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New bill would prevent insurance fraud

A new bill (S-2840)—sponsored by Sen. Joseph A. Lagana, D-38—was introduced in the state Senate on Aug. 20, 2020, that would clarify that a violation of the New Jersey Insurance Fraud Prevention Act would result in the loss of motor vehicle liability insurance coverage in certain circumstances.

Specifically, if someone violates any provision of the New Jersey Insurance Fraud Prevention Act, his or her motor vehicle liability policy would be voided, and the insurance carrier under such policy would not be responsible for any damages claimed by that person, or any innocent person who was injured.

Under this bill, if an innocent person is injured by a vehicle for which the policy has been voided (as result of a violation of the New Jersey Insurance Fraud Prevention Act), that person would be permitted to seek recovery under the uninsured/under-insured motorist portion of any private passenger automobile insurance policy for which the innocent person is eligible for coverage. If no coverage exists, then the innocent person may seek recovery from the Unsatisfied Claim and Judgment Fund. Additionally, the innocent person still would be entitled to bring an action for recovery against the person who engaged in fraudulent conduct.

This legislation has been referred to the Senate Commerce Committee for further consideration. To monitor the status of these and other bills, see the PIAdvocacy bill tracker.

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