Sponsored by:
Assemblyman NELSON T. ALBANO
District 1 (Cape May, Atlantic and Cumberland)
Assemblyman MATTHEW W. MILAM
District 1 (Cape May, Atlantic and Cumberland)
SYNOPSIS
Requires insurers to allow payment of homeowners' insurance premiums in monthly installments.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning homeowners' insurance and supplementing chapter 36 of Title 17 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
"Commissioner" means the Commissioner of Banking and Insurance.
"Financial institution" means any State or federally chartered bank, savings bank, savings and loan association or other entity engaged primarily in lending or investing in this State.
"Homeowners' insurance" means personal lines insurance providing coverage against loss to real and personal property as defined in the standard fire policy and extended coverage endorsement thereon, a dwelling policy, the homeowners multiple peril policy, insurance against the perils of vandalism, malicious mischief, burglary, or theft, or liability insurance or any combination thereof, or any other such policy delivered, issued or renewed or approved by the commissioner for issuance, delivery or renewal in this State.
"Insurer" means any domestic, foreign, or alien insurer or surplus lines insurer, and the New Jersey Insurance Underwriting Association created pursuant to P.L.1968, c.129 (C.17:37A-1 et seq.).
"Policyholder" means a holder of a policy for homeowners' insurance issued by an insurer.
2. a. Every insurer authorized to transact the business of homeowners' insurance in this State shall permit policyholders to pay the total premium amount on the policy in monthly installments.
b. It shall be a violation of this act for an insurer to require a policyholder to pay the full amount of the homeowners' insurance premium in any other manner than that prescribed in subsection a. of this section.
c. The requirements set forth in subsections a. and b. of this section shall not apply in the case of a financial institution that requires a policyholder to pay the total premium amount on a homeowners' insurance policy as a condition for obtaining a mortgage.
3. If the commissioner determines that an insurer has committed or performed, with such frequency as to indicate a general business practice, violations of any provisions of this act, the commissioner may impose a civil penalty in an amount up to $2,500 for the first violation and up to $5,000 for each and every subsequent violation, collectible in an action brought in the name of the commissioner pursuant to the provisions of the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).
4. This act shall take effect immediately and apply to homeowners' insurance policies issued or renewed on or after that date.
STATEMENT
This bill requires insurers that issue homeowners' insurance to allow policyholders to pay the premiums in monthly installments.
Each year, homeowners have the option of renewing an existing policy for homeowners' insurance or canceling the policy and purchasing a new one from a different insurer. In many instances, the insurer may provide the policyholder with several payment options including paying the total cost of the policy in one lump sum payment.
This bill would prohibit that practice of insurers requiring policyholders to pay the total cost of that policy in one lump sum payment and instead allow these individuals to pay the full amount of the policy in monthly installments. The bill creates an exception for homeowners who are required to pay the premium on a homeowners' insurance policy in one lump sum payment as a condition of obtaining a mortgage at the time of closing on a newly purchased property or refinancing a property.
The bill also authorizes the Commissioner of the Department of Banking and Insurance to impose a penalty in the amount of $2,500 for the first offense and $5,000 for second and subsequent offenses against any insurer who violates the provisions of this bill with such frequency as to indicate a general business practice.