On January 18, 2022, Governor Phil Murphy signed The New Jersey Insurance Fair Conduct Act (S-1559/A-1659) into law to be effective immediately. That law, in pertinent part, provides as follows:
[A] claimant, who is unreasonably denied a claim for coverage or payment of benefits, or who experiences an unreasonable delay for coverage or payment of benefits, under an uninsured or underinsured motorist policy by an insurer may… file a civil action in a court of competent jurisdiction against its automobile insurer for (1) an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy; or (2) any violation of… [N.J.S.A. 17:29B-4].
Entitled “Unfair claim settlement practices,” N.J.S.A. 17:29B-4(9) prohibits the following practices, among others:
- Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
- Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;
- Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
In its most basic form, the goal of this law is, as the name implies, to force insurance companies to treat its customers fairly when dealing with claims for bodily injured that either exceed the value of the actual tortfeasor’s policy limits, known as an “Underinsured claim,” or when the tortfeasor has no coverage (or cannot be located), known as an “Uninsured claim.”
The law passed when the legislature observed over many years that insurance companies were either unreasonably denying or unreasonably delaying the payment of valid claims, leaving automobile collision victims no choice but to simply wait or file a lawsuit against their own insurance company. This forced victims for years to incur needless expenses both in terms of hard costs for their attorneys, and time preparing both the liability and damages portions of their cases.
What this law allows for, based upon the specific facts of the case, is for a cause of action separate from your bodily injury claim. Meaning, if the elements of the Act are met, the insurance company can be held liable for the cost of delaying or denying your claim.
This Act is an important step forward in New Jersey. It helps the victims in these scenarios because it prompts their own insurance company to act in good faith to resolve claims, or face a possible consequence. Insurance issues can be very complex, and if you are facing similar issues, you should contact an attorney to discuss your options.
The Law Office of Mitchell H. Portnoi, P.C. concentrates its practice on Personal Injury, Workers’ Compensation, and frequently deals with insurance companies in these potential bad faith scenarios. We are always happy to provide a free consultation to discuss your rights. Just call 908-228-8800 and ask for either Mitchell H. Portnoi or Kyle S. Reed.