USA Herald - Early this year, the New Jersey Legislature passed Senate Bill 1559 called the “New Jersey Insurance Fair Conduct Act” (“IFCA”) that created a statutory, individual cause of action for insurance bad faith in the handling and payment of claims for uninsured motorist/underinsured motorist ("UM/UIM") benefits. New Jersey Governor Phil Murphy signed the IFCA into law.

Under the new rules of the IFCA legislation, “ an individual injured in a motor vehicle accident and entitled to the uninsured or underinsured motorist coverage of an insurance policy” can now file suit against an insurer who has “unreasonably denied” the insured’s claim for coverage. This injured party has new legal standing to assert a claim against the driver’s insurance courier.

Under the IFCA, an individual can bring a lawsuit against the insurer if they “experience an unreasonable delay for coverage or payment of benefits.”

Beyond a shadow of a doubt, the new IFCA rules are a significant transformation in New Jersey's first-party bad faith law. Under IFCA, a “first party” is a person directly involved in a motorist accident. These laws were typically governed under the standard of review set forth in Pickett v. Lloyd’s, 131 N.J. 457 (1993).

For a first-party claim, bad faith revolves around the insurance company's ability to process a claim in a reasonable amount of time. Insurance companies generally argue that their need to conduct an investigation into the claim and obtain a valuation of the claim constitutes a reasonable amount of time. Still, this new legislation levels the playing field a bit more, by putting further responsibility on the insurance giants to timely address these matters involving UM/UIM claims.

Insurers beware, the IFCA also provides that any plaintiff that successfully brings a claim under IFCA shall be entitled to actual damages caused by the violation of  IFCA, reasonable attorneys fees and costs, and pre-and post-judgment interest.

Given these new private rights of action, insurance providers would be wise to ensure that their claims-handling guidelines and best practices act in accordance with New Jersey law, and are in compliance with the new rules set forth under the IFCA.