A bill currently under consideration in the New Jersey Assembly would prohibit insurance companies from increasing the homeowners insurance policy’s premium based on one claim filed during the policy’s coverage period.
The Assembly Bill 4170 (An act concerning homeowners insurance and supplementing Title 17 of the Revised Statutes), sponsored by Assemblyman Timothy Eustace, (D-Bergen, Passaic), was introduced on Feb. 5 and has been referred to the Assembly’s Financial Institutions and Insurance Committee.
The bill notes that according to reports in the press, one claim can raise the monthly homeowners insurance premium by as much as nine percent. “This bill is intended to eliminate such rating and premium increases due to a single claim filed during any one coverage period,” according to the bill’s statement.
“For the purpose of determining adverse claims experience and any related increase in premium, an insurer shall not consider or categorize as a claim the first claim filed under a policy of homeowners insurance during each coverage period,” the proposed bill states.
Under the proposal, an insurer would be subject to a penalty of up to $5,000 for each violation, and if the the insurer knew or reasonably should have known it was in violation of the bill, the penalty could be up to $25,000 for each violation. The penalty would be collected in a summary proceeding in accordance with the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).
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