Insurance: Governor Christie Signs An Important Insurance Law

By: Donna Russo, Esq.

On January 28, 2011, Governor Christie signed S-191 which mandates that when an injured party and a PIP carrier seek recovery from a tortfeasor’s policy which is not sufficient to pay both claims, the injured party is to be made whole first. This law reverses a very troubling NJ Supreme Court decision, Fernandez v. Nationwide Mutual Fire Ins. Co., 199 NJ 591 (2009) which gave priority to the insurance company and if there was not enough coverage, leaving the injured party to get less of an insurance recovery and exposing the insured to personal liability if the injured party sought to to be made whole.

The Fernandez case presented major problems for insureds who were not aware that their coverage could be diluted by NJSA 39: 6A-9.1, a law which permits an auto carrier to seek reimbursement of PIP benefits paid from any insured tortfeasor that was not required to have PIP coverage. Examples of such tortfeasors could be tavern owners and owners of commercial vehicles. In catastrophic injuries, it is not unusual for PIP benefits of $250,000 to be expended for severe injuries. Prior to S-191, if the tortfeasor had a limited policy, the PIP reimbursement would be paid leaving the injured party with often not enough coverage to make him whole. The tortfeasor was thus exposed to personal liability because his expected insurance coverage for the injury was reduced.

Russo & Kieck has insurance law attorneys located in Hackensack, New Jersey representing clients in Paramus, Saddle River, Fort Lee, Paterson, Clifton, Rutherford, Glen Rock, Englewood, Mahwah, Midland Park, Rutherford, Wyckoff, New York City and all areas of Bergen, Passaic, Hudson and Essex Counties. Schedule a consultation by contacting us at 201-342-3100.