N.J. Admin. Code § 11:2-17.7

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:2-17.7 - Rules for prompt investigation and settlement of claims

(a) Every insurer shall commence an investigation on all claims other than auto physical damage within 10 working days of receipt of notification of claim.

(b) The maximum payment period for all personal injury protection (PIP) claims shall be 60 calendar days after the insurer is furnished written notice of the fact of a covered loss and of the amount of same; provided, however, that an insurer may secure a 45-day extension in accordance with N.J.S.A. 39:6A-5.

(c) Unless a clear justification exists, or unless otherwise provided by law, the maximum payment periods for property/liability claims shall be as follows:

1. For all first party claims other than personal injury protection (PIP) and auto physical damage (see N.J.A.C. 11:3-10.5(a) ), 30 calendar days from receipt by the insurer of properly executed proofs of loss.

2. For all third party property damage claims, 45 calendar days from receipt by the insurer of notification of claim.

3. For all third party bodily injury claims, 90 calendar days from receipt by the insurer of notification of claim.

(d) Rules for the payment of health insurance claims may be found at N.J.A.C. 11:22-1.

(e) If the insurer is unable to settle the claim within the time periods specified in (c) through (e) above, the insurer must send the claimant written notice by the end of the payment periods specified in (c) through (e) above. The written notice must state the reasons additional time is needed, and must include the address of the office responsible for handling the claim and the insured's policy number and claim number. This notice shall also include a telephone number which is toll free, or which can be called collect, or which is within the claimant's area code. This number shall provide direct access to the responsible claims office or shall enable the claimant to gain such access at no greater expense than the cost of a telephone call within his or her area code. An updated written notice setting forth the reasons additional time is needed shall be sent within 45 days after the initial notice and within every 45 days thereafter until all elements of the claim are either honored or rejected. The written notifications required under this subsection shall not continue to apply to that aspect of a claim for which the claimant has become represented by an attorney, as evidenced by a letter of representation.

(f) Unless otherwise provided by law, every insurer shall pay any amount finally agreed upon in settlement of all or part of any claim not later than 10 working days from either the receipt of such agreement by the insurer or the date of the performance by the claimant of any conditions set by such agreement, whichever is later.

(g) Where there is a reasonable basis supported by specific information available for review by the Department that the first party claimant has fraudulently caused or contributed to the loss by arson, or other fraudulent schemes, the insurer shall be relieved from the requirements of (c) through (f) above. Provided, however, that the claimant shall be advised of the acceptance or denial of the claim within a reasonable time for full investigation after receipt by the insurer of a properly executed proof of loss.

(h) Unless otherwise provided by statute or unless otherwise provided by the policy, all life insurance claims shall be paid within a maximum period of 60 calendar days. The payment period is defined as the period between the date proof of loss is received by the insurer and the date of claims settlement.

1. If a claim or a portion of a claim for benefits under a policy requires additional investigation or is denied by the insurer, the insurer shall notify the claimant of such fact in writing within 45 days of due proof of death. The insurer shall also notify the claimant of the reason the claim is being investigated or denied, except in certain cases involving fraud.

2. Any uncontested portion of a claim shall be paid within 60 days of receipt of due proof of death, proof of the interest of the claimant, or any other document or information requested by the insurer under the terms of the policy.

3. The insurer, upon receipt of any document or information requested relating to a claim or portion of a claim under investigation, shall pay the benefits for which the claim is made or deny the claim within 90 days of the receipt of the requested documentation.

4. Payment of a claim or a portion thereof that is not under investigation by the insurer shall be overdue if not remitted to the claimant by the insurer within 60 days following receipt of due proof of death, proof of the interest of the claimant, or any other document or information requested by the insurer.

5. Payment of a claim or a portion of a claim under investigation or denied that becomes eligible for payment shall be overdue if not remitted to the claimant by the insurer within 90 days following receipt of due proof of death, proof of interest of claimant or any other document or information requested by the insurer.

6. Overdue payments shall bear an annual rate of interest equal to the average rate of return of the State of New Jersey Cash Management Fund, established pursuant to N.J.S.A. 52:18A-90.4, for the preceding fiscal year rounded to the nearest one-half percent. Insurers may choose either the Fund's State or Other-than State rates. However, insurers shall not be permitted to change the rate once chosen.

N.J. Admin. Code § 11:2-17.7

Amended by R.1982 d.400, effective 11/15/1982.
See: 14 N.J.R. 966(a), 14 N.J.R. 1307(b).
Amended by R.1992 d.93, effective 2/18/1992.
See: 23 N.J.R. 2830(a), 24 N.J.R. 622(a).
Maximum payment period for personal claims specified at (b).
Amended by R.1992 d.493, effective 12/7/1992.
See: 23 N.J.R. 3196(c), 24 N.J.R. 4391(a).
Subsection (d) added to provide for payment of all health insurance claims within 60 days, with certain exceptions as specified.
Petition for Rulemaking.
See: 25 N.J.R. 6065(a).
Amended by R.1996 d.497, effective 10/21/1996.
See: 28 N.J.R. 3703(a), 28 N.J.R. 4585(a).
Petition for Rulemaking: Notice of Receipt of and Action on a Petition for Rulemaking.
See: 28 N.J.R. 5509(a), 29 N.J.R. 264(c), 29 N.J.R. 2188(a), 29 N.J.R. 4722(b).
Amended by R.2001 d.6, effective 1/2/2001.
See: 32 N.J.R. 3530(a), 33 N.J.R. 85(a).
Rewrote (e); and in (h), deleted "of Insurance" in reference to the Department.
Amended by R.2001 d.13, effective 1/2/2001.
See: 32 N.J.R. 1985(a), 33 N.J.R. 105(a).
Amended by R.2003 d.2, effective 1/6/2003.
See: 34 N.J.R. 1784(a), 35 N.J.R. 249(a).
Recodified (e)-(h) as (d)-(g); added (h).