N.J. Repairs Contractors’ Registration Act

November 11, 2004

New Jersey Gov. James McGreevey has signed into law a measure sought by agents and insurers that removes troublesome provisions from the Contractor’s Registration Act.

The amendments fix a provision that required written notice of cancellation or nonrenewal of a commercial general liability insurance policy by insurers to the director of the Division of Consumer Affairs, at least 10 days prior to cancellation or renewal.

The Property Casualty Insurers Association of America (PCI) worked with the agents and brokers and other associations to correct the problematic provisions. “If left untouched, the Contractor’s Registration Act would have required producers to issue certificates of insurance to contractors that were misleading and that would have misrepresented the terms of the commercial general liability policy,” maintained Richard Stokes, regional manager and counsel for the PCI.

The Professional Insurance Agents of New Jersey (PIANJ), which initiated the amending legislation, told lawmakers that the effect of the original law would have been that no home improvement contractor could have complied because a Commercial General Liability 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.

PIANJ explained that 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.

The association also advised lawmakers that the Department of Banking and Insurance addressed the proper use of certificates with a bulletin in 1998 when it cautioned that providing a certificate of insurance that materially misrepresents policy terms or conditions violates the law and subjects a producer to penalties that include suspension or revocation of their producer’s license and could create civil liability.

With McGreevey’s signature on the amendments, the revised law now requires home improvement contractors to submit a copy of the cancelled or nonrenewed certificate of commercial general liability insurance to the Division of Consumer Affairs, before the original certificate of insurance expires to receive a new or replacement policy.

In addition, the amendment removed regulations that would have required home improvement contractors to register annually with the Division of Consumer Affairs and to file a certificate of insurance verifying a policy of commercial general liability of at least $500,000.

The bill also changes the effective date of the Contractor’s Registration Act to December 31, 2005.

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