New Jersey Supreme Court Holds Insurance Brokers are Subject to the Consumer Fraud Act

Types : Alerts

On July 15, 2026, the New Jersey Supreme Court issued a significant consumer protection decision in Lowe v. Audet, holding that insurance brokers, producers, and agents are not exempt from liability under the New Jersey Consumer Fraud Act (“CFA”). In a unanimous opinion, the Court rejected the long-recognized “semi-professional” exception that had previously shielded insurance brokers from CFA claims and revived a policyholder’s consumer fraud claims against his insurance broker.

The decision substantially expands the potential exposure of insurance professionals by confirming that they may be subject to CFA’s powerful remedies—including treble damages, attorneys’ fees, and costs—when engaging in fraudulent, deceptive, or unconscionable commercial practices in connection with the marketing, sale, or procurement of insurance products. This alert summarizes the Court’s decision and highlights the practical implications for insurance professionals and businesses throughout New Jersey.

Background

Plaintiff James Lowe, M.D., a neurosurgeon, alleged that he purchased disability insurance in reliance on his brokers’ representations that the policies would provide maximum benefits if he became disabled. After developing a permanent vision condition that prevented him from performing neurosurgery, however, he only received partial disability benefits because of his ownership interests in several businesses unrelated to his medical practice. Lowe contended that his insurance brokers never disclosed that those outside business interests could reduce the benefits payable under the policies. Following the denial of his claim for maximum benefits, Lowe filed suit asserting, among other claims, violations of the CFA.

The trial court dismissed the CFA claim, relying on prior Appellate Division precedent holding that insurance brokers were “semi-professionals” exempt from CFA liability, and the Appellate Division affirmed. The New Jersey Supreme Court granted review to resolve the issue.

The Decision 

The Supreme Court reversed, holding that insurance brokers, producers, and agents are not exempt from the CFA under either the judicially created “learned professional” exception or the related “semi-professional” exception. In reaching that conclusion, the Court emphasized several key points:

• The CFA is one of New Jersey’s strongest consumer protection statutes and must be construed broadly to accomplish its remedial purpose.
• The “semi-professional” exception has no basis in the text of the CFA and originated solely through judicial decisions.
• Insurance brokers are not among the historically recognized “learned professions,” such as physicians, attorneys, and theologians.
• Although insurance brokers are licensed and regulated, licensing alone does not create an exemption from the CFA absent a direct and unavoidable conflict between the statute and another regulatory scheme. The Court found no such conflict.
• Extending the exemption to insurance brokers would improperly narrow the scope of the CFA and undermine the New Jersey Legislature’s intent to provide broad consumer protection.

The Court also questioned the continued viability of the judicially created “learned professional” exception itself, noting that it has “serious doubts” about the doctrine’s foundation and inviting the New Jersey Legislature to clarify whether any professionals should be exempt from CFA liability. Although the Court declined to decide the broader issue in this case, the opinion signals that future challenges to the “learned professional” exception may receive careful scrutiny.

Practical Implications & Key Guidance

The Lowe decision represents a significant development in the scope of potential liability under the New Jersey Consumer Fraud Act. In light of the Court’s decision, insurance professionals and other regulated businesses should consider the following:

1. Insurance brokers, producers, and agents are no longer exempt from the New Jersey Consumer Fraud Act. The Court expressly rejected the judicially created “semi-professional” exemption for insurance professionals.
2. Insurance professionals should expect increased CFA claims arising from insurance-related disputes. Plaintiffs may now pursue CFA claims in connection with the marketing, sale, procurement, and servicing of insurance products.
3. Successful CFA claims carry substantially greater potential exposure than traditional common law claims. As a result, prevailing plaintiffs may now recover treble damages, attorneys’ fees, and litigation costs in addition to other available remedies.
4. Insurance professionals should review their sales practices and client communications. Careful attention should be given to ensuring that material policy terms, limitations, exclusions, and other coverage issues are accurately communicated and appropriately documented.
5. The Lowe decision may have implications beyond the insurance industry. By questioning the continued viability of the judicially created “learned professional” exception and inviting legislative clarification, the Court has signaled that future challenges involving other licensed professionals may follow.

For more questions or guidance about how this decision may affect your business, insurance practices, or potential exposure under the New Jersey Consumer Fraud Act, please contact Michael Fekete of Montgomery McCracken.