Who Regulates Insurance and Provides Protection to Insurance Customers in New Jersey?
All issues relating to the insurance regulation industry in New Jersey are overseen by the Division of Insurance (NJDOI) under the New Jersey Department of Banking and Insurance (NJDOBI). The New Jersey Division of Insurance issues licenses to insurance companies and other risk management entities operating within the state. In addition, it reviews insurance products offered by insurers to ensure they comply with state laws and monitors the finances of registered insurance companies to guard against insolvency.
One of the most important functions of the New Jersey Division of Insurance is consumer protection. The NJDOI ensures that insurance consumers’ complaints filed against insurers in the state are handled in accordance with the New Jersey Consumer Fraud Act.
The NJDOI does not work alone in protecting insurance product consumers. Additional protection comes through the various state guaranty funds administered by the New Jersey Life and Health Insurance Guaranty Association and the New Jersey Property and Liability Insurance Guaranty Association. A guaranty fund pays part or all outstanding claims against insolvent insurers that are members of the guaranty association. In New Jersey, all registered insurance companies must belong to one or more guaranty associations. If a registered insurance company in New Jersey becomes insolvent and liquidated by a court, the guaranty association under which it is registered will provide limited payments to New Jersey citizens.
What is the New Jersey Department of Insurance?
The New Jersey Department (Division) of Insurance (NJDOI) is a division within the New Jersey Department of Banking and Insurance. The NJDOI comprises units that oversee the licensing of insurance companies in New Jersey and enforce state regulations regarding insurance matters. In addition, NJDOI monitors insurance companies within the state to detect early signs of financial instability that may result in their inability to fulfill their obligations to insurance consumers.
The New Jersey Division of Insurance regulates the state’s life, health, and property & casualty insurance industries through its sub-offices and bureaus. These offices include:
The NJDOI ensures insurance product availability and checks the activities of fraudulent insurers who may want to take advantage of their product consumers.
Who Regulates the New Jersey Department of Insurance?
The New Jersey Division of Insurance (NJDOI) is regulated by the New Jersey Department of Banking and Insurance (NJDOBI). The NJDOBI was created by the New Jersey Senate of 1947, authorized by Chapter 88 of the Laws of 1948, and reorganized by Chapter 11 of the Laws of 1970 and Chapter 45 of the Laws of 1996. The New Jersey Department of Banking and Insurance is the state regulator for the banking, insurance, and real estate industries.
What are the Unfair Trade Practices in New Jersey?
Unfair trade practices involve using deceptive, fraudulent, or unethical practices by individuals and businesses to gain an unfair advantage over competitors. These practices mislead consumers into making uninformed decisions.
In New Jersey, Unfair trade practices in insurance industry include:
Misrepresentation of facts about an insurance policy
False advertising
Tied selling (coercive tied selling). For instance, selling an insurance product to consumers on the condition that they must purchase other products or patronize other services
Gift offers (false free prizes) to gain an advantage over the competition
Non-compliance with industry standards, thereby reducing the quality of products to make large profits
Deceptive pricing for undue advantage
Selling an insurance policy without outlining the cons
Defamation of other competitors to gain an advantage
Inducing policyholders either directly or indirectly to replace their current policies with that of your preferred choice
Concealment of information to sway decisions towards a particular product or business
In New Jersey, the Unfair Trade Practices Act regulates business and insurance practices following state rules. For instance, the Division of Insurance may revoke the licenses of insurance agents and brokers who deliberately misappropriate policyholders’ money or twist facts when selling a policy. Irrespective of the type of business, the State of New Jersey Attorney General’s Office, through the Office of Consumer Protection, ensures equal opportunities for all businesses and also protects consumers.
How to Report Suspected Unfair Trade Practices in New Jersey?
In New Jersey, you can report a suspected case of unfair trade practice through the Attorney General's Office by using the “File a Complaint” portal of the AG’s office website and choosing the type of crime you want to report from the available list. For instance, to report insurance fraud, you have to click on Report Insurance Fraud and fill out the provided form with the required information. You can also contact the New Jersey Attorney General’s Office to report insurance fraud by:
Calling the NJ Office of the Attorney General on 1(877) 553-7283
Sending a mail to:
The NJ Office of the Attorney General
Office of the Insurance Fraud Prosecutor
P. O. Box 094
Trenton, NJ 08625-0094
- Sending an email to njinsurancefraud@njdcj.org
New Jersey residents with grievances against insurance companies can seek assistance through the Consumer Protection Services of the Division of Insurance. The Consumer Protection Services investigate complaints relating to inquiries that fall within the jurisdiction of the Department of Banking and Insurance. In addition, the Enforcement Unit of the Consumer Protection Services processes all administrative penalties imposed on defaulters by the Department of Banking and Insurance for violating the law.
