Efforts have been made, since Hurricane Sandy, to broaden the remedies available to consumers who feel they have been wronged by the claim practices of insurance carriers. These efforts have failed in each of their prior versions. A-231 sponsored by Assemblypersons Reed Gusciora, Timothy Eustace, and Marlene Caride will be reviewed by the Assembly Financial Institutions and Insurance Committee on December 10, 2015. The bill has a narrow scope of relief, providing for a private civil action in addition to the enforcement authority of the Commissioner of Banking and Insurance only in regard to claims arising out of a declared disaster. In the event a carrier were to violate N.J.S.A. 17:29B-4(9) the wronged insured may recover the full amount of damages regardless of the coverage limits of the policy along with pre-judgment interest, attorneys’ fees, and all reasonable litigation expenses from the date of institution of the action as well as punitive damages.
THE STATUTORY REQUIREMENTS ARE ENUMERATED AS:
(9) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following:
(a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
(c) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(d) Refusing to pay claims without conducting a reasonable investigation based upon all available information;
(e) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
(f) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
(g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;
(h) Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;
(i) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;
(j) Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made;
(k) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
(l) Delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
(m) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
(n) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;
(o) Requiring insureds or claimants to institute or prosecute complaints regarding motor vehicle violations in the municipal court as a condition of paying private passenger automobile insurance claims.
The attorneys of Craig, Annin & Baxter have testified before legislative committees on pending legislation and have participated in working groups with the Legislature in drafting legislation. If you wish to discuss this or any other pending legislative matter give us a call at 856-795-2220.