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NJ Legislature Passes Bill Aiming to Enforce Fair Auto Insurance Practices


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NJ Legislature Passes Bill Aiming to Enforce Fair Auto Insurance Practices

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Collision Repair | Insurance | legal

A new law passed Monday by the New Jersey General Assembly and Senate gives motorists injured in car accidents the right to file civil lawsuits against auto insurers.

Under the New Jersey Insurance Fair Conduct Act, policyholders can now sue if they are unreasonably denied a claim for uninsured or underinsured coverage or if insurers violate state laws that prohibit unfair or deceptive acts or practices. Lawsuits may also be filed where there is an unreasonable delay in coverage or payment of benefits without having to prove the insurer’s actions as normal business practice. The state previously demanded multiple violations before enforcement and it was up to the state’s Banking and Insurance Commissioner to take legal action.

The Assembly passed the 45-22-4 bill and the Senate passed it 23-13. It became effective immediately and supplements Title 17 of the Revised Articles.

Plaintiffs are entitled to trial judgments not exceeding three times the applicable cover amount, pre- and post-trial interest, reasonable attorneys’ fees, and reasonable litigation costs.

For repairers, this means pre-existing regulations can be followed initially by insurers to avoid lawsuits and in turn speed up estimates and cost negotiations. For example, insurers could pay more attention to the already existing law that requires vehicle damage to be inspected within seven working days before repair.

“If insurance companies knew they could be fined and pay court and attorney fees and the like, they would follow the law,” Charles Bryant, executive director of Alliance of Automotive Service Providers/New Jersey (AASP/NJ) told RDN. December.

AASP/NJ Chairman of the Board of Directors Dennis Cataldo believes the law should go further and insurance companies should not have to go to court over enforcement of regulations by the state’s Department of Banking and Insurance.

Despite claims the law would increase premiums, the bill says rate increases will not be passed on to consumers as a result of insurers’ compliance with the law. The statutory auditor can determine whether an insurer’s rates are constitutionally adequate on the basis of the law.

“If the commissioner determines that a rate reduction is necessary, the commissioner will determine an appropriate rate adjustment,” the law states.

PICTURES

Featured Image: New Jersey State Capitol Building in Trenton. (Credit: Aneese/iStock)

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