New Jersey citizens seeking to file complaints against their insurers can do so:
By calling the Consumer Protection Services on (609) 292-7272, or through the Consumer Hotline 1(800) 446-7467 between 8.30 a.m. and 5.00 p.m, Monday through Friday.
Through mail to:
The NJ Department of Banking and Insurance
20 West State Street
PO Box 325
Trenton, NJ 08625
- Through fax on (609) 777-0508 or (609) 292-2431
An individual can also report unfair trade practices through the New Jersey Division of Consumer Affairs Complaint Page and follow the instructions on the page.
What is the New Jersey Life and Health Insurance Guaranty Association?
The New Jersey Life and Health Insurance Guaranty Association (NJLHIGA) is a statutory entity enacted in 1992 by the legislature through the New Jersey Life and Health Insurance Guaranty Association Act. All accident, life, health, and annuity insurance companies registered in the state are members of the New Jersey Life and Health Insurance Guaranty Association. The New Jersey Life and Health Insurance Guaranty Association protects policyholders insured under member insurance companies if they are insolvent and liquidated by a court with jurisdiction. The NJLHIGA maintains stability within the accident, life, health, and annuity insurance markets If a member of the NJLHIGA is liquidated by a court, the association alleviates problems that may arise due to claims.
The New Jersey Life and Health Guaranty Association has statutory limitations. For instance, in the event of insolvency, payouts for covered annuity benefit claims do not exceed $500,000. Also, as a non-governmental organization, it does not run on state funds, but through assessment levies on members. Additional funds are made available by selling off assets of insolvent members to settle covered claims.
To have the protection of a guaranty association, your insurer must be a member of that association. To be a member of an insurance guaranty association, an insurance company must register to operate in New Jersey. You can verify the status of an insurance company in New Jersey by contacting the New Jersey Department of Banking and Insurance by:
Calling the department’s automated hotline on 1(800) 446-7467
Sending a mail to:
NJ Department of Banking and Insurance
20 West State Street
PO Box 325
Trenton, NJ 08625
Phone: (609) 292-7272
How Does the New Jersey Life and Health Insurance Guaranty Association Work?
The aim of the New Jersey Life and Health Insurance Guaranty Association (NJLHIGA) is to protect accident, life, health, and annuity insurance product consumers from total loss in the event of insolvency of their insurers. If a member company goes bankrupt and is declared insolvent, the guaranty association would step in and take over the insurer’s obligations to its policyholders to the limits of the Guaranty Association's Act. The New Jersey life and health guaranty association will settle claims up to the limit stated for each policy in the Life and Health Insurance Guaranty Act. For policyholders of insolvent members, the association’s payment limits are outlined in the table below.
New Jersey Life and Health Insurance Guaranty Association claim limits:
| Plan Type | Maximum Payout |
| Life Insurance Death Benefit | $500,000 |
| Life Insurance Cash Surrender | $100,000 |
| Annuity Benefit (Cash Surrender Value) | $100,000 |
| Annuity Benefit (Present Value) | $500,000 |
| Health Insurance Claims | No fixed limit |
In the event of insolvency of a member of the NJLHIGA, the association may continue providing coverage to the insured under the policy or cancel the plan outrightly. The decision taken by the association may be due to a court judgment or the policyholder’s preference. To continue coverage, an insured must regularly pay the premium for such coverage to the New Jersey life and health insurance association until the association transfers the policy to a new insurer. To transfer insurance policies of insolvent insurers to a new insurance company, the NJLHIGA must have the state’s approval.
Additional information on how the New Jersey Life and Health Insurance Guaranty Association works are outlined in the FAQs below.
- What happens if my claim exceeds a plan's maximum payout?
