This bill amends Section 3 of P.L.1981, c.160 (C.17:46C-3) to clarify the definition of "legal insurance" and to differentiate certain legal service plans from traditional insurance products. The new language specifies that "legal insurance" involves the obligation to pay or reimburse for specified legal services or expenses in exchange for a payment, which can be made by beneficiaries or a third party. It also establishes that the payment of an administrative fee to an attorney does not count as payment for legal services or expenses. Furthermore, the bill outlines various exceptions to what constitutes legal insurance, including retainer contracts, limited consultation plans, and legal services provided by unions or nonprofit organizations.

The bill aims to modernize existing law by clarifying that certain legal service plans do not function as insurance, as they do not involve the payment of claims or the assumption of risk. This distinction is intended to provide a clearer regulatory framework for legal service plans, ensuring that they are not misclassified as traditional insurance products. The act will take effect 90 days after its enactment.

Statutes affected:
Introduced: 17:46C-3