After many years of significant efforts by the New Jersey Association for Justice and other consumer groups, New Jersey Governor Murphy finally signed the Insurance Fair Conduct Act. The Act
provides a first-party cause of action against insurance companies
when they unreasonably delay, deny or underpay legitimate claims in
uninsured or underinsured motorist cases. For those of you who may not know, UM (uninsured motorist coverage) benefits are those benefits that are paid to a driver or passenger in an automobile when a phantom (or unidentified) vehicle or an uninsured vehicle causes injury or damage to a person in an insured vehicle. UIM (Underinsured Motorist Coverage) is that which protects a person for bodily injury or property damage when the at fault party lacks sufficient coverage.
For years Insurance Companies in New Jersey have not had to promptly pay on these claims to their First party insureds because there was no reason to pay these claims quickly and promptly. If they waited long enough perhaps their insureds died or had other accident making those claims less valuable. There was no downside to the insurance company waiting it out or offering significantly less than the actual value of the case. Why was that? Because no damages accrued to the company over and above the actual coverage that the insured had. For instance, if an insured had a $100,000 available UIM claim against their own insurance company for a claim which ultimately received a verdict of $1 Million the most the insurance company would ever have to pay was the $100,000. The Insurance Fair Conduct Act puts teeth into Trial Counsel insistence that the Insurance Company pay fair and adequate settlements to an Uninsured or underinsured party when appropriate. The greatest enhancement is the expectation of treble (triple) damages, Attorney Fees as well as damages and costs if the Company violates the Fair Practices Act.
The Law States:
In addition to the enforcement authority provided to the Commissioner of Banking and Insurance pursuant to the provisions of P.L.1947, c.379 (C.17:29B-1 et seq.) or any other law, a claimant may, regardless of any action by the commissioner, file a civil action in a court of competent jurisdiction against its insurer for:
- An unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy; or
- any violation of the provisions of section 4 of P.L.1947, c.379 (C.17:29B-4).
- In any action filed pursuant to this act, the claimant shall not be required to prove that the insurer’s actions were of such a frequency as to indicate a general business practice.
- Upon establishing that a violation of the provisions of this act has occurred, the plaintiff shall be entitled to:
- actual damages caused by the violation of this act;
- prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses; and
- treble damages.
My practice consists of significant numbers of UM/UIM cases. Having this arrow in my quiver allows for the prompt resolution of numerous cases and a significant hammer for those cases where an insurance company decides to withhold a reasonable offer or delay the same. Should anyone have any questions about these types of cases please call Mitchell H. Portnoi at (908)228-8800. Thank you.
