The new law got the nod from the NJ General Assembly and Senate at the start of this week.
A new auto insurance law was just approved by the New Jersey General Assembly and Senate, focused on improved enforcement of fair practices.
The law allows people injured in car accidents to file civil lawsuits against insurers.
The New Jersey Insurance Fair Conduct Act makes it possible for auto insurance policyholders to sue their insurers if they are unreasonably denied a claim for underinsured or uninsured coverage. They may also do so if the insurer has violated NJ laws banning deceptive or unfair practices or acts. Additionally, policyholders can file a lawsuit in the case of an unreasonable coverage or benefit payments delay, without having to prove that the actions of the insurer were usual business practice.
Before this bill passed into law, New Jersey had formerly required multiple violations before there would be legal enforcement. Moreover, it was the responsibility of the Commissioner of Banking and Insurance to pursue the legal action, not the policyholder. This bill was passed by the Assembly 45-22-4 and by the Senate 23-13. It became immediately effective and is a Title 17 of the Revised Statuses supplement.
The auto insurance fair practices law allows plaintiffs to sue for up to three times to applicable coverage.
Under the new law, policyholders can sue for an amount no greater than three times the applicable coverage amount, pre- and post-judgment interest, reasonable litigation expenses, and reasonable attorney fees.
Among the benefits the law was designed to achieve was to provide regulations that insurers would follow in order to avoid litigation to speed up the repair estimate and cost negotiation processes. For instance, they hope that insurers will take greater care to comply with the already existing law requiring vehicle damage inspections prior to repair to take place inside seven days.
“If insurance companies knew that they could get fined and have to pay court costs and attorney fees and things like that they would follow the law,” explained Charles Bryant, executive director of the Alliance of Automotive Service Providers/New Jersey (AASP/NJ) in an RDN report before the auto insurance bill had passed.