Recently, the New Jersey Senate passed S-2144, entitled the New Jersey Insurance Fair Conduct Act. While the bill still must go through the Assembly and be signed by the Governor, this is much welcomed news by insureds and their representatives. Since 1993, insureds have had basically no right to bad faith claims against their insurers under the blanket of the Picket v. Lloyd “fairly debatable” standard.1

That standard set the bar so low for the insurance carrier to overcome that most cases could only proceed under the breach of contract claim. The new bill states:

a. In addition to the enforcement authority provided to the Commissioner of Banking and Insurance pursuant to the provisions of P.L. 1947, c.379 (C.17:29B-1 et seq.) or any other law, a claimant may, regardless of any action by the commissioner, file a civil action in a court of competent jurisdiction against its insurer for:

(1) an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy; or

(2) any violation of the provisions of section 4 of P.L. 1947, c.379 (C.17:29B-4).

b. In any action filed pursuant to this act, the claimant shall not be required to prove that the insurer’s actions were of such a frequency as to indicate a general business practice.

c. Upon establishing that a violation of the provisions of this act has occurred, the plaintiff shall be entitled to:

(1) actual damages caused by the violation of this act;

(2) prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses; and

(3) treble damages

This could be a huge win for insureds in New Jersey if it passes as-is. Not only could a Plaintiff recover extra-contractual damages but those damages can also be tripled (treble damages).

In addition, removing the requirement to show a pattern or practice by the insurance company allows a single litigant the ability to collect under this act. Stay tuned for more developments as this bill makes its way through the New Jersey legislature.

I leave you with a quote from Matt Mead, Governor of Wyoming who stated: Connectivity is important to our state, including the opportunity for our citizens to see our legislative process at work. Let’s hope the New Jersey legislature does the right thing here and passes this bill.
1 Picket v. Lloyd, 131 N.J. 457 (1993).