The New Jersey Life and Health Insurance Guaranty Association Act stipulates the maximum payment for claims in the event of insolvency of the insurer. However, If a policyholder’s claim exceeds these limits in the event of liquidation, the policyholder may receive extra payment after the disposal of the company’s assets, or forfeit the excess amount.
- How do I know if I have protection under the New Jersey life and health insurance guaranty association?
To have protection under NJLHIGA, your insurer must be a member of the association. All registered life, accident, and health insurance providers in New Jersey are members of NJLHIGA. To find out if your insurer is registered in New Jersey, visit the State Department of Banking and Insurance page for licensed insurance carriers.
- If my insurance provider liquidates, when will I be paid my benefit?
If an insurance company files for bankruptcy and is liquidated by a court order, all payments from the insurer's accounts will be suspended. The court will appoint a receiver to assess its assets and liabilities. The assessment process, in some cases, may take up to several months. The NJLHIGA will step in and make payments after the assessment is over.
- How do I find New Jersey licensed insurance companies?
You can confirm if an insurance company is registered in New Jersey through the New Jersey Department of Banking and insurance and go through the list of registered insurers in the state.
- Will I have protection from NJLHIGA if I move to a new state?
You may have protection from the new state’s guaranty association if your insurer operates in the new state and is a member of their life and health guaranty association.
- Will I get my claim paid in full if my insurer is insolvent?
The amount you get as a payout may depend on the size of your claim. If the amount is less than the maximum for such plans, you may get full payment. Also, your payout may depend on available funds and the number of policyholders the association needs to pay.
- If I choose to continue my policy, who do I pay a premium to?
The NJLHIGA long-term plan is to transfer policyholders to new capable insurers. However, while still in the process of securing suitable insurers to take over the policies, all premium payments are made to the New Jersey life and health insurance guaranty association. If the NJLHIGA transfers an insurance policy to a new insurance company, the policyholder should make premium payments to the new insurer.
- What if I have more than one same type of policy with an insolvent insurer?
If you have more than one policy under an insurance plan, your benefit may be limited to one policy. For instance, if you have two annuity benefits (cash surrender value) policies, in the event of insolvency, the maximum amount payable by the NJLHIGA is $100,000 (maximum payout for one policy). The New Jersey property and casualty insurance guaranty association will not make a double payout to individuals with two policies under the same plan.
What is the New Jersey Property and Casualty Insurance Guaranty Association?
The New Jersey Property and Casualty Insurance Guaranty Association mitigates the financial losses policyholders may incur in the event of insolvency of their insurers. In New Jersey, all insurance companies licensed to provide property-casualty insurance are required to be members of the New Jersey Property and Casualty Insurance Guaranty Association. The aims of the NJPLIGA in relation to insurance protection are:
To act as a safety net against challenges of the insurance industry
To render services to policyholders and insurance claimants of members following the laws that set up the association
The New Jersey property and liability insurance guaranty association acts as a safety net for policyholders and claimants of insolvent insurance companies. In New Jersey, the NJPLIGA protection covers some other entities administering claims within the state. These entities include:
The New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA)
The New Jersey Surplus Line Insurance Guaranty Fund (NJSLIGF)
The Workers’ Compensation Security Fund (WCSF)
The Unsatisfied Claim and Judgment Fund (UCJF)
New Jersey Property and Liability Insurance Guaranty Association (NJPLIGA)
In 1974, the New Jersey senate established the property and liability insurance guaranty association through an Act of Legislature. The New Jersey Property and Liability Insurance Guaranty Association (NJPLIGA) protects the policyholders of insolvent property-casualty insurance companies. The NJPLIGA is a non-state-funded, non-profit, unincorporated private entity. Once a member is declared insolvent by a court of competent jurisdiction, the association takes over the company’s obligations to policyholders. By its statute, NJPLIGA can receive premiums and administer claims of policyholders of its liquidated members. Also, NJPLIGA reimburses insurers for certain excess medical benefits (EMBs) above $75,000 for personal injury protection (PIP) claims. However, this payment applies to policies purchased or renewed before 2004.
As a non-governmental organization, the New Jersey property and liability insurance association is not state-funded but relies on members’ assessment and distributions from the insolvent members’ estates. However, membership assessments may be passed to New Jersey residents as a surcharge for policies with the authorization of the New Jersey Department of Banking and Insurance.
