The New Jersey legislature has introduced a series of pro-policyholder insurance reform bills as the one-year anniversary of Superstorm Sandy nears. The latest, introduced on Friday, seeks to establish a private bad faith claim for unfair practices in the settlement of insurance claims arising out of a declared disaster. The bill, A4382, would allow a property owner to pursue a lawsuit against an insurer for violations of the state's Unfair Claim Settlement Practices Act, even if the insurer did not violate the act with enough frequency as to indicate a general business practice. The legislation defines a "declared disaster" as a significant natural, technological or civil event that results in the declaration of a state of emergency by the governor or president of the United States.

Successful claimants would be entitled to compensatory damages regardless of policy limits, punitive damages, prejudgment interest, attorney's fees and litigation costs. The proposed law would take effect immediately upon enactment and would apply to all claims filed on or after October 1, 2012, which would encompass Sandy-related claims.