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The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) announced it is continuing its support of a critical piece of consumer protection legislation, commonly known as the “New Jersey Insurance Fair Conduct Act,” as it gears up for another round in the legislature.
The bill (S-2144/A-4293) seeks to establish a private cause of action for first-party claimants regarding certain unfair or unreasonable practices by their insurer. Most significantly, it aims to do away with the state’s current system of making a claimant prove that an insurer’s actions were of such a frequency as to indicate a general business practice. Once an insurer violation has been established, the bill would entitle the claimant to “actual damages caused by the violation including, but not limited to, actual trial verdicts” and “prejudgment interest, reasonable attorney’s fees and all reasonable litigation expenses.”
The bill passed the New Jersey Senate in June 2018. At that time, the legislation called for a plaintiff to be awarded treble damages if an insurer was shown to be in violation. However, the Assembly Financial Institutions and Insurance Committee amended the legislation in early January 2020 to remove this provision. A new, pre-filed version of the assembly bill (A-1659) seeks to reinstate the treble damages language.
AASP/NJ President Jerry McNee believes that passage of the Act would prompt greater accountability from the insurance industry.
“The New Jersey Insurance Fair Conduct Act seeks to address everything that some insurers do on a daily basis,” said McNee. “It would help prevent the ‘Wild West’ mindset we have now where carriers shoot from the hip and see where the bullets land.”
However, McNee is quick to express apprehension over recent attempts to remove the ability for successful plaintiffs to receive treble damages.
“If I did something as simple as not have the customers sign work authorizations, I’m liable for treble damages. It’s acceptable for me to have to be responsible for my obligations and liability as a shop owner, but it’s unacceptable for insurers to be held to the same standard? It’s concerning that this bill could be chipped away as it moves forward to the point where it won’t have any teeth.”
A longtime advocate for the Act, AASP/NJ Executive Director Charles Bryant is pleased to see that the current legislation still seeks to substantially change what is deemed a “general business practice” with respect to insurer violations in the state.
“Passage of this legislation will finally put an end to the need to demonstrate that an insurer has committed enough violations to be considered a general business practice before actions can be taken against it,” said Bryant. “The current ‘general business practice’ mentality is similar to allowing a motorist to run a red light multiple times before they can get a ticket. This legislation aims to address a situation that is in dire need of change.”
Bryant is also confident that more claimants will file actions against insurers once the financial provisions of the Act are finally signed into law.
“Because claimants currently can’t get back their court costs or attorney’s fees, insurance companies are gambling that they will just go away or won’t sue. As a result, carriers can get away without paying what they owe.”
For more information on AASP/NJ, visit aaspnj.org.