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Insurance Bad Faith Bill Passes New Jersey State Senate

June 11, 2018

On June 7, 2018, the New Jersey State Senate passed the “New Jersey Insurance Fair Conduct Act” by a 21-14 margin.  The legislation is significant because, if enacted, it would for the first time establish a private, statutory bad faith cause of action against insurers in New Jersey.  Prior attempts to introduce similar bills, for close to a decade, have all died in the Senate.  While the bill still has a long way to go to become law, its progress should be monitored closely.

The legislation appears focused on “first party claimants,” creating exposure with regard to, among other things, claims for property damage, personal injury protection (“PIP”) claims, and claims for uninsured motorist (“UM”) or underinsured motorist (“UIM”) benefits.  If enacted into law, it would expose insurers to legal liability for either (1) an “unreasonable delay” or “unreasonable denial” of a claim for the payment of benefits under an insurance policy; or (2) any violations of the provisions of the New Jersey Unfair Claims Settlement Practices Act, N.J.S.A. 17:29B-4.  Notably, the proposed legislation does not provide any guidance as to what would constitute an “unreasonable delay” or “unreasonable denial” in the claim handling process. 

Moreover, the bill seeks to create a private right of action for violations of the existing Unfair Claims Settlement Practices Act and establish so-called “super penalties” against insurers.  These penalties include mandatory treble damages, prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses.  The bill, with its “super penalties,” seeks to bring New Jersey in line with some of the most pro-policyholder jurisdictions in the United States, including Washington.

A copy of the draft legislation passed by the New Jersey State Senate may be downloaded here.

If you have any questions about this proposed legislation and its potential impact,
please contact:

Brian O'Donnell

Lance Kalik

Glenn Curving

Michael O'Mullan

Anthony Zarillo, Jr.

Tracey Wishert 

Michael Rossignol

Maura Smith

Caroline Brizzolara

Anne Mohan

Marcia Wefelmeier

Jeffrey Beyer 

Lisa Jarmicki

Peter Perkowski

Margriet Schaberg 

Our Team

Jeffrey M. Beyer

Jeffrey M. Beyer
Partner

Glenn D. Curving

Glenn D. Curving
Partner

Lance J. Kalik

Lance J. Kalik
Partner

Brian E. O'Donnell

Brian E. O'Donnell
Partner

Michael P. O'Mullan

Michael P. O'Mullan
Partner

Peter M. Perkowski, Jr.

Peter M. Perkowski, Jr.
Partner

Michael J. Rossignol

Michael J. Rossignol
Partner

Maura C. Smith

Maura C. Smith
Partner

Tracey K. Wishert

Tracey K. Wishert
Partner

Anthony J. Zarillo, Jr.

Anthony J. Zarillo, Jr.
Partner

Caroline Brizzolara

Caroline Brizzolara
Of Counsel

Anne M. Mohan

Anne M. Mohan
Counsel

Marcia Miller Wefelmeier

Marcia Miller Wefelmeier
Counsel

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