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The New Jersey Insurance Fair Conduct Act (IFCA)
The state legislature has passed a bill that will reshape insurance bad faith litigation in New Jersey going forward. Governor Murphy officially signed senate bill 1559 into law recently, which is titled The New Jersey Insurance Fair Conduct Act (IFCA).
The Act establishes a private cause of action for claimants who are injured in a motor vehicle accident for insurance bad faith in the handling and payment of claims for uninsured motorist (UM) and underinsured motorist (UIM) benefits.
Under the New Jersey IFCA, a claimant may file a lawsuit against an insurer for:
- an unreasonable delay or unreasonable denial of a claim for coverage or for payment of benefits; or
- any violation of the provisions of section 4 of a separate statute, the New Jersey Unfair Claims Settlement Practices Act (N.J.S.A. 17:29B-4), which governs unfair methods of competition and unfair and deceptive acts or practices.
In addition, the law also notes 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. If the plaintiff establishes that the insurer violated provisions of this Act, plaintiff is entitled to:
- actual damages caused by the violation of this act which shall include, but need not be limited to, actual trial verdicts that shall not exceed three times the applicable coverage amount
- pre- and post-judgment interest, reasonable attorney’s fees, and reasonable litigation expenses.”
WHAT IS BAD FAITH INSURANCE
People purchase insurance to protect themselves against economic losses that they can incur because of property damage and/or personal injuries. as well as protection from lawsuits that could result in economic losses.
When a person pays their insurance premiums, they are owed specific duties by the insurer. This includes a duty to provide coverage, a duty to uphold the terms of the policy, and a duty to pay any valid claims that are covered by the policy. In some cases, an insurance company fails to adhere to its implied or express duties that it owes to its insured policy holders.
Insurance companies in New Jersey and across the country are held to a high standard because:
- If an insurance company denies, delays, or undervalues an insurance claim, the policyholder could experience significant financial hardship.
- Insurance companies are large corporations often worth billions of dollars that employ hundreds of experienced corporate attorneys. This power renders most policyholders defenseless in a legal dispute.
IMPLIED DUTY OF GOOD FAITH OR FAIR DEALING
All insurance companies have an implied duty of good faith and fair dealing.
In a general legal sense, every contract contains an implied duty of good faith and fair dealing. This duty requires that neither party will do anything that will destroy or injure the right of the other party to receive the benefits of the contract.
“There is no specific definition, however, of this duty and courts have discretion to determine its scope. When deciding whether the duty of good faith and fair dealing was breached, courts analyze the facts and determine what is fair under the circumstances.” (American Bar Association)
As it relates to insurance, the policyholder agrees to pay their premiums and the insurance company agrees to help that policyholder financially in the event of an accident. The implied duty of good faith and fair dealing means the insurance company will not do anything to avoid paying the policyholder’s accident-related costs.
THE BOTTOM LINE
First, please watch this quick video.
Next, double-check your auto insurance policy and ensure you have an adequate amount of Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage. We suggest the maximum available, but certainly no less than $100,000 in coverage.
Without this coverage, as personal injury lawyers, we are unable to help you if you are in an accident with someone that has little or no insurance. Regardless of how seriously injured you may be, without your policy having UM and UIM protection, there is little we can do to help get you compensation.
With this new law, we will be in an even better position to help our clients with UM and UIM protection get compensation for their injuries. If the insurance companies act in bad faith in your case, we will know it and use this new law to ensure they act fairly.
Please call us today to discuss any questions at 908-352-2323.
Sources:
https://www.njleg.state.nj.us/bill-search/2020/S1559
MINTZ & GEFTIC – New Jersey Personal Injury Law Firm
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