Members of the Alliance of Automotive Service Providers of New Jersey (AASP/NJ) recently gathered for “Understanding the Role of the Division of Insurance,” an association-hosted virtual event that welcomed industry attorney Patrick J. McGuire, Esq. for a discussion on the do’s and don’ts of successfully submitting complaints and inquiries to the New Jersey Department of Banking and Insurance (NJDOBI).
As explained during the presentation, there are three avenues one can take to help improve the industry: legislation, litigation and education. McGuire stressed the latter as the key approach.
“In my philosophy, education is the cheapest and most effective way in doing this. You know going in what the circumstances are, what your rights are and what [your rights] aren’t.”
Additionally, he suggested having a solid working knowledge of the laws governing the industry can make the complaint process more productive and save time from being spent on issues that do not have a high probability of success.
McGuire used the example of aftermarket crash parts and pointed out New Jersey’s Administrative Code prohibits an insurance company from requiring the use of such parts unless they are warrantied by the manufacturer; at least like kind and quality to OEM parts in terms of fit, quality and performance; and the insurer pays for any modifications that may become necessary in making the repairs because of the use of such parts.
Based on this, McGuire said a complaint would have a better chance of success if it stated how a proposed aftermarket crash part failed to meet one or more of these standards.
McGuire also addressed what appears to be an inconsistency in New Jersey law. He explained that New Jersey, like most states, generally recognizes there is a fundamental legal difference between the rights and obligations of a first-party insured who makes a claim for coverage under the collision or comprehensive section of a policy (i.e., contract law) and the rights and obligations of a third-party claimant who makes a claim under the liability section of the at-fault driver’s policy (i.e., tort law).
Therefore, the aftermarket crash parts provision found in the collision section of the at-fault party’s policy generally has no bearing on liability claims paid to an innocent third-party claimant.
“It is the same logic as to why a first-party insured has to pay a deductible and a third-party claimant doesn’t,” he said.
Nevertheless, and unlike other states, the New Jersey Administrative Code provisions applicable to aftermarket crash parts lump the two types of claims together.
McGuire said he did not have the opportunity to...