Clarifies the violation of "New Jersey Insurance Fraud Prevention Act" results in loss of motor vehicle liability insurance coverage in certain circumstances; provides coverage for innocent persons in certain situations involving insurance fraud.
Under this legislation, if the insurance coverage is voided because of fraud, any innocent person injured by a vehicle is provided primary access to compensation through their uninsured motorist coverage or, if that is unavailable, through the Unsatisfied Claim and Judgment Fund. This provision underscores a shift in liability away from insurers who are entangled in fraud cases, thus directing the focus towards ensuring that injured parties are supported and compensated, regardless of the circumstances surrounding the policy's voiding.
Senate Bill 2391 amends the 'Motor Vehicle Security-Responsibility Law' in New Jersey to clarify the consequences of violating the 'New Jersey Insurance Fraud Prevention Act.' The bill stipulates that if a person violates any provision of this act, their motor vehicle liability insurance coverage will be voided, removing any financial responsibility from the insurance carrier for claims related to that individual. This ensures that innocent persons who suffer injuries in accidents involving such violations have alternative recourse.
One notable point of contention is the removal of verbal threshold requirements for access to the Unsatisfied Claim and Judgment Fund for those whose insurance claims were invalidated due to the fraud. This change could potentially streamline the claims process for injured parties but raises concerns among insurers about increased liabilities. Critics argue that while protecting innocent victims is vital, the lack of restrictions following fraudulent activities could encourage further abuse of the system. Overall, the bill highlights the delicate balance between protecting consumers from fraud and ensuring the sustainability of the insurance system.