InsuranceLecturer — Like most states in the U.S., having homeowners insurance in New Jersey is not required, although the mortgage company giving the home loan often requires it. With this in mind it is important to be up to date on current New Jersey state laws governing homeowners insurance.
The New Jersey State Department of Insurance has a law in place that allows for prosecution of any person who provides false or misleading information on an insurance policy application.
This means if the insurance company finds out that you have fraudulently applied for insurance or have presented a false claim, you can be pursued by the insurance company and the state with criminal and civil action.
On the other hand, New Jersey State also has the FAIR plan law in place. The FAIR plan allows for those who have made unsuccessful attempts at purchasing an insurance policy to go about obtaining insurance through the New Jersey Insurance Underwriting Association.
The only difference between a FAIR plan policy and a private insurance policy is that the FAIR plan will only offer basic insurance coverage like fire, vandalism, and wind but will not cover burglary or personal liability.
Keep in mind that if you cannot find insurance this does not mean the New Jersey Underwriting Association has to protect you. The homeowner can be denied insurance through the FAIR plan if the building to be insured is in poor condition such as faulty wiring or plumbing, there is overcrowding in the building, or because of improper storage of flammables in the building.
Because the FAIR plan is in place, New Jersey homeowners are subjected to the possibility of a cancelled policy or the non-renewal of a policy. Insurance companies can cancel a policy within the first 60 days for almost any reason that has not been prohibited by the state of New Jersey.
After this 60-day period, insurance companies can alter the terms or rates of a plan if they have provided the policyholder with written notice. Mid-term cancellation or change of rates is not allowed unless the policy owner has not paid the premium or unless the policy owner has not met other agreements spelled out by the policy.
Non-renewal and altering of plans is allowed after the initial policy period has ended, but there must be a written notice sent to the policy within a 120 to 30 day period before the renewal date.
If a private insurance company has canceled insurance, a policy owner is also eligible to seek insurance through the FAIR plan. Of course the FAIR plan may have restrictions that require the homeowner to first seek alternative insurance through other sources in order to first be eligible.
Two types of insurance that may possibly be excluded from a basic plan and may be necessary while living in New Jersey are flood and windstorm coverage.
Flood insurance is almost never covered in a private insurance policy and will need to be obtained through the National Flood Insurance Program. Flood insurance in New Jersey will be most prominent in areas near the coast where high storm surges or potential hurricanes are the most threatening.
Often those living on the coast of New Jersey also have difficulty finding windstorm coverage. The Windstorm Market Assistance Program is a network of insurance companies and agents that will help qualified applicants near the coast of New Jersey find windstorm insurance.
Agents of the Windstorm assistance program first try to acquire windstorm protection through independent insurance companies. If this is not possible, they will then turn to a segment of the FAIR plan in order to find insurance for coastal residents.