Law Offices of

 Thomas E. Maloney, Jr.

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10 Madison Ave, Third Floor,   Morristown, NJ 07960   973.538.4100




The Adjuster's Advantage

A Newsletter Devoted to the Public Adjuster


Vol. 2,  No. 3                                                  March 22, 2012





In this issue, we explore some of the New Jersey administrative regulations governing insurance claims handling. While you work with these regulations all the time, every once in a while taking a fresh look at them may be helpful.


One important point to remember is that if the insurer fails to comply with the regulations, the insured can use that failure as evidence of bad faith in a lawsuit. Experience shows that questioning a claims handler on these regulations and the carrier's breach of them is most helpful in bringing about a favorable settlement.




N.J.A.C. 11:2-17.12 (c) requires insurers to maintain records of all pertinent communications relating to a claim, including date, parties and substance. What this means to you is that your file should also contain such records, not only as a matter of style, but specifically so that the claims rep or independent cannot re-write the record if an issue or lawsuit later arises. This is particularly true where telephone discussions are involved. Recording the substance is crucial as that will be the difference maker. A written record made at the time of the call will trump a vague recollection or a failure to recall at trial every time.




N.J.A.C. 11:2-17.10 (a) (14) provides that if the insurance carrier desires to inspect the damaged property, it shall have 10 working days following receipt of notice of the claim to do so, except for losses caused by a catastrophe. This regulation seems to contradict the usual policy language requiring the insured to permit the insurer to inspect the property as often as reasonably required. One could argue that this regulation means an inspection of the physical damage is unreasonable if not made within the 10-day window. Common sense would seem to dictate when to invoke this regulation. Meetings at the loss location to agree on construction details could be appropriate in determining the carrier's payment. A carrier's request to have an engineer inspect the property long after negotiations have stalled, where you know the purpose is only to create a report denying liability, could be rebuffed by citation to this regulation.


Written Estimates


N.J.A.C. 11:17-10 (a) (15) provides that if a loss is to be settled on the basis of a written estimate prepared by or for the insurer, the carrier has to give the claimant a copy of it before beginning negotiations. Note, there is no time frame given for providing a copy of the estimate. Of course you can always refuse to negotiate until you have had an opportunity to study the estimate and have it reviewed by your expert. The estimate must be reasonable and allow for repairs to be made in accordance with generally accepted standards for safe and proper repairs, subject to policy conditions such as limits, deductible, depreciation and prior damage. If the insured obtains an estimate that exceeds the insurer's, the carrier must review it and respond within 10 working days and, if requested, must provide the name of the repair shop or contractor that will make the repairs in accordance with generally accepted standards for safe and proper repairs. You may refer to this regulation if the carrier takes too long to respond to your estimate of the cost of repairs; if you believe that the carrier has not considered some factor relating to safe and proper methods or materials for repair; or if you are convinced that the carrier's estimator will not undertake the actual repairs but is giving the carrier a lowball estimate for negotiation purposes. This regulation allows you to call the carrier's bluff.  


Payment of undisputed amount


N.J.A.C. 11:2-17.8 (g) provides that, unless otherwise provided by law, where there is no dispute as to one or more elements of a claim, payment for the undisputed element shall be made notwithstanding the existence of disputes over other elements, where such payment can be made without prejudice to either party. Carriers will not make payments where liability is in dispute, such as a claim of arson by the insured, or where coverage for the cause of loss is denied, e.g. wear and tear or deterioration. Do not expect most carriers to offer to pay the undisputed amount of the loss - you will have to ask for the payment.


Hidden damage


N.J.A.C. 11:2-17.10 (a) (3) provides that the insurer remains liable for hidden damage directly related to the loss giving rise to the claim, subject to policy terms, conditions and limits, "unless the question has been specifically negotiated." As a practical matter therefore, don't raise the issue, don't discuss it, don't agree to it and don't take money for it unless you or your insured are willing personally to pay for the hidden damage. Note, a code upgrade cost will not be considered as hidden damage, even if it was not anticipated, because the code is a matter of public record.




N.J.A.C. 11:2-17.8 (a) provides that no insurer shall deny or offer to compromise a claim because of a policy provision, condition or exclusion without providing a specific reference to such language and a statement of the facts which make that language operative. Thus a denial letter requires both (1) a reference to the specific language upon which the carrier bases the denial and (2) a statement of facts which make that policy provision applicable. Most lawyer generated denial letters will comply with this, although the statement of facts will be highly cryptic. Many company generated denial letters will also comply, again with less detail in the statement of facts. Many denials communicated by independent adjusters will fall short of the mark, especially where a small payment is made on a portion of the loss and the adjuster refuses to pay for other portions of the loss. The question for you is whether you respond to a denial by requesting more elaboration of either the policy provisions or the facts upon which the company relies. Remember, such a failure is prized litigation evidence of bad faith conduct which may result in the award of counsel fees to your insured.




N.J.A.C. 11-2.17-5 (d) provides that no insurer shall request a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment. A release that contains language releasing the carrier from liability for everything that has happened from the start of the world to the date of the release, usual in settling lawsuits, is improper. You can cite this regulation when you tender a release limited to the claim. If the matter does go to suit, you may wish to limit the release to known damage if the matter is resolved prior to completion of the repairs.


As always, if you or your insureds encounter any difficulties relating to these matters, please feel free to contact me at 973-538-4100 or by email at We are here to help!

Tom Maloney

Tom Maloney


Representing the Insured in:

  • Coverage Disputes
  • Claims
  • Investigations
  • Examinations Under Oath
  • Suits
  • Trials
  • Appeals

Statewide coverage

Associate Member New Jersey Public Adjusters Association


AV rated Attorney Martindale-Hubbell


Admitted: All State and Federal Courts in New Jersey; Third Circuit Court of Appeals; U.S. Supreme Court


Certified by the Supreme Court Of New Jersey as a Civil Trial Attorney - 1982


Qualified Mediator by the New Jersey Supreme Court


Pro Hac Vice Admissions:NY, NH, MD, USDC-SDNY,

Second Circuit Court of Appeals


Georgetown University Columbia Law School


DISCLAIMER: This newsletter contains the personal opinions of the writer and is not intended to and does not provide legal advice in any way, shape or form; does not create an attorney-client relationship between the writer and the recipient or any other person; and is offered without charge for informational purposes only. You should consult with an attorney of your own choosing in any matter in which you seek legal advice.