New Jersey Senate Committee to Consider Proposed Bad Faith Statute on March 4, 2013

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On Monday, the New Jersey Senate’s Commerce Committee will be considering legislation providing a private right of action against insurers “for any violation of the provisions of subsection (9) of section 4 of P.L.1947, c.379 (C.17:29B-4), regarding unfair claim settlement practices, notwithstanding that the insurer did not violate any applicable provision with enough frequency as to indicate a general business practice.” Bill S-2460, styled the “Consumer Protection Act of 2012,” is “intended to incorporate into statutory law certain aspects of New Jersey’s current case law, which recognize private causes of action in first-party and third-party claims regarding the bad faith actions of insurance companies which result in harm to their insureds.” In addition to providing for compensatory damages, the new statute provides that claimants “shall” be entitled to prejudgment interest, reasonable attorneys’ fees and litigation costs and punitive damages. The bill’s authors state that the “bill is not in any way intended to narrow or limit the rights of insureds under established case law to assert a private cause of action for the bad faith actions of insurance companies.” If passed in its current form, the “act shall take effect immediately and shall apply to all claims filed by a claimant on or after October 1, 2012.”