N.J. Panel Advances Contractors Insurance Fix

September 24, 2004

The New Jersey Assembly Regulated Professions and Independent Authorities Committee this week unanimously released two bills that supporters say will remedy a problem for insurance producers in the issuance of certificates of insurance that inadvertently was created by the recently enacted Contractor’s Registration Act.

The bills were introduced at the suggestion of the Professional Insurance Agents of New Jersey Inc., which spotted the problem in the new law and alerted the sponsors of the act.

Assemblyman Anthony Impreveduto (D-Secaucus), chairman of the legislative committee, said the Contractor’s Registration Act enacted earlier this year had unintended consequences and he intends to correct them.

The act requires home improvement contractors to register annually with the Division of Consumer Affairs and to file a certificate of insurance evidencing a policy of commercial general liability in a minimum amount of $500,000. The law was to be effective Nov. 9, 2004.

One of the bills released this week (A-3258) will delay implementation of the act until Dec. 31, 2005. This bill, and another (A-3215) also released by the committee, remove a problematic provision in the act that would have required insurance producers to provide home improvement contractors with a certificate of insurance stating that cancellation or nonrenewal of their commercial general liability policy would not be effective unless the director of Consumer Affairs received written notice at least 10 days prior to cancellation or renewal.

Testifying in support of the bills, Leon Zimmerman, PIANJ’s legislative representative, told the committee that the act would require insurance producers to issue certificates of insurance “that misrepresent the terms of the commercial general liability (CGL) policy. No CGL policy currently exists that contains a policy provision for notice of cancellation or nonrenewal to be given to the director of consumer affairs.”

According to PIANJ, certificates cannot amend the terms of the policy and only are used as proof an insurance policy is in effect and to summarize the essential terms, conditions and duration of the policy.

PIANJ told the committee that the effect of the original law would have been that no home improvement contractor could have complied because a CGL policy providing for notice of cancellation or nonrenewal to Consumer Affairs does not exist and a certificate of insurance providing for this notice could not have been legally issued.

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