This bill amends Section 3 of P.L.1981, c.160 (C.17:46C-3) to clarify the definition of "legal insurance" and differentiate it 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 outlines that certain arrangements, such as retainer contracts, limited consultation plans, and legal services provided by unions or nonprofit organizations, do not qualify as legal insurance under New Jersey law. Additionally, the bill states that the payment of an administrative fee to an attorney does not count as payment for legal services or expenses.

The intent of the bill is 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 aims to provide clearer guidelines for legal service plans and their operation within the state, ensuring that they are not misclassified as traditional insurance products. The bill will take effect 90 days after its enactment.

Statutes affected:
Introduced: 17:46C-3