An insurer knows that a claim is reasonably due and payable, but instead of paying it stalls and forces the policyholder to file a lawsuit to recover the amount. Under New Jersey law, what is this conduct?

Why D is correct

N.J.S.A. 17B:30-13.1 lists as an unfair claim settlement practice compelling policyholders to institute litigation to recover amounts due under a policy by offering substantially less than the amount ultimately recovered. N.J.A.C. 11:2-17.1 reinforces the insurer's duty to settle fairly and promptly where liability is reasonably clear. Forcing a policyholder into court to collect what the insurer already owes shifts the insurer's burden onto the insured, and the New Jersey Department of Banking and Insurance treats the tactic as a market-conduct violation.

Why the other options are wrong

• A) Low-balling a clear claim into litigation is not negotiation; it is specifically named unfair claim settlement conduct.
• B) The scenario involves payment delay, not the collection or use of personal information, so privacy rules are not implicated.
• C) The insurer itself is the regulated entity committing the practice; this is not merely an individual adjuster's licensing issue.

Memory hook

If the amount is due, pay it — making the insured sue for it is the named violation.