HF3972

Purpose

• Establish a new framework called the Rental Home Marketplace Guarantees Act to regulate guarantees offered through rental home platforms for short-term rentals.
• Require guarantees to be backed by a reimbursement insurance policy (not considered insurance itself) and overseen by the Minnesota Commissioner of Commerce.
• Create consumer protections, clear disclosures, and registration requirements for providers offering these guarantees.

Key Definitions

• Commissioner: the commissioner of commerce.
• Platform contract holder: the platform user who benefits from or holds the rental home marketplace guarantee.
• Provider: the rental home marketplace or a related affiliate/representative that issues or administers the guarantee.
• Reimbursement insurance policy: an insurance policy that pays on behalf of the provider when the provider fails to fulfill the guarantee.
• Rental home marketplace: a platform or service that advertises, offers, and connects users with rental properties and may offer guarantees as part of its service.
• Rental home marketplace guarantee: a contract backing a renter’s damages or related obligations under the platform’s terms of service, with or without separate indemnity payments.

Main Provisions

• Prohibition and requirements to operate:
  • A provider may not issue a rental home marketplace guarantee unless the guarantee terms are available on the provider’s website and the provider complies with the chapter.
  • Providers offering guarantees must register with the commissioner and pay a $750 annual fee.
  • Providers must insure all guarantees under a reimbursement insurance policy issued by a Minnesota-licensed insurer (or as otherwise allowed by state law).
• Nature of the guarantee:
  • A rental home marketplace guarantee is not insurance, but must be backed by a reimbursement insurance policy.
  • The policy’s purpose is to pay amounts the provider owes under the guarantee if the provider defaults or fails to perform.
  • Insurers may seek indemnification or subrogation from the provider if they pay under the policy.
• Policy specifics:
  • The reimbursement insurance policy must state that it pays on behalf of the provider for the guaranteed obligations.
  • The policy is subject to standard termination/nonrenewal laws; the insurer’s responsibility continues for guarantees issued before termination.
  • The provider acts as an agent of the insurer; insurers reserve rights to subrogate.
• Consumer disclosures and language:
  • Each guarantee must clearly state: (a) it is not insurance, (b) obligations are backed by a reimbursement insurance policy, and (c) if the provider fails to perform within 180 days after proof of loss, a platform user can file a claim directly with the insurance company under the policy terms.
  • Guarantees must be written in clear, understandable language and outline limits, conditions, exclusions, and transfer/termination rules.
  • Providers may not make false or misleading statements or omit material facts related to the guarantee.
• Enforcement:
  • The commissioner has authority to ensure compliance with the chapter and the applicable insurance and consumer protection laws.

Consumer Protections & Disclosures

• Clear labeling that guarantees are not insurance.
• Disclosures that the guarantee is backed by a reimbursement insurance policy.
• A 180-day period after proof of loss for consumers to pursue a claim with the insurer.
• Plain-language, non-misleading terms and explicit details about transferability, termination, and any limitations or exclusions.

Enforcement & Oversight

• The Minnesota Commissioner of Commerce oversees compliance with this chapter.
• The commissioner also ensures the reimbursement insurance policies backing guarantees comply with applicable laws under relevant chapters.

Significance and Potential Impacts

• Creates a distinct regulatory category for short-term rental guarantees separate from traditional insurance.
• Shifts risk management from providers to a reimbursed insurance framework while retaining consumer protections.
• Increases regulatory transparency for platform users and platform operators through required disclosures and registration.

Relevant Terms - rental home marketplace guarantee - reimbursement insurance policy - provider - platform contract holder - rental home marketplace - not insurance - Commissioner of Commerce - Minnesota Statutes chapter 59E - registration - proof of loss - transferability - termination - subrogation - clear language disclosures - consumer protection - short-term rental guarantees - platform users - insurer authorized to transact insurance in Minnesota