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. 4,  No. 3                                                  March 11,  2014



In New Jersey and elsewhere, Courts enforce a strong public policy against double recoveries by accident victims. Double recoveries occur when more than one person or entity pays for the same loss. In order to avoid a windfall to the accident victim, there is usually a set-off credited to one payor for the payment made by another payor. For instance, medical expenses and worker's compensation liens are deducted from tort recoveries.


The potential for a double recovery by the insured in property losses is unusual for several reasons: (1) the measure of damages under the insurance policy (replacement cost) is better than in tort (difference in fair market value) and (2) most insurers explore the potential for subrogation during the early stages of the loss investigation.




A recent (February 12, 2014) decision by a panel of the Appellate Division of the New Jersey Superior Court demonstrates the perils of an insured who receives a double recovery. In AIG Casualty Company of New York, Inc. v. Walsh, boat owners suffered a damaged engine. They gave prompt notice to their insurance carrier and received a prompt payment. Shortly thereafter, the insureds had the engine repaired and were advised upon completion of the repairs that the manufacturer had paid the entire bill.   


AIG pursued its subrogation investigation and learned that the manufacturer had paid for all of the repairs. AIG demanded reimbursement, but the insureds refused. AIG instituted suit and in the course of the litigation added a count for violation of the New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 et seq.   


The Act declares it a violation if a person or practitioner "conceals or knowingly fails to disclose the occurrence of an event which affects any person's initial or continued right or entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled." N.J.S.A. 17:33A-4(a)(3).The Act also provides a violation if a person or practitioner "knowingly assists, conspires with or urges any person or practitioner to violate any of the provisions of this act." N.J.S.A. 17:33A-4(b).


On cross-motions for summary judgment, the Court found that AIG was entitled to the return of its payment, that it did not act unfairly in trying to obtain it and that the insureds' failure to advise AIG of the payment by the manufacturer supported a claim for violation of the NJIFPA. The Court found that since the manufacturer paid for all repairs, the insureds suffered no monetary loss and were not entitled to the insurance payment.




In this case, the Court held that the failure of the insureds to inform the insurer within a reasonable time after the manufacturer paid for the costs of repair was sufficient to state a claim under the NJIFPA. Under the Act, all that is required for the insurance carrier to prevail is proof that the insured concealed or knowingly failed to disclose the payment and that the insurance company was damaged thereby. The insurer does not need to prove fraudulent intent to sustain its claim. If successful, the insurer also recovers reasonable investigation expenses, costs of suit and attorneys' fees.


Given the engine manufacturer's payment for the installation of a new engine, it is difficult to find a rationale for the insureds' contention that they had some financial loss to support a recovery from their insurer. Their argument in Court was based upon a sophistic misreading of a distinguishable case.



  • Impress upon your insureds the importance of telling you ALL of the facts and that this is a continuing obligation. Advise your insureds that concealment and non-disclosure are hazardous practices.
  • Explain to your insureds that the insurance company will probably conduct its own investigation to see if anyone is responsible for the loss and will pursue recovery from that party for any money they pay out. 
  • Ask your insureds if they think they know of anyone potentially responsible for their loss.  
  • Be careful if the insureds receive assistance from friends, family, charities, churches, etc. in the replacement of their destroyed property. Let the company adjuster know exactly what is happening. Often charitable donations are not adequate replacement and the insureds will be entitled to replace what they actually lost. 
  • In out-of-sight loss situations (e.g. the lost engagement ring), counsel your insureds to advise the insurer if they later discover the item. They may have to turn over the item or the money received for the item. 

The critical need for forthright communications and disclosures from insureds has once again been spotlighted by the Court.


If you or your insureds encounter any similar situations or have any questions, please feel free to contact us 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.