When someone is injured in an accident, they often turn to insurance for help. Whether it is an auto accident, a slip-and-fall, or another injury, insurance policies are meant to provide financial protection. Unfortunately, insurance companies do not always handle claims fairly. Some engage in bad faith practices, denying valid claims or delaying payments to protect profits. In New Jersey, victims have rights when this happens, and knowing how to respond is critical.
What Is Insurance Bad Faith?
Insurance bad faith occurs when an insurance company fails to honor its legal duty to act in good faith toward policyholders. Insurers are required to evaluate and pay legitimate claims in a fair and timely manner. When they instead look for ways to avoid paying, they may be acting in bad faith.
Examples include:
- Unreasonable denial of coverage despite clear policy terms
- Delaying claim investigations to stall payments
- Offering far less than the claim is worth without justification
- Failing to communicate with the policyholder
- Misrepresenting policy language to limit payout
The New Jersey Supreme Court has long recognized that insurers owe a duty of good faith and fair dealing to their insureds. When that duty is breached, the injured party may have grounds for legal action.
Common Bad Faith Tactics in New Jersey Injury Cases
Insurance companies are skilled at protecting their bottom line. In injury claims, their adjusters may use tactics that feel unfair or even dishonest. Common strategies include:
1. Denying Liability Without Investigation
Sometimes insurers reject claims outright without thoroughly reviewing the facts. For example, a car accident victim may submit clear evidence of another driver’s fault, only to be told the claim is “not covered.”
2. Delaying the Process
Insurers may drag out claim reviews, request unnecessary paperwork, or repeatedly change adjusters. The goal is often to frustrate the claimant into accepting a low settlement.
3. Offering Unreasonably Low Settlements
An injured person facing medical bills may feel pressured to accept a small settlement. Insurers know this and may exploit financial stress to close the case quickly.
4. Misrepresenting Policy Provisions
Some adjusters interpret policy language in a way that reduces or eliminates coverage, even when the policy clearly provides for payment.
5. Using “Independent” Medical Exams Against the Victim
Insurers may require injured claimants to undergo examinations by doctors they choose. These doctors may downplay injuries, giving the company grounds to minimize compensation.
New Jersey’s Legal Framework on Bad Faith Claims
New Jersey law gives policyholders important protections. Courts have ruled that insurance companies cannot put profits above their duty to policyholders. When an insurer unreasonably denies a claim, it may face liability for damages caused by that denial.
Key points under New Jersey law:
- Breach of the duty of good faith can give rise to a bad faith lawsuit.
- A claimant must show the insurer had no reasonable basis for denying or delaying payment.
- Courts may award not only the original claim value but also additional damages caused by the insurer’s misconduct.
One notable New Jersey case, Pickett v. Lloyd’s, established that insurers may be liable if they lack a reasonable basis for denying benefits and knew or recklessly disregarded that fact. This precedent continues to guide courts in evaluating bad faith cases.
The Consequences of Bad Faith for Injury Victims
When insurers act in bad faith, the harm goes beyond financial delay. Victims may face severe consequences, including:
- Mounting medical bills with no coverage support
- Lost wages from inability to work
- Increased stress and anxiety from prolonged disputes
- Credit damage due to unpaid medical debt
For accident victims already coping with physical injuries, the emotional and financial burden can be overwhelming. That is why holding insurers accountable is so important.
Steps to Take if You Suspect Insurance Bad Faith
If you believe your insurer is acting unfairly, there are several steps you can take to protect yourself.
1. Keep Detailed Records
Maintain copies of all communications, including letters, emails, and notes from phone calls. Documentation can serve as powerful evidence in proving bad faith.
2. Review Your Policy Carefully
Compare your policy language to the insurer’s explanation for denial. Sometimes, the denial is inconsistent with what the policy actually says.
3. Request Written Explanations
If your claim is denied, ask the insurer to provide a written explanation. This creates accountability and prevents adjusters from shifting reasons later.
4. File a Complaint
In New Jersey, you may file a complaint with the Department of Banking and Insurance. The state regulates insurance companies and can investigate misconduct.
5. Seek Legal Help
A skilled attorney can evaluate whether the insurer’s actions rise to the level of bad faith. Lawyers familiar with New Jersey courts know how to challenge improper denials and delays.
Real-World Examples of Insurance Bad Faith
While each case is unique, several real-world examples illustrate how insurers may act improperly:
- A driver with full coverage is struck by another vehicle. Despite police reports confirming the other driver’s fault, the insurer delays payment for months.
- An injured worker files a valid claim under a policy, only to be told the injury is “not severe enough” to warrant payment—contradicted by medical records.
- A homeowner suffers serious property damage in a storm. The insurer offers only a fraction of the repair costs despite contractor estimates showing much higher expenses.
These examples show why vigilance and strong legal advocacy are essential in fighting back against unfair practices.
How Legal Representation Helps
Navigating an insurance dispute can be overwhelming for injury victims. Attorneys experienced in personal injury and insurance bad faith know how insurers operate. They can:
- Investigate whether the insurer followed proper procedures
- Collect evidence proving the claim’s validity
- Challenge denials and delays in court if necessary
- Seek compensation not only for the original claim but also for additional losses caused by the insurer’s misconduct
Protecting Your Rights in New Jersey
No one expects to fight their own insurance company after an accident. Unfortunately, it happens too often. The law in New Jersey gives victims a path to justice when insurers act in bad faith.
If you believe your claim was wrongfully denied or unfairly delayed, legal guidance can make all the difference. Gregg A. Wisotsky, Esq., has extensive experience in personal injury and insurance disputes across New Jersey. He provides honest, personalized representation, ensuring clients understand their options and have a strong advocate at every stage.
For a free consultation, call 973-898-0161 to discuss your case and learn how your rights can be protected.
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