Florida law allows first-party claimants to recover attorneys’ fees in the event litigation is required for an insured to be made whole.1 New Jersey has a similar rule with a dramatic difference. New Jersey Rule 4:42-9(a)(6) provides:

(a) Actions in Which Fee Is Allowable. No fee for legal services shall be allowed in the taxed costs or otherwise, except:
* * * *
(6) In an action upon a liability or indemnity policy of insurance, in favor of a successful claimant.

At first glance, it appears that any policyholder may seek attorneys’ fees when an insurer fails to fulfill its obligations requiring litigation. The reasoning is simple to understand: When a policyholder suffers property damage, it is difficult to restore their property if attorneys’ fees are deducted from the recovery. Hence, a fee statute provides a policyholder with the opportunity to recover those fees against the insurance carrier that underpaid or wrongly denied their claim.

Unfortunately, New Jersey courts have refused to apply Rule 4:42-9(a)(6) to first-party actions. Instead, New Jersey currently only allows recovery for attorneys’ fees to third-party claimants.2

It is well documented that Superstorm Sandy caused catastrophic damages to the Garden State, and recently carriers are getting more attention for mistreating their policyholders as thousands of lawsuits have been filed. As a result of these lawsuits, policyholders’ advocates are getting the opportunity to show the judges that first-party claimants are deserving of the same remedies under Rule 4:42-9(a)(6) as third-party claimants.

1 See Florida Statute 627.428.
2 Giri v. Med. Inter-Ins. Exch. of New Jersey, 251 N.J. Super. 148, 151-52, 597 A.2d 561, 562-63 (N.J. Super. Ct. App. Div. 1991).