In Griggs v. Bertram, 88 N.J. 347, 443 A.2d 163 (1982) the Supreme Court of New Jersey addressed the situation where a policyholder settles directly with the claimant because the insurer disputes coverage. In Griggs, the policyholder was sued by the claimant for personal injuries suffered during a fight. Id. at 352, 443 A.2d 163. The policyholder sought insurance coverage for the personal injury lawsuit against him, but his insurance company disclaimed liability. Id. at 354-55, 443 A.2d 163. Prior to trial, the policyholder negotiated a settlement in which he assigned his rights under the insurance policy to the claimant. Id. at 354, 443 A.2d 163. The policyholder also stipulated to a judgment in favor of the claimant in exchange for a covenant not to execute. Ibid. The insurance company argued, among other things, that the settlement arrangement was unenforceable because "it was unreasonable and negotiated in bad faith." Id. at 365, 443 A.2d 163. In examining this issue, the Court noted that an insurance policy is a contract of adhesion, making it entirely appropriate to place the ultimate burden of persuasion on the insurer. Id. at 366, 443 A.2d 163. However, the Court determined that it was neither "fair nor practical to require the carrier also to assume the burden of producing evidence" because the insured would be in a better position to proffer evidence regarding the settlement. Id. at 367, 433 A.2d 163. It was thus said that "the insured, without undue hardship or fundamental inequity, can best marshal the basic facts relating to the settlement." Ibid. The Court explained that placing the initial burden of production on the insured to demonstrate that the settlement was "prima facie reasonable in amount and untainted by bad faith," serves to protect the carrier from having to pay a settlement reached through collusion between the insured and the injured third party or which is otherwise unreasonable and the product of bad faith. Ibid. The Court set forth the shifting burdens in the following terms: We therefore hold that a settlement may be enforced against an insurer in this situation only if it is reasonable in amount and entered into in good faith. The initial burden of going forward with proofs of these elements rests upon the insured and the ultimate burden of persuasion as to these elements is the responsibility of the insurer. This rule reasonably accommodates and compromises the competing interests of the parties and considerations of public policy. It will discourage collusive or overreaching impositions upon insurance carriers and, at the same time, will be conducive toward encouraging settlement and protecting an insured in its efforts amicably to resolve a claim against it after having been abandoned by its carrier. Id. at 368, 443 A.2d 163. Accordingly, the Court adopted a bifurcated analysis for the burdens imposed on each party, with the insured carrying the initial burden of production. Ibid.