Levinson Axelrod, P.A.: New Law Gives New Jersey Motorists with Uninsured, Underinsured Claims Right to Sue Insurers Over Bad Faith

EDISON, N.J., Feb. 3, 2022 /PRNewswire/ -- Motorists in New Jersey now have the right to sue auto insurance carriers who act in bad faith when handling their uninsured or underinsured motorist claims, thanks to legislation recently signed into law by Gov. Phil Murphy.

The Insurance Fair Conduct Act creates a private cause of action allowing insurance consumers to bring first-party claims against auto insurance companies that deny, delay, or underpay legitimate claims in bad faith. As it is currently written, the new law applies only to uninsured / underinsured motorist claims and will allow claimants to sue their auto insurance carriers and "related parties" over:

1. Unreasonable delays or claim denials;
2. Violations of the NJ Unfair Claims Settlement Practice Act.

Viewed as a major victory for insurance consumers, the new law helps level the playing field for motorists who file claims with their own insurance companies after suffering covered losses in motor vehicle accidents caused by uninsured or underinsured motorists, including personal injuries.

As noted by Michael B. Fusco, Partner at the New Jersey law firm of Levinson Axelrod, P.A.:

"The new law will protect the injured in New Jersey from having their first-party claims handled in "bad faith" by the insurance companies. The fact is that there are more and more drivers on the road these days with minimal insurance coverage on their auto policies. This is giving rise to more and more cases resulting in first-party Underinsured Motorist (UIM) claims against our client's own insurance companies."

Prior to the passing of the Insurance Fair Conduct Act, there were few meaningful ways to hold insurers accountable for acting in bad faith when handling UM / UIM claims filed by their policyholders. By giving insurance consumers the right to sue, however, the new law offers a meaningful avenue for accountability and a deterrent for carriers obligated to fairly process claims. According to Fusco:

"To date, Courts have been hesitant to impose penalties on carriers that act in bad faith. It's refreshing to see that the legislature and Gov. Murphy have come to the protection of consumers, who through no fault of their own, have wound up in these circumstances.

All we're asking is that the carriers act in "good faith" – this law now simply imposes potential penalties if they do not. Since the insurance companies lobbied vigorously against the new law, it's almost an admission that they have been acting in "bad faith" on certain claims up until this time."

UM / UIM Coverage
For years, safety and consumer rights advocates have expressed concern over high rates of uninsured and underinsured drivers and the need for drivers to carry UM / UIM coverage as part of their auto insurance policies. According to a 2021 study from the Insurance Research Council (IRC), as many as one in eight drivers were uninsured in 2019. Many others carry low-limit liability policies that often fail to provide meaningful recompense to victims injured by policyholders. Some fear conditions created by the COVID-19 pandemic, such as economic insecurity and increased reliance on travel by vehicle, could be making the problem worse.

By carrying UM / UIM coverage, drivers can protect themselves if they suffer losses caused by uninsured drivers or losses which exceed the policy limits of the underinsured. These claims are filed with a person's own insurance provider, rather than the at-fault driver's, which means that carriers have a duty to act in good faith and fair dealing.

Levinson Axelrod, P.A. is a U.S. News "Best Law Firms" ranked personal injury and workers' compensation practice that has been serving residents across New Jersey since 1939. Comprised of award-winning trial lawyers and NJ Supreme Court Certified Specialists, the firm has recovered over $1 billion in compensation for victims injured in a range of accidents, including motor vehicle collisions caused by uninsured and underinsured drivers. For more information, visit www.NJLawyers.com. 

Media Contact: Michael Fuscomfusco@njlawyers.com

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SOURCE Levinson Axelrod, P.A.