Pickett v. Lloyd’s, 131 N.J. 457, 621 A.2d 445 (1993)

Practice Areas: First Party, Insurance Coverage and Bad Faith

Insured brought action against insurer and its agent for breach of duty of good faith and fair dealing arising out of failure to promptly pay insured’s claim. The Superior Court, Law Division, Sussex County, entered judgment in favor of insured for $70,000, and defendants appealed. The Superior Court, Appellate Division, 252 N.J.Super. 477, 600 A.2d 148, affirmed. Certification was granted. The Supreme Court, O’Hern, J., held that: (1) insurer has duty to exercise good faith in processing insured’s claims; (2) in case of denial of benefits, bad faith is established by showing that no debatable reasons existed for denial of benefits; (3) in cases of processing delay, bad faith is established by showing that no valid reasons existed to delay processing claim and insurer knew or recklessly disregarded fact that no valid reasons supported delay; (4) liability may be imposed for consequential economic losses fairly within contemplation of insurer; and (5) evidence established insurer’s liability for bad-faith delay and supported award of damages.

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