Governor Signs Bad Faith Statute For Auto Insurers

New Jersey Governor Phil Murphy, who has been sworn in for a second term, has signed into law some legislation to allow policyholders to sue their auto insurers for as much as three times the applicable coverage amount.

SB 1559, also known as the New Jersey Insurance Fair Conduct Act (IFCA), will allow injured parties to file lawsuits against their insurer for "an unreasonable delay or unreasonable denial" of an insurance claim.

It also allows policyholders to sue their insurer if they believe the company violated the New Jersey Unfair Claims Settlement Practices Act (UCSPA), which governs ‘unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.’

Prior to the bill, the state previously required multiple violations before any legal enforcement would be allowed.

Also under previous rules, it was the responsibility of the Commissioner of Banking and Insurance to file the lawsuits, not the policyholders.