N.J. Admin. Code § 11:2-17.8 - Rules for fair and equitable settlements and reasonable explanations applicable to all insurance
(a) No insurer
shall deny or offer to compromise a claim because of a policy provision,
including any concerning liability, a condition, or an exclusion without
providing a specific reference to such language and a statement of the facts
which make that language operative.
(b) Any denial or offers of compromise to the
claimant shall be confirmed in writing and shall be kept in the appropriate
claim file.
(c) In any case where a
first party claim is denied or a compromise is offered, the insurer shall
notify the first party claimant of any applicable policy provision limiting
such claimant's right to sue the insurer.
(d) Insurer shall not fail to settle first
party claims on the basis that responsibility for payment should be assumed by
others except as may otherwise be provided by law or policy provisions such as
Workers' Compensation exclusions, or coordination of benefits
provisions.
(e) If a claimant is
actively negotiating with an insurer for settlement of a claim, and the
claimant's rights may be affected by a statute of limitations or a policy time
limit, the insurer shall provide the claimant with written notice that the time
limit may be expiring and may affect the claimant's rights. Such notice shall
be given to claimants 60 calendar days before the date on which such time limit
may expire. This rule shall only apply if the insurer is negotiating a claims
settlement with a person who is neither an attorney nor represented by an
attorney.
(f) No insurer shall make
statements which indicate that the rights of a claimant may be impaired if a
form or release is not completed within a given period of time unless the
statement is given for the purpose of notifying the claimant of any applicable
law or policy provision.
(g) Unless
otherwise provided by law, in any case where there is no dispute as to one or
more elements of a claim, payment for such element(s) shall be made
notwithstanding the existence of disputes as to other elements of the claim
where such payment can be made without prejudice to either party.
(h) An insurer shall not compel claimants to
institute litigation to recover amounts due under an insurance policy by
offering substantially less than amounts recovered in actions brought by such
claimants.
(i) No insurer shall
deny payment of a claim when it is reasonably clear that either full or partial
benefits are payable.
(j) No claim
shall be denied or compromised based on an exclusion, reduction or limitation
in a policy unless documentation of facts rendering the exclusion, reduction or
limitation operative can be obtained. If such documentation is not made a part
of the claim file, the insurer shall place in the claim file a written notation
explaining how documentation may be obtained.
(k) With respect to first party claims, and
third party claims as set forth in
N.J.A.C.
11:2-17.10(c), insurers
shall make claim payments by check or draft. Payment by direct deposit, wire
transfer, or other electronic means where the claim payment is deposited
directly into the claimant's bank account as permitted by
N.J.A.C.
11:2-17.10 shall be considered the equivalent
payment by check or draft. All payments shall be made contemporaneously with
issuance of a statement setting forth the coverage under which payment is made
and in sufficient detail so that first party and third party claimants can
reasonably understand the benefits included within the claim payment. The
statement shall include an explanation of how the benefit payment was
calculated. Where payment is made by electronic means, whenever possible the
statement shall be provided electronically at the same time that such payment
is made. Where electronic notification is not possible, the statement shall be
sent via regular mail to the claimant at the time payment is made. The
requirement to provide the statement set forth in this paragraph shall not
apply to claims in which the claim payment figure was arrived at through
negotiations between the insurer and the first party or third party
claimant.
(l) If a
first party claimant or a third party claimant not represented by an attorney
does not submit sufficient information to establish his or her entitlement to
the benefits claimed, then the insurer shall provide the claimant with a
general description of the information and documentation needed to establish
such entitlement.
Notes
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