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New Jersey Insurance Fair Conduct Act Passed, On Governor’s Desk

Article by:  Daniel Inadomi, Esq.

On January 10, 2022, the New Jersey Senate passed S.B. 1559, known as the New Jersey Insurance Fair Conduct Act (“Act”), which establishes a private cause of action for first-party claimants against an insurer for “unreasonably” denying or delaying claims for uninsured or underinsured motorist benefits.  The Act also permits lawsuits to be filed for violations of New Jersey’s Unfair Trade Practices Act (NJ Rev. Stat § 17:29B-4).

The text of the Act does not define “unreasonable” conduct.  Thus the courts will be left to interpret what constitutes an unreasonable denial or delay of a claim.

The Act defines “insurer” as “any individual, corporation, association, partnership or other legal entity which issues, executes, renews or delivers an insurance policy in this State, or which is responsible for determining claims made under the policy.”

An insured who successfully demonstrates a violation of the Act will be entitled to recover “actual damages,” which includes “actual trial verdicts that shall not exceed three times the applicable coverage amount,” pre-and post-judgment interest, reasonable attorney’s fees, and reasonable litigation expenses.

Having cleared both houses, S.B. 1559 will be sent to Governor Phil Murphy for his consideration.