Governor indicators insurance coverage dangerous religion statute for auto insurers

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New Jersey Gov. Phil Murphy, who has been sworn in for a second term, has signed some legislation allowing policyholders to sue their auto insurers for up to three times the applicable coverage amount.

SB 1559, also known as the New Jersey Insurance Fair Conduct Act (IFCA), will allow injured parties to bring claims against their insurer for “unreasonable delay or unreasonable denial” of an insurance claim. It also allows policyholders to sue their insurer if they believe the company has violated the New Jersey Unfair Claims Settlement Practices Act (UCSPA), which governs “unfair methods of competition and unfair and deceptive acts or practices in the insurance business.”

Prior to the bill, the state previously required multiple violations before legal enforcement would be allowed. Even under previous rules, it was the responsibility of the Commissioner of Banking and Insurance to bring the lawsuits, not the policyholders.

Policyholders who can demonstrate a breach of the ICFA are entitled to compensation for actual damages, including court judgments, and up to three times the applicable coverage – in addition to pre- and post-judgment interest, court costs, and attorneys’ fees.

A blog post on the website of the law firm Troutman Pepper says New Jersey joins other states, such as Pennsylvania, in introducing bad faith statutes for policyholders, allowing them to sue insurers. The law firm has noted that while the IFCA attempts to penalize “inappropriate” conduct by insurers, it does not elaborate on what specific conduct is inappropriate. Troutman Pepper also raised questions about certain specifics — or lack thereof — of the law, such as: B. how much time an “unreasonable delay” means or what an “unreasonable denial of benefit” is when the facts of the law are unsettling.

“While the IFCA is little more than a hazy roadmap, it offers insureds a new avenue of recourse against their carriers and exposes auto insurance companies and their employees to high-profile litigation in New Jersey,” Troutman Pepper concluded in his blog post. “Given the many uncertainties surrounding what the law means and how it will be interpreted, insurers should consider reviewing their bona fide claims practices for objective reasonableness and compliance with New Jersey’s UCSPA.”

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