N.J. Admin. Code § 11:2-17.8

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

Section 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.

N.J. Admin. Code § 11:2-17.8

Amended by 49 N.J.R. 647(a), effective 4/3/2017