State RegulationsNJ specificDifficulty 2/5
An insurer denies a homeowner's claim without conducting any meaningful review of the file. Which New Jersey trade practice has it committed?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
N.J.S.A. 17B:30-13.1 makes it an unfair claim settlement practice to fail to adopt and implement reasonable standards for the prompt investigation and processing of claims, and N.J.A.C. 11:2-17.1 enforces the same expectation administratively. A denial issued without a real investigation is not an exercise of underwriting judgment — it is the prohibited shortcut. The New Jersey Department of Banking and Insurance can cite the practice in market conduct actions and discipline the insurer for it.
Why the other options are wrong
- A) Rate discrimination concerns pricing between insureds, not the handling of an individual claim file.
- C) Defamation targets false statements about competitors; nothing here involves a competitor or a defamatory statement.
- D) Rebating involves giving back part of the premium as a sales inducement, which has no connection to claim investigation.
Memory hook
Investigate before you deny — no standards, no investigation, no defense.