Apr 26, 2019

Action needs to be taken on the PIANJ’s top priority duty-of-care bill before May 13

PIANJ’s signature duty-of-care legislation (S-2475/A-2034) is on Gov. Phil Murphy’s desk. The legislation would standardize the duty of care in New Jersey. Currently, insurance producers can be held to a fiduciary standard in civil cases. This means producers can be held strictly liable for any mistake they make, no matter how small. The current standard prevents producers from using a vital legal defense: comparative negligence.

Comparative negligence is a rule for allocating fault and/or damages when both parties to a suit are at least somewhat negligent. The truth is that things are rarely black and white. Comparative negligence accounts for the gray. Let’s use a real:life example:

You have a client who always had purchased purchase flood insurance. Recently, however he paid off his mortgage and he is no longer required to purchase the insurance. You present him with flood quote, but he refuses the coverage. In the five subsequent years, when you remarket the client’s other policies you also provide him with a flood quote. He refuses the coverage each time. Finally, after five years, you decide to stop providing flood quotes. Of course, that happens to be the year he has a flood loss. He sues you claiming that had he been offered flood insurance that year he would have purchased it. Under the current fiduciary standard, you could be strictly liable. You didn’t offer flood insurance that year, therefore, you could be found 100% at fault. 

Under a comparative negligence standard you could provide evidence that the client was offered flood insurance in the previous five years and refused each time. Do you, the producer, still bear some of responsibility? Yes, but under comparative negligence so does the client. Comparative negligence puts some onus on clients to take responsibility for the choices they made regarding their insurance.

PIANJ believes that insurance producers should be expected to exercise ordinary and reasonable care and skill in renewing, procuring, binding or placing insurance, and are fully liable for negligent actions, but should not held responsible for the negligent actions of others.

The governor must take action on the bill by Monday, May 13, 2019. PIANJ asks you to tell the governor that New Jersey needs to adopt a reasonable standard of liability for producers. To make your voice heard, click here.