If enacted, S-2460 would create a new cause-of-action for policyholders to file suit against insurers for 'bad faith.'   Proponents argue that this bill will help those who have been affected by Superstorm Sandy by codifying existing case law.  In reality, this legislation creates a new cause of action beyond current case law and threatens to add uncertainty and greater consumer costs to New Jersey's homeowners' insurance market:

• Very few victims of Sandy will be helped.  Those who lacked flood coverage, had inadequate coverage limits, or could not afford their deductible could not file suit under this bill.

• Policyholders would be able to recover damages in excess of the terms of their insurance contract.  In addition, they would be able to file for attorneys' fees, court costs, and prejudgment interest dating to the time the suit was filed.   

• All New Jersey insurance customers, including businesses which purchase commercial insurance, will pay higher insurance premiums as a result.