On a single claim file, an insured inflates the value of the stolen items, while the insurer, handling the same claim, fails to investigate it reasonably. Under New Jersey law, which pairing of violations is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
The two acts fall under different New Jersey authorities. The insured's knowing false statement about the stolen property is insurance fraud under the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 et seq. The insurer's failure to adopt and implement reasonable standards for the prompt investigation of claims is an unfair claim settlement practice under N.J.S.A. 17B:30-13.1 and N.J.A.C. 11:2-17.1. The New Jersey Department of Banking and Insurance enforces both regimes, and a single claim file can generate violations on both sides of the desk — which is exactly why the categories must not be blurred.
Why the other options are wrong
- A) The insurer's sloppy claims handling is not fraud — no knowing false statement was made; it is a settlement practice violation.
- B) The insured's inflated claim is not a settlement practice; settlement practices govern how insurers handle claims, not claimant honesty.
- C) The pairing is reversed: the false statement belongs to the insured (fraud), and the claims-handling failure belongs to the insurer.
Memory hook
Claimant lies are fraud; insurer sloppiness is a settlement practice — one file, two statutes.