What is the New Jersey Insurance Fair Conduct Act?
The New Jersey Insurance Fair Conduct Act is a law that mandates that an insurance company who is providing underinsured or uninsured motorist benefits to an individual who is involved in a motor vehicle accident treat that claimant fairly.
As stated above, the insurance fair conduct act applies to a person who is involved in a motor vehicle accident and is able to recover underinsured or uninsured motorist benefits from their own insurance carrier. This situation occurs when a person is involved in a car accident and suffers an injury. In some circumstances, the individual who is responsible for the accident may not have adequate insurance coverage to cover all of the harms and losses that the injured person has suffered. In that circumstance, the hurt individual is able to go to their own insurance company and file a claim for underinsured or uninsured motorist benefits. Essentially, the individual’s own insurance company will step into the shoes of the person who caused the accident and pay damages up to the insurance policy limits.
The insurance fair conduct act mandates that the insurance company who provides underinsured or uninsured motorist coverage treat the claimant fairly and not engage in certain conduct that is prohibited by the statute.
The Act defines unfair conduct as “a claimant who is unreasonably denied a claim for coverage or payment of benefits, or who experiences an unreasonably delay for coverage or payment of benefits, under an uninsured or underinsured motorist policy by an insurer”
The Act specifically states that no rate increase shall be passed on to the claimant or policyholder as result of a claim under this law.
Finally, the act states that if a claimant does suffer from an unreasonable delay or denial of coverage, the claimant may be able to recover from the insurer the actual damages caused by a violation of the act, which can include the actual trial verdict even if goes beyond the policy, prejudgment interest and attorney’s fees.
How is This law different from previous New Jersey law?
The major change in this law is that under previous New Jersey law, an individual who filed an underinsured or uninsured motorist claim in court was always limited to the coverage amount on their policy regardless of the specific facts and circumstances or the conduct of their insurance company. Under the new law, if an insurance company acts unfairly as set forth above, the plaintiff may take their case to trial and may be able to recover the amount of the verdict from the insurance company, up to three times the coverage amount, as well as reasonable attorney fees and expenses.
Does this law apply to all cases?
The short answer is no. The act only applies to underinsured and uninsured motorist complaints that are filed in connection with motor vehicle accidents. This specific law does not cover other civil and negligence claims that may involve insurance companies.
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If you or someone you know has been involved in a car accident and has further questions regarding the New Jersey Insurance Fair Conduct act, contact our firm today. Our firm will only charge a legal fee if we successfully recover money on your behalf. All consultations are completely free.
