NJM News

March 18, 2008

Contact: Patrick W. Breslin, 609-883-1300, ext. 7070

NJM Receives $75,000 Settlement in Towing Overcharges Suit

WEST TRENTON, N.J. — A towing company based in Toms River, NJ, has paid a $75,000 settlement to New Jersey Manufacturers Insurance Company (NJM) after systematically overcharging NJM for towing-related services in violation of New Jersey's Consumer Fraud Act.

Grone's Wrecker Service, Inc., tows damaged cars after accidents, as ordered by the Toms River Police Department. Since the car owners do not order this towing service, state law allows municipal governments to control the towing fees, which are paid by the owner or, in many cases, the owner's auto insurance policy.

NJM sued Grone's in 2006 and again in 2007 for unilaterally and unlawfully increasing its fees in violation of Toms River's municipal towing ordinance. The overcharges totaled $7,327.53, spanning 81 incidents from September 2001 to June 2006.

Grone's fought both lawsuits, but in March 2007, Superior Court Judge Mary C. Jacobson ruled in the first suit that Grone's had indeed violated the Consumer Fraud Act and that NJM was entitled to damages. Settlement discussions on both suits followed. Grone's paid a $75,000 settlement on January 22, 2008, in exchange for NJM dismissing the suits.

The Consumer Fraud Act prohibits "any unconscionable commercial practice, deception, fraud, false pretense, false promise [or] misrepresentation" in connection with the sale of goods and services. NJM's case against Grone's was documented as a joint effort of the Company's General Claims Department and Special Investigations Unit.

New Jersey Manufacturers Insurance Company, the largest auto insurer in New Jersey, exercises careful stewardship over all of its expenses in order to deliver both dividends and quality service to policyholders. NJM's pursuit and settlement of these claims against Grone's is in furtherance of NJM's philosophy. NJM is committed to providing cost-conscious and fair claims handling service and will not hesitate to pursue Consumer Fraud Act claims on behalf of policyholders whenever it discovers evidence of unconscionable, deceptive or fraudulent business practices.