Insurance Company Bad Faith Upheld By Court

On January 5, 2010 a New Jersey Appellate Division panel of Judges upheld a lower court’s ruling that Rutgers Casualty Insurance Company acted in bad faith by refusing to settle an underlying lawsuit for its policy limits of $100.000.00. A New Jersey Supreme Court case from 1974 entitled Rova Farms Resort, Inc. v. Investors Insurance Company of America (“Rova Farms”) stands for the proposition that if a plaintiff is willing to settle his or her claim for the defendant’s policy limits, and the defendants’ insurance company, in bad faith, refuses to tender the policy limits, then any excess verdict will not be the responsibility of the defendant, but rather will be the responsibility of the insurance company.

In this recent New Jersey case, a verdict of approximately $186,000.00 was awarded by a jury after trial against Rutgers Casualty Insurance Company’s insured. Rutgers Casualty had a $100,000.00 policy in force on the date of the accident. Because the plaintiff had advised defense counsel of his willingness to settle the case for the insured’s $100,000.00 policy through a Rova Farms letter, the full amount of the verdict was deemed payable by the insurance company.

Rutgers Casualty Insurance Company appealed and the Appellate Division affirmed the lower court’s ruling. Rutgers Casualty Insurance Company is now required to pay the full verdict amount even though it is in excess of the policy limits. If the Rova Farms case did not exist, then insurance companies would have no incentive to settle cases for their policy limits. They could go to trial on almost any case and have no concern that an excess verdict would ever expose the company to a verdict higher than the policy limits.

If you have been injured in the State of New Jersey you have certain rights and may be entitled to a monetary damages award for your injury. Insurance companies do not always act in good faith. An experienced attorney can fight for your rights and ensure that insurance companies treat your claim properly. Contact a skilled New Jersey insurance bad faith attorney at the law firm of Lependorf & Silverstein for a free consultation regarding your rights.