My two previous posts regarding Hurricane Sandy insurance claim denials are important to study before moving on to today's post regarding public policy. Accordingly, please review the brief posts of:
Hurricane Sandy Insurance Claim Denials in New Jersey;
Reasonable Expectations – Why New Jersey Policyholders Should Have a Thankful Christmas Day;
New Jersey Hurricane Sandy victims have the law on their side when it comes to public policy. In Zuckerman v. National Union Fire Insurance Company,1 the New Jersey Supreme Court stated:
A condition to the enforcement of insurance contracts is that they not violate public policy.... The term “public policy” contemplates a standard measured by the impact upon the public at large rather than the individual:
Public policy * * * underlies all judicial action. Stemming from our state and federal constitutions, it is * * * public policy to uphold the freedom of contract, but this court is reluctant to enforce the exercise of that freedom where it tends to result in injury to persons beyond the immediate parties.
On public policy grounds, insurance contracts have consistently been construed strictly against insurance companies. The rationale is that insurance contracts are contracts of adhesion since an individual's bargaining power is necessarily limited. Accordingly, such contracts are to be interpreted in a manner that recognizes the reasonable expectations of the insured... [citations omitted and phrases emphasized]
New Jersey insurance law recognizes that public policy requires insurance contracts to be interpreted so the reasonable expectation of the policyholder is recognized. Every insurance adjuster, insurance claim manager and insurance claims attorney should ask whether their interpretations of insurance policies satisfy such public policy before denying claims. Otherwise, insurance companies are violating public policy and should be help accountable.
1 Zuckerman v. Nat'l Union Fire Ins. Co., 100 N.J. 304, 320-21, 495 A.2d 395, 404 (1985).