Key Takeaways
- NJPLIGA protects New Jersey policyholders when P&C insurers become insolvent
- NJPLIGA covers claims up to $300,000 per claim for most covered claims
- Workers' compensation claims are covered without a cap
- NJPLIGA does not cover surplus lines policies or self-insured plans
- Producers cannot advertise or use NJPLIGA coverage as a selling point
New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA)
The New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA) protects New Jersey residents when P&C insurance companies become insolvent.
Purpose and Function
NJPLIGA:
- Protects policyholders of insolvent P&C insurers
- Pays covered claims up to statutory limits
- Funded by assessments on member insurers
- Operates under state law supervision
How It Works
When a P&C insurer becomes insolvent:
- DOBI takes over - Places insurer in liquidation
- NJPLIGA activates - Takes responsibility for covered policies
- Claims processed - NJPLIGA pays covered claims
- Assessments made - Member insurers pay assessments
Coverage Limits
NJPLIGA provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $300,000 per claim |
| Workers' Compensation | No cap |
| Homeowners Claims | $300,000 |
| Auto Claims | $300,000 |
| Commercial Claims | $300,000 |
Exam Tip: Remember the $300,000 limit for NJPLIGA. This is a key number for New Jersey P&C exams.
Aggregate Limits
- $300,000 maximum per claimant (except workers' comp)
- Workers' comp has no aggregate limit
- Deductible may apply to some claims
What Is Covered
NJPLIGA covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
- Personal liability
What's NOT Covered
| Not Covered | Reason |
|---|---|
| Surplus lines policies | Non-admitted insurers |
| Self-insured plans | Not insurance policies |
| Life insurance | Separate guaranty fund (NJLIFGA) |
| Health insurance | Separate guaranty fund |
| Title insurance | Separate coverage |
| Ocean marine insurance | Excluded |
| Amounts above limits | Statutory limit applies |
| Return of unearned premium | Not a claim |
Funding
NJPLIGA is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in New Jersey
- May be passed to policyholders via surcharges
- Recouped over time
Assessment Categories
| Category | Purpose |
|---|---|
| Workers' Comp Account | WC claims only |
| Auto Account | Auto claims |
| Other Account | All other claims |
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use NJPLIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by NJPLIGA
- Compare NJPLIGA to FDIC or SIPC
- Suggest choosing insurer based on NJPLIGA
Required Conduct
- Provide accurate information if asked directly
- Cannot misrepresent coverage limits
- Cannot suggest coverage exceeds actual limits
- Must not use to induce sales
Exam Tip: Producers CANNOT use NJPLIGA coverage as a selling point. This is frequently tested in New Jersey.
Claims Process
When an insurer becomes insolvent:
- Notice sent - NJPLIGA notifies policyholders
- Claims submitted - To NJPLIGA directly
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Policy may end - Policyholder finds new coverage
Important Notes
- Surplus lines policyholders have NO NJPLIGA protection
- Must disclose surplus lines status to consumers
- Self-insured employers have no guaranty fund protection
- Claims above $300,000 may not be fully paid
What is the maximum coverage NJPLIGA provides for most P&C claims?
Can a New Jersey P&C producer use NJPLIGA coverage as a selling point?
Which of the following types of insurance is NOT covered by NJPLIGA?
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