Key Takeaways
- New Jersey FAIR Plan provides basic property coverage for high-risk properties that cannot obtain coverage in the voluntary market
- The Shore Insurance Exchange provides specialized coverage for coastal properties at risk from hurricanes and storms
- New Jersey requires specific notice periods for policy cancellation and non-renewal
- Insurers must provide at least 60 days notice for non-renewal of homeowners policies
- New Jersey has specific disclosure requirements for property insurance policies
New Jersey Homeowners Insurance Requirements
New Jersey has specific property insurance regulations that protect consumers and ensure adequate coverage availability.
New Jersey FAIR Plan
The New Jersey FAIR Plan (Fair Access to Insurance Requirements) provides basic property insurance for high-risk properties:
What FAIR Plan Covers
| Coverage | Included |
|---|---|
| Fire and Lightning | Yes |
| Extended Coverage | Yes |
| Vandalism and Malicious Mischief | Yes |
| Windstorm | Yes |
| Liability | No (separate policy needed) |
| Contents | Optional |
When FAIR Plan Is Used
- Property located in high-risk areas
- Property has been declined by voluntary market insurers
- Property doesn't meet standard underwriting guidelines
- After major disasters when voluntary market tightens
- Urban properties with higher risks
Important: FAIR Plan is a last resort, not a first choice. It typically costs more and provides more limited coverage than voluntary market policies.
FAIR Plan Application Process
- Attempt to obtain coverage in voluntary market
- If declined, apply to FAIR Plan
- Property inspection may be required
- Premium based on FAIR Plan rates
- Coverage issued if property meets requirements
Shore Insurance Exchange
The New Jersey Shore Insurance Exchange provides specialized coverage for coastal properties:
Purpose
- Provides wind coverage for coastal properties
- Supplements voluntary market coverage
- Addresses hurricane and storm exposure
- Serves barrier islands and coastal communities
Coverage Area
- Properties within designated coastal zones
- Typically barrier islands and waterfront areas
- Areas with elevated hurricane/wind risk
- Defined by geographic boundaries
Cancellation and Non-Renewal Requirements
New Jersey has strict requirements for canceling or non-renewing property insurance:
Cancellation Notice Requirements
| Reason for Cancellation | Notice Required |
|---|---|
| Non-payment of premium | 10 days |
| Material misrepresentation | 30 days |
| Substantial increase in hazard | 30 days |
| Within first 60 days (new policy) | 30 days |
Non-Renewal Notice Requirements
| Timeframe | Requirement |
|---|---|
| Standard Non-Renewal | 60 days before expiration |
| Reason Required | Must state specific reason |
| Appeal Rights | Consumer may request review |
Prohibited Cancellation Reasons
New Jersey prohibits cancellation or non-renewal based on:
- Filing a single claim (inquiry alone doesn't count)
- Age of the insured (except as actuarially justified)
- Location alone (without other risk factors)
- Credit history (subject to limitations)
Excess Lines (Surplus Lines)
New Jersey allows surplus lines insurance for risks not available in the admitted market:
Surplus Lines Requirements
| Requirement | Details |
|---|---|
| Diligent Search | Must show risk cannot be placed in admitted market |
| Eligible Surplus Lines Insurer | Must be on DOBI approved list |
| Surplus Lines Licensee | Must use licensed SL broker |
| Surplus Lines Tax | 5% of premium |
| Disclosure | Must disclose SL status to insured |
Consumer Protection
- Surplus lines policies NOT covered by NJ Guaranty Association
- Consumer must acknowledge understanding of this limitation
- Disclosure forms required
Flood Insurance
- Standard property policies exclude flood damage
- National Flood Insurance Program (NFIP) provides coverage
- Agents should disclose flood insurance availability
- Many NJ properties in flood zones due to coastal location
How many days notice must a New Jersey insurer provide for non-renewal of a homeowners policy?
What does the New Jersey FAIR Plan provide?
What is the New Jersey surplus lines tax rate?