Insurance bad faith is when an insurance company denies coverage without a good reason, often forcing the policyholder to jump through hoops and wait unreasonable amounts of time for coverage. In NJ, there is a specific law that allows lawsuits for bad faith, but it applies only to some limited areas of insurance; other insurance bad faith claims might be handled differently.
Under a 2022 law called the New Jersey Insurance Fair Conduct Act, victims of insurance bad faith can sue for any “unreasonable” delays or denials, which is a pretty low bar that benefits victims. However, this only applies to uninsured motorist and underinsured motorist coverage (UM/UIM). For other first-party car insurance benefits or insurance benefits from other types of insurers, the case would essentially be filed as a breach of contract case that accuses the defendant of specific bad acts, including a violation of the duty of good faith.
For help with your bad faith insurance claim, call the NJ personal injury lawyers at Legal Care New Jersey today at (732) 838-9769.
Suing for Bad Faith Insurance Under the IFCA in NJ
The New Jersey Insurance Fair Conduct Act (IFCA) was introduced in 2022 to help victims of insurance bad faith sue their insurance companies when it comes to unreasonably denied or delayed benefits for UM/UIM coverage. This law is pretty narrow in scope in that it covers bad faith insurance only for UM/UIM benefits and not other no-fault insurance, homeowners insurance, flood insurance, or other various areas of insurance. Even so, it creates a pretty clear-cut system that our Newark personal injury lawyers can use to get your case heard.
New Jersey’s case law on bad faith insurance claims for UM/UIM claims needed this specific law put in place in order to make it clear that victims of bad faith insurance can indeed sue their insurance carrier. This law also created a pretty low bar, deeming any “unreasonable” denials or “unreasonable” delays grounds for a lawsuit. In other states or in other bad faith insurance lawsuits, you would usually need to prove that the insurance company was denying your claim intentionally with a bad motivation, but this “unreasonableness” standard is much friendlier to your lawsuit.
In a lawsuit under the IFCA, you allege that your insurance carrier simply isn’t getting back to you in a reasonable amount of time or that they were taking actions that unreasonably denied your claim, such as “losing” the record of your initial claim, canceling the policy after you made the claim, “losing” records of your past premium payments, or making up other excuses to deny your claim. If you can prove that they did this, then the IFCA says you can get damages for up to three times what the insurance claim was supposed to pay you – often referred to as “treble damages” – as well as the costs of litigation, attorney’s fees, and interest.
Other Insurance Bad Faith Claims in NJ
UM/UIM coverage is only a particular area of compensation that is not going to come up in every car accident case, let alone all insurance claims. If you were unfairly denied insurance benefits under a different type of insurance policy, you may still be able to sue on the grounds that the insurance company breached your contract.
An insurance policy is itself a contract, and you can usually sue an insurance company for failing to follow the terms of the policy. However, this usually requires a higher showing than what you can claim under the IFCA.
In most insurance bad faith claims, you will point to some type of deceptive or fraudulent practices. These claims are called “bad faith” claims because the insurance company in the case breaches what’s known as a duty of good faith – the requirement that all insurance companies make a good faith effort to pay insurance claims that properly fall within the scope of the policy. This duty was established under NJ law in a 1993 case.
NJ law has a list of unfair practices, and it makes committing one of these acts illegal, but this law does not give victims of these practices a cause of action (i.e., a right to file a lawsuit for them). Even so, this list of unfair practices can help form grounds for an insurance bad faith lawsuit.
Some examples of bad behaviors on this list include discrimination, unfair settlement practices, ignoring communications, denying claims without investigations, unreasonable delays, undercutting claims, not offering explanations of denials, failing to track complaints, and more. The list also clearly points out that just because a specific practice is not listed on this list does not mean it is not an unfair practice.
Damages for Other Insurance Bad Faith Claims in NJ
If you are successful in filing a different type of insurance bad faith claim, you should at least be entitled to the payments the insurance policy should have paid out. If they undercut your claim, then you should get the difference paid to make up the rest of the full payout. If they refused to pay you at all, this should result in full payment.
Although there is no law specifically authorizing up to triple this amount as damages, courts in NJ are permitted to issue “punitive damages,” which can potentially include treble damages. You could also be entitled to the other damages you can get in an IFCA claim, such as attorney’s fees and interest, but always talk to a lawyer about the specifics of your case and what damages can be paid for the specific legal case you are filing.
Call Our Bad Faith Insurance Lawyers in NJ Today
If your insurance claim was unfairly denied, call (732) 838-9769 for a free case assessment with Legal Care’s Trenton personal injury lawyers.
