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The End Is Near. Statutory Bad Faith Begins in NJ
January 20, 2022
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Well, it finally happened. After a few years of debates and a not insignificant amount of plaintiff lobbying, this week, Governor Murphy signed into law the <em><a href="https://www.wcmlaw.com/2022/01/the-end-is-near-statutory-bad-faith-begins-in-nj/bad-faith/" rel="attachment wp-att-24878">New Jersey Insurance Fair Conduct Act</a></em>. The law creates statutory bad faith in NJ. Fortunately (although this is likely the canary in the coal mine), the law ONLY applies to parties injured in a motor vehicle accident who are entitled to uninsured or underinsured benefits. If the insurer "unreasonably" denies a claim or "unreasonably" delays payment of owed benefits, then the insurer is subject to: (a) actual damages (including trial verdicts) up to 3x the applicable coverage amount; (b) pre and post judgment interest; (c) reasonable attorneys fees; and (d) reasonable litigation expenses. In other words, the insurer has exposure to what are basically "standard" bad faith damages. In terms of "reasonableness", I think the policyholder bar is going to push for 30 day turnarounds. Sounds like fun during this time of the Great Resignation
It's safe to say that we can expect a flood of new lawsuits in 2022 (all the while insurers are trying to comply with the onerous new NY insurance disclosure obligations --<a href="https://www.wcmlaw.com/2022/01/new-ny-insurance-disclosure-obligations-effective-december-31-2021/" title="onerous new NY insurance disclosure obligations"><em>https://www.wcmlaw.com/2022/01/new-ny-insurance-disclosure-obligations-effective-december-31-2021</em>/</a>). The policyholder bar just does a much better job at getting legislation passed -- even when that legislation appears to be a solution in search of a problem.
For more information about this new law, please contact <em><a href="mailto:rcosgrove@wcmlaw.com">Bob Cosgrove</a></em>.