FIRST
PARTY CLAIMS AND BAD FAITH
When a person makes a claim under his or her own
policy, for example in a fire loss claim, sometimes the parties disagree as to
the amount of the loss sustained by the claimant. When one’s own insurance
company appears to be acting adversarial to its own policy holder, an issue
arises as to whether the insured policy holder can sue his or her own insurance
company for acting in bad faith. Despite the covenant of good faith and fair
dealing that is contained in every contract, the Courts have still been very
reluctant to allow these types of cases.
To preclude these cases the Courts have adopted
the “fairly debatable” standard. This standard is virtually impossible to
overcome. All the insurance company needs to do is raise some issue that is
subject to debate to defeat a bad faith claim. With this standard in mind, bad
faith claims for first party claimants are virtually dead in New Jersey.
