Consumers could wind up paying as much as 40 percent more for auto insurance due to litigation costs under a “bad faith” bill scheduled for a vote in the Senate today, the New Jersey Business & Industry Association (NJBIA) said.

The association is urging legislators to vote “No” on S-2144.

“Let’s be clear: a vote for this bill is a vote to increase insurance premiums across the board, including the mandatory auto insurance coverage all state drivers must carry,” Chief Government Affairs Officer Chrissy Buteas said. “Allowing individuals to sue for something as vague as ‘bad faith’ would be a bad deal for everyone else who has to pay for the increased litigation.

“Driving in New Jersey is expensive enough as it is. Let’s not add another cost burden on residents and businesses,” Buteas said.

According to a report conducted by the independent actuarial firm Milliman, the bill would result in an increase of 20-39 percent for both personal auto insurance and commercial auto insurance policies. Additionally, the firm predicts:

• Commercial Multi-Peril Liability rates would increase by as much as 21 percent;
• Commercial General Liability would increase by as much as 22 percent;
• Commercial Multi-Peril non-liability would increase by 17 percent; and
• Homeowners’ insurance rates could increase by as much as 17 percent.

“Many of our members are very concerned about the overall competiveness and affordability of New Jersey,” Buteas said. “With tax hikes proposed in the budget and several labor mandates and energy regulations signed into law over the last couple of months, employers are already facing dramatic increases in their costs.”

The bill is also unnecessary, Buteas said. Currently, the New Jersey Department of Banking and Insurance has the authority to investigate bad faith complaints and penalize companies that violate the law. S-2144 would allow for individuals to sue for vague offenses like “unreasonable delay in processing a claim,” opening the door for a flood of lawsuits which would be costly to defend against or lead to costly settlements to avoid litigation.
“We do not want to see unscrupulous lawyers target businesses with meritless lawsuits in the hopes of obtaining settlements from companies afraid of litigation costs,” Buteas said. “The ultimate price will be paid by the consumer as premiums will rise to cover either the settlement or litigation costs.”

4 responses to “Bad Faith Bill a Bad Deal for Consumers”

  1. Harold says:

    This new government must be reined in. Tax, spend and more costly, time consuming – wasteful litigation. No companies can survive in NJ under these conditions. It’s going from very challenging to worse, very rapidly. We the business community and the people must stop this immediately.

  2. Dan G says:

    Have they even considered cutting back on spending by looking at what is not working or wasteful?
    Oh yea…..That would mean their jobs would be eliminated!

  3. JD says:

    New Jersey electtorate is full Of educated idiots. You cannot come to a different conclusiion. They voted for a guy who promised to raise taxes. in high tax state (supposedly according to the recent poll 40% Of resudents worry about high properties taxes). Or may
    Be they were high on marihuana and Did not know what they were doing?

  4. Claude says:

    Talk with anyone who can leave the Garden State and they will. High taxes legislation not favorable to business is just a few. If you can leave now, it will not get better