Bad Faith Law From NJ Assembly Finance Committee Is Structured to Strike a Blow to Auto Carriers
In June of 2018, the New Jersey Senate passed a bad faith bill, marking the first time a bad faith bill made it out of the Senate. Entitled "New Jersey Insurance Fair Conduct Act," the bill provides “claimants” with a private cause of action for conduct deemed “unfair and discriminatory” as delineated in the New Jersey Unfair Claim Settlement Practices Act, N.J.S.A. 17:B29-4. In the Senate version, the term "claimants" was defined to essentially include anyone who had a direct claim to benefits under an insurance policy. It also permitted treble damages and counsel fees.
The Senate bill then went to the Assembly Financial Institutions and Insurance Committee for review. The committee amended the bill with significant changes.
The Assembly’s version, number A1659, narrows the class of claimants to uninsured or underinsured motorist claimants:
2. As used in this act:
"First-party claimant" or “claimant” means an individual corporation, association, partnership or other legal entity injured in motor vehicle accident and entitled to the uninsured or underinsured motorist coverage of an insurance policy asserting an entitlement to benefits owed directly to or on behalf of an insured that insurance policy.
The Assembly amendments include removal of the treble damage component but permit the claimant to receive the entire jury verdict, even if it exceeds the policy limit:
Provide that a plaintiff is entitled to actual damages caused by a violation of the bill, which shall include, but need not be limited to, actual trial verdicts, and prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses.
This change is obviously intended to supersede the long standing rule enunciated in Taddei v. State Farm Indem. Co., 401 N.J. Super. 449 (App. Div. 2008). Taddei holds that a UM/UIM claimant is limited to the policy limit in a bad faith situation. The attorney’s fee remedy is in addition to the existing availability of attorney’s fees pursuant to the Offer of Judgment Rule.
The latest Legislative Calendar, dated April 10, 2020, does not have the bill on it.
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