Sponsored by:
Assemblyman JON M. BRAMNICK
District 21 (Morris, Somerset and Union)
SYNOPSIS
Prohibits certain provisions in liability insurance policies.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning liability insurance and supplementing Title 17 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Notwithstanding any other law or regulation to the contrary, an insurer authorized to transact liability insurance in this State shall not issue or renew a liability policy that includes any provision that provides that the insurer will not be liable for any loss for any claim based upon the fact that the loss or claim is similar to any fact, circumstance, situation, transaction, event, or wrongful act underlying or alleged in a separate, unrelated proceeding or claim.
b. For the purposes of this section, “claim” means any demand received by an insured seeking damages that results from any incident, occurrence, or wrongful act or an insured’s notice to the insurer of a specific act or omission that the insured reasonably believes may result in a demand for damages.
2. This act shall take effect immediately and shall apply to policies of liability insurance issued or renewed on or after the effective date of the act.
STATEMENT
This bill prohibits an insurer from including in a liability insurance policy a provision that provides that the insurer will not be liable for any loss for any claim based upon the fact that the loss or claim is similar to any fact, circumstance, situation, transaction, event, or wrongful act underlying or alleged in a separate proceeding or claim.
Certain insurance policies include provisions that state that the insurer will not be liable for any loss for any claim based upon or arising out of any same or substantially same or similar fact, circumstance, situation, transaction, event, wrongful act or related wrongful act underlying or alleged in such demand, suit, or other proceeding. In effect, such a provision allows the insurer to deny coverage based on the mere fact that a similar, but unrelated, event to the one being alleged in a claim may have occurred. For example, a medical malpractice insurer could attempt to deny coverage for an alleged claim of medical malpractice based upon a similar occurrence in an unrelated case.
This bill is intended to
prohibit such a provision, sometimes referred to as an “interrelated wrongful
act clause” or “prior and pending proceeding clause,” in liability insurance
policies as it
relates to a similar fact, circumstance, situation, transaction, event, or wrongful
act underlying or alleged in a separate, unrelated proceeding or claim.