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N.J. Legislature Proposes Direct Cause of Action Against Insurers Who Dodge Disaster Claims

Per The NJ Law Journal:

"A bill proposed in Trenton would give New Jersey victims of disasters like Hurricane Sandy a private right of action against their insurance companies over improper handling of their claims.

"Individuals as well as businesses and other legal entities would be entitled to sue over a direct or assigned right to payment for a contingency or loss covered by an insurance policy.

"The bill, A-4382, filed Sept. 9, would cover not only natural disasters but also technological or civil calamities that result in a declared state of emergency by the governor or president.

"Insureds would be able to recover their full damages, regardless of coverage limits, as well as legal fees, expenses and punitive damages.

"The claims would be based on the kind of conduct that is already defined in the state insurance law as 'unfair claim settlement practices,' which include:

• misrepresenting pertinent facts or policy provisions concerning coverage;
• failing to respond "reasonably promptly" to claims-related communications;
• failing to adopt and implement reasonable claims investigation standards;
• compelling insureds to sue for coverage by offering substantially less than the amounts ultimately recovered in litigation; and
• failing to make a good-faith attempt "to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear."

Full article after the jump...