TRENTON, N.J., March 16 – The New Jersey Supreme Court lowered the standard for insurance companies to sue policyholders who file fake insurance claims.

In a 5-2 ruling, the justices held companies need only a preponderance of the evidence to prove civil fraud and not the tougher requirement that a company had to show clear and convincing evidence to sue fraudulent policyholders.

The tougher standard was required by an appeals court in a case involving Liberty Mutual, which sued Rose and Frank Land and their nephew Steven Budge for $82,412 in a fraud case involving damage to a house from a fallen tree.

A jury found the Lands and their nephew guilty of trying to further damaging a vacation home in Highland Lakes after the tree fell on it. In the trial, a videotape showed three men slamming the fallen tree at least 10 times against the roof creating damage to the roof and shattering a skylight.

The defendants appealed, citing questionable comments made by plaintiffs attorney during the trial, and a new case was ordered. Liberty Mutual cross-appealed, arguing that the easier standard be set for Liberty Mutual to collect treble damages as allowed under the 1983 Insurance Fraud Prevention Act.

Mauro Casci, a Middletown Township attorney argued the case for Liberty Mutual. He said of the ruling, It makes it a lot easier to prove insurance fraud against an insured who presents a fraudulent claim to an insurance company which hopefully should have a deterrent effect in the long run.

The two dissenters to the new standard expressed concerns it would increase the risk to an innocent policyholder. They held the court should require the tougher standard of clear and convincing evidence which is required to collect punitive damages in civil cases.

Magdalena Padilla, president of the New Jersey Insurance Council, said the decision makes it easier to protect the public against fraud and sends a clear message to fraud perpetrators: Dont do it in New Jersey.

She said the ruling is consistent with the legislative intent to protect ageist he threat of fraud. Padilla noted, As Justice (Marie) Garibalid said in 1982, and the court repeated here, insurance fraud is a problem of massive proportions.