'Bad faith' insurance bill will yield costly, frivolous lawsuits
Insurance costs are a central component to the affordability challenges both residents and businesses face in New Jersey.
Policyholders in the Garden State currently pay among the highest average premiums in the nation. Instead of trying to find solutions that would lessen the financial burden, the New Jersey Legislature recently introduced a bill that could cause these already exorbitant rates to skyrocket and threaten the ability of businesses to operate in the state.
Assembly bill A-4293/3850 would rewrite the legal definitions of good faith and bad faith in a way that would open the floodgates for frivolous lawsuits based on bad faith claims and could increase insurance costs by as much as 40 percent. This “bad faith” bill would allow individuals additional opportunities to sue insurance companies for minor delays in processing claims.
The legislation is so vague and overly broad that overzealous attorneys would be able to sue insurance companies for normal mistakes that occur in the ordinary course of business.