New Jersey Administrative Code › Title 11 - INSURANCE › Chapter 2 - INSURANCE GROUP › Subchapter 17 - UNFAIR CLAIMS SETTLEMENT PRACTICES › Section 11:2-17.9 - Rules for fair and equitable settlements applicable to life and health insurance

Current through Register Vol. 56, No. 14, July 15, 2024
(a) No insurer shall indicate on a payment draft, check or in any accompanying cover letter that said payment is "final" if additional benefits relating to the claim for which benefits are being paid are payable under the policy.
(b) When it is apparent to the insurer that additional benefits would be payable under a policy upon receipt of additional proofs of loss from the claimant, the insurer shall explain to the claimant in writing or by telephone the additional proofs or information needed to establish entitlement to additional benefits.
(c) No insurer shall undertake any activity that has the effect of coercing the insured to settle a disability claim on a lump sum basis.
(d) No insurer shall pay a claim involving both a covered and noncovered condition on a percentage basis of contributing loss, unless said percentage is reasonable.
(e) Settlement of claims for a fraction of an indemnity period shall be on a pro rata basis unless the policy specifically excludes pro-rata payments.
(f) If it is found that an insured's age is overstated on an individual life or health policy or understated on an annuity, benefits shall be adjusted upward under a policy which contains a misstatement of age provision specified in 17B:25-6 and 17B:26-18.
(g) No insurer shall request a claimant to sign an agreement which releases the insurer from all future claims under an insurance policy unless no other benefits are payable under it.
(h) Unless otherwise provided by the policy, no insurer may terminate disability benefits based solely on lack of regular medical attendance when the disability has been verified by a physician and can reasonably be expected to continue beyond the date through which benefits have been paid.
(i) No policy shall be rescinded and claim denied for loss incurred during the contestable period based on material misrepresentation by the applicant unless the application is a part of the contract.
(j) No policy shall be rescinded and claim denied for loss incurred during the contestable period based on omission of material information when such information is not specifically requested on the application.
(k) When an application for a life/health policy contains only one medical question or declaration as to general status of the insured's health, such as, "Are you now in good health?", an insurer shall not rescind a policy or deny a claim for loss incurred during the contestable period on the basis of material misrepresentation, if based on the totality of circumstances, the insured responded to the best of his/her knowledge and belief that the general status of his/her health was satisfactory.
(l) No insurer or carrier offering health benefits plans shall issue an explanation of benefits, explanation of payment, and remittance advice forms with denial reasons that are not applicable to the specific claim.
1. Use of denial reasons with multiple grounds shall only be used if all denial grounds apply to the specific claim, including when the reasons are separated by an "and," similar text, symbol, or punctuation. For example, if a denial reason stated that the claim was denied as follows: "lacked a referral, prior authorization, and the service was not rendered by a primary care physician," then all of those reasons must apply to the specific claim being responded to by the insurer or carrier.