Insurance Fair Conduct Act Allows NJ Residents To Sue Their Car Insurance Company For Bad Faith

In January 2022, Governor Phil Murphy signed into law the New Jersey Insurance Fair Conduct Act (IFCA) which allows drivers to sue their automobile insurance provider who handle their uninsured (UM) or underinsured (UIM) motorist claims in bad-faith.  Under your policy’s UM and UIM coverage, also known as “first-party benefits,” you may be able to file a claim against your own car insurance provider if you are hurt in a motor vehicle accident through someone else’s fault and they do not have enough insurance coverage (or, worse yet, none at all) to fairly compensate you for your injuries. Under the IFCA, your own insurance company must treat your UM or UIM claim honestly, competently, and without undue delay if you file one against them for injuries or damages you have sustained.

What is the NJ Insurance Fair Conduct Act

The NJ Insurance Fair Conduct Act (IFCA) allows an injured person who was involved in a motor vehicle accident to sue their own insurance company for UM/UIM benefits if it engages in the following behavior:

  • When the insurer unreasonably delays the payment of benefits; or
  • When the insurer unreasonably denies a claim for benefits payment in bad faith; or
  • Plainly breaches the New Jersey Unfair Claims Settlement Practice Act. Such violations include, among others, a carrier failing to promptly communicate and investigate a claim, failing to issue a coverage determination within a reasonable time, refusing to pay claims without conducting a reasonable investigation based upon all available information, and compelling policyholders to institute litigation in pursuit of their claims

How does the IFCA Assist Drivers with Insurance Companies?

The New Jersey Insurance Fair Conduct Act (IFCA) now provides for a new private cause of action for “unreasonable delay” or for “unreasonable denial” of an insured’s UM/UIM claim. The IFCA sets forth an express, statutory bad faith claim against an insurer. Prior to the enactment of this statute, New Jersey only recognized bad faith for UM/UIM claims under common law. The IFCA also essentially now provides for a private cause of action for any violation of the New Jersey Unfair Claims Settlement Practices Act. Given its broad reach, including the allowable damages permitted under the statute, the IFCA provides greater relief to a potential successful claimant than under common law.

What are the Damage Payments from the Insurance Fair Conduct Act?

If it is determined that an insurer violated the New Jersey IFCA, the insured individual may file for damages which includes:

  • Actual damages up to three times the actual policy coverage brought on by the insurance company’s violation of this act; and
  • Interest before and after the judgment, reasonable attorney fees, and reasonable litigation costs and expenses. 

In an effort to provide greater protections to insureds, IFCA forbids insurance companies to increase rates for insureds who comply with the new law and file bad faith lawsuits.  

Struggling with your personal injury or car accident claims in New Jersey? Contact Mazie Slater

An experienced personal injury attorney can help you navigate your insurance company’s maze of delay tactics and make sure you receive all you are entitled to, or perhaps more. Our firm has extensive experience dealing with insurance companies and has a proven track record of litigating motor vehicle accident cases. Many personal injury attorneys are quick to agree to settlement offers that may not be in the best interest of their clients. At Mazie Slater Katz & Freeman, we work closely with our clients to ensure that they receive the financial compensation they deserve.