New Jersey Gov. Chris Christie’s administration issued a statement this week reminding insurance agents, contractors and other interested parties in the state that the new certificates of insurance law will take effect on April 10.
The Certificates of Insurance Act, P.L. 2015, c.195, was signed into law by Christie on Jan. 11. It makes providing or demanding the issuance of a certificate of insurance that contains any false or misleading information concerning property or casualty insurance coverage a violation of the New Jersey Insurance Fraud Prevention Act (“Fraud Act”), N.J.S.A. 17:33-4a(6).
Violations of the Fraud Act are punishable by civil and administrative penalties of up to $5,000 for a first violation, up to $10,000 for a second violation, and up to $15,000 for a third violation.
“We are informing agents, brokers, insurance companies, contractors and any other parties who issue or use certificates of insurance that it is now a violation of state civil insurance fraud laws to request or provide false or misleading information in these documents,” said New Jersey Department of Banking and Insurance Acting Commissioner Richard J. Badolato.
“Previously, unscrupulous actors were able to use fraudulent insurance certificates to falsely maintain they had liability coverage, and if a disaster or accident occurred, there was no insurance coverage. This law will be one more tool to prevent that and provide more protection to consumers,” Badolato said.
A certificate of insurance is a summary document usually issued by an agent on behalf of an insurer that says a property or casualty policy has been issued to an insured for a certain type of risk.
The certificate is generally issued to the insured or a third party who wants some assurances that a policy covering certain property or casualty coverages has been issued. For example, these certificates are widely presented by contractors as proof they have the insurance coverage that is required by a prospective client, by contract, or by bidding requirements.
The new law specifies that a person who prepares, presents or causes to be presented to any insurer or other person, or demands or requires the issuance of, a certificate of insurance that contains any false or misleading information concerning the policy of insurance to which the certificate makes reference — or assists, abets, solicits or conspires with another to do any of these acts — has committed a violation of the Fraud Act.