Most policyholder advocates have made it up to New Jersey or another jurisdiction affected by Superstorm Sandy over the last year. Recently, I was in Atlantic City fighting over coverage for one of my clients whose carrier truly missed the boat. The purpose of the visit was to allow the carrier the opportunity to have its engineers inspect the property, something the carrier should have done months ago when my clients’s public adjuster provided an estimate that exceeded the carrier’s payment. My consultants and I sat quietly during the first hour of the inspection. As the carrier’s consultants began to leave the 4,500 square foot building, I asked a few simple questions.
First, is anyone going to inspect the sheet rock behind the siding? It is part of the claim the carrier is disputing.
Second, is anyone going to photograph the damage?
Third, is anyone going to ask the insured about the loss and the damage to the building?
Fourth, is anyone going to inspect the ceiling? It is another part of the claim the carrier is disputing.
Finally, can someone explain how the scaffolding and stucco figures are sufficient to make the necessary repairs?
It is my experience that carriers fail to fully investigate a loss and instead shift the burden onto their insureds. An insurer’s duty to investigate generally requires sufficient investigation to determine coverage under the policy in question. An insurer must investigate before it denies or settles a claim. The investigation should be reasonable, both in terms of depth and timeliness.1
In New Jersey, insurers have a duty to investigate all aspects of a claim, to determine coverage, and to fulfill their fiduciary duty to settle claims within policy limits.2
I have noticed a troubling trend where adjusters, contractors, and engineers retained by insurance companies conduct inadequate investigations. These inadequate investigations force many policyholders to sue to get the benefits they are owed. It is often a waste of time and money and unnecessarily delays recovery for months and years.
1 14 Couch on Ins. § 198:28.
2 New Jersey Mfrs. Ins. Co. v. National Cas. Co., 393 N.J. Super. 340, 353, 923 A.2d 315, 323–24 (App. Div. 2007), certification denied, 932 A.2d 31 (N.J. 2007).