The New Jersey Supreme Court recently ruled in favor of New Jersey Manufacturers Insurance Co. in two significant cases involving plaintiffs who filed lawsuits against the automobile insurance company for compensation under their uninsured motorist policies.
These extremely important rulings essentially provide insurance companies with the legal right to deny uninsured motorist benefits to individuals insured under their policies in certain cases, spelling profound implications for New Jersey drivers who are injured in motor vehicle accidents involving other drivers who are uninsured or underinsured.
In order to understand the significance of these rulings, one must first grasp the purpose and necessity of uninsured motorist benefits, as well as the associated requirements for this type of coverage as dictated by New Jersey law. The State’s Uninsured Motorist Act requires individuals with Standard Automobile Insurance policies to obtain what is known as “Uninsured Motorist Coverage” to protect the interests of insured individuals who are injured during motor vehicle accidents with other drivers who either do not have auto insurance policies (uninsured) or do not have auto insurance policies with limits that can sufficiently compensate for the costs associated with their injuries (underinsured).
With regard to the recent cases in question, the New Jersey Supreme Court issued its decisions in both cases, with 5-0 rulings in favor of New Jersey Manufacturers Insurance Co. (NJM), on Wednesday, February 18th. The two cases—Badali v. New Jersey Manufacturers Insurance and Wadeer v. New Jersey Manufacturers Insurance—both involved plaintiffs who filed lawsuits against the insurance carrier for acting in “bad faith” after denying compensation under their uninsured motorist benefits.
In the Badali case, Badali was struck by an uninsured motorist and had uninusured insurance coverage through both NJM and Harleysville Insurance Co. Ultimately, the court decided that the costs incurred by Badali should be divided, with each insurance company required to pay half. Although Harleysville followed the court’s instruction, NJM refused, arguing that Badali’s specific policy caps all arbitration awards at $15,000 and that the policy language itself is “fairly debatable.” The State Supreme Court affirmed this argument in its recent decision.
As for the Wadeer’s case, the plaintiffs were initially awarded $255,175 after reportedly being injured in an accident caused by an unidentified vehicle. The sum of their compensation was subsequently reduced to $100,000 to coincide with their policy limit, in addition to the costs and fees associated with obtaining legal representation. However, a court of appeals later overturned the ruling that awarded them payment for legal counsel costs and fees. The Wadeers then filed a bad-faith lawsuit against NJM. In this case, their bad-faith claim was rejected because the court decided that their claim had been fairly litigated and therefore, they were not entitled to pursue any further litigation pertaining to the matter.
The plaintiffs’ attorneys in both of these cases pointed to NJM and other insurance companies’ common use of the “fairly debatable doctrine” to deny uninsured motorist benefits claims. Unfortunately, the New Jersey Supreme Court sided with the insurance company and continued to abide by the precedent of the “fairly debatable doctrine.” So what does this mean for New Jersey drivers one might ask? Ultimately, it means that a skilled and aggressive personal injury attorney is even more essential when you are seeking compensation for damages incurred as a result of a motor vehicle accident.
For additional information related to this subject access the following article: NJ Justices Say Insurers Can Reject UM Arbitration Awards