Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult an attorney for advice specific to your situation.
Detailed Answer
After a collision in New Jersey, your insurer must investigate and pay covered claims within set deadlines. The New Jersey Prompt Payment of Claims Act, N.J.S.A. 17:29B-4, generally requires insurers to pay or deny claims within 30 days of receiving proper proof of loss. If the insurer unreasonably delays or denies your property damage or personal injury protection (PIP) benefits, you can take several steps to challenge these tactics:
- Review Your Policy and Gather Evidence
Read your policy carefully. Note filing deadlines, coverage limits, and requirements for proof of loss. Gather photos of the damage, a copy of the police report, repair estimates, medical records for PIP claims, and all correspondence with the insurer.
- Submit a Formal Proof of Loss
Send a detailed written proof of loss or claim form to the insurer by certified mail. Include supporting documentation such as repair quotes, medical bills, and invoices. Keep copies of everything.
- Send a Demand Letter
If your claim remains unpaid or is underpaid after 30 days, send a demand letter outlining the facts, referencing N.J.S.A. 17:29B-4, and setting a deadline (e.g., 10 days) for payment before further action.
- File a Complaint with the New Jersey Department of Banking and Insurance (DOBI)
Visit the DOBI website to submit a complaint: NJ DOBI Complaint Portal. The DOBI will investigate violations of the Prompt Payment Act or unfair claim practices under N.J.S.A. 17:29B-4 et seq.
- Consider the Appraisal Process
Many property damage policies include an appraisal clause for disputes over repair costs. Invoke this clause in writing to have independent appraisers evaluate the damage and resolve the coverage amount.
- Pursue a Bad Faith Lawsuit
New Jersey recognizes first-party bad faith claims under common law. If the insurer’s conduct was arbitrary or unreasonable, you may file a lawsuit for bad faith. Courts can award compensatory and punitive damages.
- Consult an Attorney
Insurance disputes can be complex. An attorney can help you interpret policy language, negotiate with the insurer, and represent you in court or alternative dispute proceedings. Act quickly to preserve your rights under New Jersey’s statute of limitations (generally two years for breach of contract claims).
Key Statute: N.J.S.A. 17:29B-4 Prompt payment of claims – Payment of claims within 30 days. View Statute.
Helpful Hints
- Track all deadlines in writing and meet them precisely.
- Keep a complete file of correspondence, estimates, and receipts.
- Use certified mail for all critical communications.
- Escalate repeated denials to DOBI before filing suit.
- Act swiftly—New Jersey’s statute of limitations for insurance claims is tight.
- Ask for appraisal if coverage disputes arise over repair costs.