New Jersey Gov. Signs Certificates of Insurance Bill

By | January 25, 2016

New Jersey Gov. Chris Christie signed the Certificates of Insurance Act (S-3270/A-4705) into law on Jan. 11.

The new law will govern the use of certificates of insurance, making it illegal to request the issuance of certificates that contain any false or misleading information. The law will provide the New Jersey Department of Banking and Insurance (DOBI) with enforcement authority with respect to their use.

The Certificates of Insurance Act will take effect on April 10, 90 days after the governor’s signing. It passed the state Senate and the state Assembly in December.

A certificate of insurance indicates that a property or casualty policy has been issued to the insured and that the policy contains certain coverages and limits. These certificates are typically used by contractors to demonstrate that they have the coverages required to enter into construction contracts.

The new law specifies that a person shall not: (1) prepare, issue, request, or require the issuance of, a certificate of insurance that contains any false or misleading information concerning the referenced policy of insurance; or (2) prepare, issue, request, or require the issuance of, a certificate of insurance that purports to alter, amend, or extend the coverage provided by the referenced policy.

The law also provides that a certificate of insurance shall not warrant that the policy of insurance referenced in the certificate complies with the insurance or indemnification requirements of a contract. The inclusion of a contract number or description within a certificate shall not be interpreted as providing such a warranty.

The law makes actions regarding false or misleading information in a certificate of insurance a violation of the New Jersey Insurance Fraud Prevention Act.

The law gives the insurance commissioner the power to enforce the provisions of this act, including the authority to issue orders to cease and desist and to impose a fine of up to $1,000 per violation against offenders. The commissioner may adopt rules and regulations necessary to put into effect the new law’s provisions.

The law’s provisions apply to all certificates of insurance issued in connection with property, operations, or risks located in New Jersey, regardless of where the policyholder, insurer, insurance producer, or person requesting or requiring the issuance of a certificate is located.

The Professional Insurance Agents of New Jersey (PIANJ), a statewide trade association representing independent agencies and their employees, hailed the legislation’s passage.

“PIANJ commends Gov. Christie, Assemblyman Gary S. Schaer, D-36, Sen. Nia H. Gill, D-34, the bill’s prime sponsors, and the eight other legislators who shepherded this important legislation into law,” said PIANJ President Charles J. Caruso.

Last month, PIANJ testified in favor of the legislation during hearings of the Assembly Financial Institutions and Insurance Committee and the Senate Commerce Committee.

“This law will protect New Jersey’s insurance-buying community and their insurance agents, who will not have to address impossible demands from third parties,” Caruso said.

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