Legislation that would rewrite the insurance-law definition of bad faith could drive away the kind of game-changing innovative companies New Jersey needs, NJBIA’s Chrissy Buteas argues in this Asbury Park Press op-ed.
If enacted, the bill could hike insurance rates by as much as 40 percent. The bill, S-2144, has already passed the Senate while its companion, A-4293/3850, is awaiting action in the Assembly Insurance Committee.
As Buteas explains:
“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.
“The unfortunate reality for many companies, particularly good actors, is settling the case out of court often makes more financial sense — even if the defendant is convinced the case is winnable. Opportunistic lawyers will have free reign to target businesses with baseless lawsuits in the hopes of obtaining unjustified, lucrative settlements. The bill certainly offers a financial incentive to do so, as it provides for payment of actual damages, all litigation costs (including attorney fees), and triple damages.”