When you file an insurance claim, you expect your insurance company to handle it fairly, promptly, and honestly. After all, you’ve been paying premiums for the protection and peace of mind they promised. Unfortunately, insurance companies don’t always honor that commitment. In some cases, they may act in bad faith, unfairly delaying, denying, or underpaying valid claims in violation of their legal duty to policyholders.

In New Jersey, insurers are legally obligated to treat policyholders with good faith and fair dealing. When they breach that obligation, they can be held accountable through a bad faith insurance lawsuit. But what does bad faith actually look like? And how can you tell the difference between a difficult claims process and one that’s intentionally deceptive or negligent?

Common Signs Your Insurer May Be Acting in Bad Faith

Bad faith can take many forms, but there are several red flags that often point to wrongdoing. If you're noticing any of the following behaviors, it's worth speaking with an attorney who understands bad faith insurance litigation:

• Unreasonable Delays: If the insurance company takes an excessive amount of time to respond to your claim or provide updates, it may be a tactic to wear you down or avoid payment. While some delays are legitimate, unexplained or repeated postponements are not.
• Denying a Claim Without a Valid Reason: Insurers are required to provide clear, written explanations for any claim denial. If you receive a vague or blanket rejection with no supporting documentation, that’s a serious warning sign.
• Failure to Investigate the Claim: Insurance companies are responsible for conducting thorough, timely investigations. If your claim is denied or stalled without any real inquiry into the facts, that’s not just lazy — it could be bad faith.
• Lowball Settlement Offers: Offering far less than a claim is worth, especially without explanation, may indicate the insurer is trying to take advantage of your financial vulnerability.
• Misrepresenting Policy Terms: If the insurer misquotes your policy, insists you’re not covered when you clearly are, or tries to shift blame, they may be intentionally misleading you to avoid paying.
• Threatening Behavior or Intimidation: Any effort to pressure, scare, or confuse you into accepting a low offer — or abandoning your claim — can constitute bad faith.

These tactics are designed to protect the company’s bottom line, not your rights. Recognizing them early can help you take the right steps toward protecting your legal interests.

What Insurance Companies Are Required to Do in New Jersey

Under New Jersey law, insurers are bound by the principle of “good faith and fair dealing,” meaning they must process claims honestly and efficiently. In fact, the New Jersey Unfair Claims Settlement Practices Act outlines specific practices that are considered unlawful when handling claims. These include:

• Failing to acknowledge receipt of a claim within a reasonable time
• Failing to affirm or deny coverage promptly
• Not attempting to reach fair settlements where liability is reasonably clear
• Compelling claimants to sue by offering substantially less than the claim’s value

Violating any of these can form the basis for a bad faith claim. If the insurance company’s actions go beyond mere negligence and show intent to avoid fulfilling their contractual obligations, the case becomes even stronger.

Insurance companies have teams of adjusters and attorneys working on their side — but that doesn’t mean you have to accept unfair treatment. You have legal options, especially when the insurer’s conduct crosses the line from disorganized to deliberately deceptive.

What You Can Do If You Suspect Bad Faith

If you believe your insurance company is acting in bad faith, your first step should be to document everything. Save all correspondence, make notes of every phone call (including names, dates, and summaries), and gather any paperwork related to your policy and claim.

Then, speak with an attorney who focuses on these types of cases. At Edward Lee Law, we help policyholders take action when insurers don’t live up to their legal obligations. Our team is experienced in identifying patterns of bad faith and building strong cases that hold companies accountable.

We will review your policy, examine the insurer’s actions, and determine whether you may be entitled to compensation beyond your original claim. This can include damages for emotional distress, attorney’s fees, and in some cases, punitive damages intended to punish especially wrongful conduct.

If your claim was denied, undervalued, or delayed without cause, our bad faith insurance attorneys can evaluate whether bad faith is involved and explain your options for moving forward.

Contact us today to schedule a free consultation. Don’t let your insurer take advantage of you; let us fight to make things right.