Insurance policyholders in New Jersey presently have no ability to sue their insurance companies for violations of each state's claim handling guidelines - New Jersey's Unfair Claim Settlement Practices Act, N.J. Admin. Code tit. 11, 2-17.6 and 2-17.7. Although the New Jersey statute prohibit insurance companies from engaging in unfair claim settlement practices, the state does NOT allow policyholders to privately sue their insurance company to enforce the laws or seek damages for a violation. Instead, the only protection for the policyholder is through the state Department of banking and Insurance. Unfortunately, the state will only take action when an insurance company engages in a pattern of violations demonstrating that the mishandling of claims is a general business practice. Hopefully, that may soon change.
On January 8, 2013 and January 28, 2013, a pair of bills was re-introduced in the New Jersey Senate and Assembly, respectively, authorizing a private right of action by any policyholder directly against its insurance company for a violation of New Jersey's claim handling guidelines, regardless of any action by the Department of Banking and Insurance and notwithstanding that the insurer did not violate the guidelines with enough frequency to constitute a general business practice.
Senate Bill 2460, introduced by Senators Nicholas P. Scutari (D-Middlesex) and Jennifer Beck (R-Monmouth), and Assembly Bill 3710, introduced by Assemblywoman Linda Stender (D-Middlesex), are identical in text and seek to codify New Jersey case law recognizing private causes-of-action for first- and third-party bad faith claims handling, as set out in Pickett v. Lloyd's, 131 N.J. 457 (1993) and Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474 (1974). Under the bills, an insured may recover:
- the full amount of damages - without regard
to policy limits;
- prejudgment interest, reasonable attorney's
fees and litigation expenses; and
- punitive
damages on a showing of actual malice or willful and wanton
disregard by clear and convincing evidence. If passed, the bills
would take effect immediately, and apply to all claims filed after
October 1, 2012 - thus ensuring application to Superstorm Sandy
insurance claims.
In order for the bills to become law, they must first make it through Senate and/or Assembly committees. The committees will review and discuss the proposed bills, then consider any necessary revisions. If the bills pass through the committees, they will be debated for a floor vote. New Jersey Senate Bill 2460 has been pending before the Senate Commerce Committee since January 8, 2013. New Jersey Assembly Bill 3710 has been pending before the Assembly Financial Institutions and Insurance Committee since January 28, 2013.
These bills are being aggressively opposed by the insurance industry. The only chance they have of being passed is if our elected officials hear from us, demanding we be given the ability to protect ourselves and force the insurance companies to provide the insurance coverage we paid for!!
To find out how to contact your State Senator and Assembly person use this website:
http://www.njleg.state.nj.us/members/legsearch.asp
www.sfhlaw.com
