PROTECT JERSEYANS AGAINST INSURANCE FIRM FRAUD

It is time that insurance companies be held accountable when they unreasonably fail to pay a valid claim.

Consumers are protected with warranties when they purchase products in New Jersey. These warranties enable consumers to replace or repair broken or defective products in a timely and efficient manner.

This is not true when purchasing auto, disability, health or property insurance. There are not warranties or remedies for the consumer when insurance companies unreasonably refuse to pay legitimate claims or stall on providing coverage.

An injured party has limited recourse when an insurance company does not pay what is covered by a policy. Often the person continues to pay the bills or do without what was lost or needed. This can place an undue hardship on the policy holder. If a person loses is home as a result of unfair or untimely handling of an insurance claim, there is no effective remedy against the insurance company in New Jersey. If an injured person doesn't have the money to pay the bills, he may not receive necessary medical treatment. Right now the only remedy for the consumer is to retain an attorney, sue the insurance company and bear the brunt of legal fees and other costs.

Clearly, such insurance company behavior shows bad faith. If, at the end of litigation, the consumer prevails, the worst that can happen to an insurer is that it is required to pay the claim it should have paid in the first place without interest or damages for the delay. Insurance companies have tools, including a state prosecutor, to protect against consumer fraud. But who is going to protect the consumer against companies that delay or deny benefits in bad faith?

It is time that insurance companies be held accountable when they unreasonably fail to pay a valid claim in a timely manner. Such bad faith by an insurance company in denying or delaying benefits can have serious physical, emotional and financial ramifications for consumers.

Legislation has been introduced that would change this unfairness. S-265 is co-sponsored by Sens. John Bennett (R-Monmouth) and Richard Codey (D-Essex). The Assembly version is sponsored by Assembly Majority Leader Paul DiGaetano (R-Bergen) and Minority Leader Joseph Doria, Jr. (D-Hudson). The bill says insurers have an obligation to promptly, fairly and equitably settle claims in good faith. It says a claim may be brought against an insurance company for unfair settlement practices based on violations of the law, violations of claim settlement standards or rules of the insurance commissioner.

If the insurance company is found guilty or wrongdoing damages could include, but would not be limited to, the benefits under the policy, interest on the benefits, court costs, reasonable attorney fees, compensation for loss due to the insurance company's delay and punitive damages.

Just as with a refrigerator, washing machine or car, we should be able to buy insurance in good faith.

----------

Jorden N. Pedersen, Jr. is the president of the Association of Trial Lawyers of America-New Jersey and a partner in the law firm of Baker, Pedersen & Robbins, with offices in Hoboken, Newark and Brooklyn.

back to top