On January 10, 2022, the New Jersey State Assembly and Senate passed the New Jersey Insurance Fair Conduct Act (S.B. 1559), which would permit bad faith lawsuits by those injured in automobile accidents against insurers for “an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy.” The bill awaits Gov. Phil Murphy’s consideration.

Under a Standard Policy, New Jersey motorists are required to have uninsured coverage in the amount of $15,000 for single-person injuries, $30,000 for injuries of all persons involved in an accident, and $5,000 for property damage. Underinsured Motorist coverage is available as an option in New Jersey.

If signed, the New Jersey Insurance Fair Conduct Act would allow potential damages up to a maximum of three times the coverage amount, in addition to pre- and post-judgment interest and reasonable attorney fees and litigation expenses. The law would also bar passing on rate increases to policyholders as a result of complying with it. Opponents of the bill have criticized it for not defining the term “reasonable,” which will lead to increased litigation costs for insurance carriers.

More information regarding the New Jersey Insurance Fair Conduct Act can be found at the New Jersey Legislature’s website.

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