Insurance Coverage: Jury Trials For Bad Faith Claims

By: Donna Russo, Esq.

On June 14, 2011, The NJ Supreme Court ruled in Karen Wood v. New Jersey Manufacturers Insurance Co. (A-44-10) that there can be jury trials for bad faith insurance claims. New Jersey Manufacturers Insurance Company (NJM) refused to settle a case against its insured for the policy limits of $500,000. A postal worker had been attacked by a dog owned by NJM’s insured. The postal worker was severely injured and required at least two spinal surgeries. The case was arbitrated and the postal worker was awarded $600,000. The attorney for the NJM insured recommended that the case be settled for the $500,000 policy limits because he believed the value of the case would exceed the policy limits. NJM’s claim committee disagreed and valued the case at $300,000. The $300,000 offer was rejected but the postal worker made clear that she would accept the policy limits of $500,000. The case was tried and the award against NJM”s insured was $1,408,320.33. NJM paid $500,000 but the postal worker would not release NJM’s insured for the excess verdict. The postal worker took an assignment of NJM”s insured’s claim against NJM for bad faith and commenced suit under the well settled law that an insurance company has a fiduciary duty to attempt in good faith to settle within the policy limits.

The only issue before the NJ Supreme Court was the right to a trial by jury. The Court ruled that a trial by jury attaches to a bad faith claim. However, a jury trial is not mandatory and may be waived by the parties.

Let the professional attorneys of Russo & Kieck law firm assist you with your insurance disputes. Located in Hackensack, New Jersey – directly across the street from the Bergen County Courthouse, we represent clients in Teaneck, Paramus, Mahwah, Paterson, Midland Park, Englewood, Glen Ridge, Clifton, Fort Lee, Ramsey, Rutherford and all areas of Bergen, Passaic, Hudson and Essex Counties in northern NJ. Call 201-342-3100 to schedule a consultation.