed by the commissioner and must pay the

commissioner a $750 fee annually.

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(c) To ensure the faithful performance of a provider's obligations to the provider's

platform contract holders, each provider who is obligated to a platform contract holder shall

insure all rental home marketplace guarantees under a reimbursement insurance policy

issued (1) by an insurer authorized to transact insurance in Minnesota, or (2) pursuant to

sections 60A.195 to 60A.2095.

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(d) Each person handling rental home marketplace guarantee losses on behalf of a

provider must be trained in property damage and loss assessment and interpretation of the

rental home marketplace guarantee terms before handling losses. The training must be

adequate for each person handling rental home marketplace guarantee losses to provide

knowledgeable, fair, and objective service. Providers must maintain records demonstrating

completion of the training under this paragraph by each person handling rental home marketplace guarantee

losses.

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Sec. 4.

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[59E.04] RENTAL HOME MARKETPLACE GUARANTEES ARE NOT

INSURANCE.

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A rental home marketplace guarantee does not constitute insurance and is not required

to comply with other Minnesota insurance laws if the provider complies with this chapter.

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Sec. 5.

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[59E.05] REIMBURSEMENT INSURANCE POLICY.

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(a) A reimbursement insurance policy insuring rental home marketplace guarantees must

clearly state that upon the provider's default or nonperformance under the rental home

marketplace guarantee, the insurer that issued the policy must pay on behalf of the provider

any amount the provider is obligated to pay according to the rental home marketplace

guarantee.

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(b) A reimbursement insurance policy is subject to the laws and regulations governing

termination and nonrenewal of insurance policies in Minnesota. The termination of a

reimbursement insurance policy does not reduce the issuer's responsibility for rental home

marketplace guarantees issued by providers before the termination's effective date.

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(c) A provider is the agent of the insurer that issued the reimbursement insurance policy.

The insurer retains the right to seek indemnification or subrogation from the provider if the

insurer pays or is obligated to pay the platform contract holder the amount the provider was

obligated to pay under the rental home marketplace guarantee. This chapter does not prevent

or limit the insurer's right in this regard.

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Sec. 6.

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[59E.06] CONSUMER PROTECTION AND DISCLOSURES.

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(a) A rental home marketplace guarantee must include a statement in substantially the

following form: "This rental home marketplace guarantee is not an insurance contract."

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(b) A rental home marketplace guarantee must contain a statement in substantially the

following form: "The provider's obligations are backed by a reimbursement insurance policy.

If the provider is unable or fails to perform on the provider's contractual obligation under

a rental home marketplace guarantee within 90 days after the date proof of loss is filed, a

platform user is entitled to make a claim directly against the insurance company subject to

the terms of the policy."

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(c) A rental home marketplace guarantee must be written in clear, understandable

language and must specify the terms, limitations, exceptions, conditions, or exclusions,

including conditions governing transferability or termination.

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(d) A provider is prohibited from making, permitting, or causing to be made a false or

misleading statement, or deliberately omitting a material statement whose omission is

considered misleading, in connection with offering or advertising a rental home marketplace

guarantee.

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Sec. 7.

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[59E.07] ENFORCEMENT.

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The commissioner must ensure rental home marketplace guarantees comply with this

chapter pursuant to the commissioner's powers under chapter 45. The commissioner must

ensure reimbursement insurance policies insuring rental home marketplace guarantees

comply with applicable law pursuant to the commissioner's powers under chapters 45 and

60A.

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