Sponsored by:
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
Assemblyman ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
Co-Sponsored by:
Assemblyman Webber, Assemblywomen Carter, Speight and Flynn
SYNOPSIS
Differentiates certain legal services from traditional insurance products.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning legal insurance and amending P.L.1981, c.160.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1981, c.160 (C.17:46C-3) is amended to read as follows:
3. As used in this act:
a. "Commissioner means the Commissioner of Banking and Insurance.
b. "Insurer means any person who obtains a certificate of authority in accordance with the provisions of section 4 of this act and any person authorized to transact the business of insurance under Subtitle 3 of Title 17 of the Revised Statutes or Subtitle 3 of Title 17B of the New Jersey Statutes.
c. "Legal insurance means the assumption of a contractual obligation to [provide] pay or reimburse for specified legal services or [reimbursement for] specified legal expenses, in consideration of a specified payment for an interval of time, regardless of whether the payment is made by the beneficiaries individually or by a third person for them, in such a manner that the total cost incurred by assuming the obligation is to be spread directly or individually among a group of persons. The payment of an administrative fee to an attorney shall not be considered payment or reimbursement for specified legal services or specified legal expenses for the purposes of this definition. Legal insurance shall not include the provision of or reimbursement for legal services incidental to other insurance coverages such as the duty to defend, nor shall the following be considered legal insurance under the laws of this State:
(1) Retainer contracts made with individual clients with the fees based on estimates of the nature and the amount of services that will be provided to the specific client, and similar contracts made with a group of clients involved in the same or closely related legal matters such as class actions.
(2) Plans providing no benefits other than a limited amount of consultation and advice on simple matters either alone or in combination with referral services or the promise of fee discounts for other matters.
(3) Plans providing limited benefits on simple legal matters on an informal basis not involving a legally binding promise, in the context of an employment or educational or similar relationship.
(4) Legal services provided by unions or employee associations to their members in matters relating to employment or occupation.
(5) Employee benefit plans regulated by the Employee Retirement Income Security Act of 1974, (P.L. 93-406, 29 U.S.C. 1001 et seq.).
(6) Plans or legal services provided by a legal aid office or public defender office, a military legal assistance office, a lawyer referral service operated, sponsored or approved by a bar association representative of the general bar of the geographical area in which the association exists, or any other nonprofit organization that recommends, furnishes or pays for legal services to its members or beneficiaries in a manner incidental and reasonably related to a primary purpose of such organization to promote a public interest, including, without limitation, defense of human and civil rights, elimination of prejudice and discrimination as to race, religion, sex and national origin, lessening neighborhood tensions, preservation of scenic beauty, combatting or preventing pollution, preservation of natural resources, protection of consumer interest, promotion of cultural, historical or other educational activities, and prevention of cruelty to animals.
As used herein, contractual obligation includes any arrangement in which those persons for whom services are to be provided under the arrangement have reasonable expectations of enforceable rights.
(cf: P.L.1981, c.160, s.3)
2. This act shall take effect on the 90th day next following enactment.
STATEMENT
This bill differentiates certain legal service plans from traditional insurance products.
Under the bill, existing law is modernized by differentiating certain legal service plans from traditional insurance products. Such legal service plans are not insurance because they do not require the payment of claims; assumption of risk; or reimbursement or indemnification for legal services or expenses.