New Jersey Surplus Line Insurance Guaranty Fund (NJSLIGF)
The New Jersey surplus line insurance fund was established in 1984 by the New Jersey State Senate through a Senate Legislative Act. The fund provides a safety net for the payment of claims of policyholders of insolvent surplus line insurers in the state. All surplus line insurance companies operating in New Jersey must be members of NJSLIGF. To be eligible for an NJSLIGF claim, a claimant or policyholder must:
Be resident in New Jersey at the time of occurrence of the claim event, and it must be a covered event.
Be a first-party claimant.In the cases of property damages, such properties must have a permanent location in New Jersey.
New Jersey surplus line insurance guaranty fund does not cover:
Claims filed after the expiration of the date set by the court
Punitive damages (except those covered by the policy)
Legal costs and claims made before the date of insolvency
Payments due to reinsurers, underwriting associations, and insurance pools. However, are exceptions for claim amounts asserted against an individual insured by an insolvent insurer (this becomes a covered claim)
Attorney fee for a lawsuit against the fund
Charges incurred due to the insolvent insurer’s inability to settle claims on time
Interests on unliquidated claims
Funding for the New Jersey surplus line insurance guaranty fund is through the distribution of the insolvent insurer’s estate for payments made on behalf of the estates. Also, the fund places surcharges on surplus line insurance policies.
New Jersey Workers’ Compensation Security Fund (WCF)
The New Jersey workers’ compensation security fund was established by New Jersey Act N.J.S.A. 34:15–103 et seq of the New Jersey senate to pay claims of insolvent workers’ compensation insurers in the state. The New Jersey workers’ compensation security fund is a money pool that protects against risks located within the state. It covers the payment of valid claims or death benefits of workers’ compensation policies of insolvent insurance companies operating in New Jersey.
All insurance companies providing workers’ compensation coverage within New Jersey must contribute to the WCSF. Also, additional income comes through profits from investing the contributed fund, and distributions from insolvent members' estates.
Unsatisfied Claim and Judgment Fund (UCJF)
The unsatisfied claim and judgment fund was set up in 1952 by the New Jersey senate through the legislative act N.J.S.A. 39:6-61 et seq. It pays claims for injuries and damages resulting from hit-and-run accidents involving uninsured motorists. In addition, UCJF provides Private Passenger Pedestrian (PIP) coverage for the uninsured. Under the UCJF act, an insurer can file a claim within 90 days of a hit-and-run accident if:
The insurer spends more than $50,000 on an individual in the event of a hit-and-run accident.
The insurer Incurs a cost above $75,000 in a hit-and-run accident.
In the event of injury to or death of an individual who is qualified for protection, UCJF may pay up to the following limits based on the type of expense:
Medical expenses benefit - $250,000 per individual subject to the approval of the insurance commissioner. If the injuries lead to death, this benefit goes to the estate of the decedent. However, medical expense benefit comes with a $250 deductible and a 20% copayment which may range between $250 and $5,000.
Income continuation benefit - If an eligible individual sustains injuries or disability that leads to loss of income, UCJF will pay a maximum of $100 weekly. The income continuation benefit is payable during the lifetime of the individual subject to a limit of $5,200 per individual in an accident. The income benefit shall not exceed the amount the individual will normally earn during the period the payment is active.
Essential service benefits - UCJF will reimburse an injured individual to a limit of $12 daily for injuries sustained in an accident that leads to the individual’s inability to carry out normal essential services. This amount is payable during the injured individual’s lifetime and is subject to a limit of $4,380 on account of injury to an individual.
Death benefits - If an accident leads to the death of a breadwinner, the maximum amount of the income continuation benefit may go to the spouse, children, or estate. If the deceased performs essential services and qualifies for essential service benefits, such benefits go to the person incurring the expenses of providing such services.
Funeral expenses benefits - In the event of an accident leading to the death of the injured individual, UCJF will pay up to a limit of $1,000 for burial expenses.
Note: The above benefits are payable to individuals eligible for payment under the unsatisfied claim and judgment fund law as defined by section 2 of P.L.1972, c.70 (C.39:6A-2).
The UCJF raises funds by assessing insurance companies offering automobile insurance within the state.
How Does the New Jersey Property and Casualty Insurance Guaranty Association Work?
The New Jersey property and casualty (or property- and liability) insurance guaranty association (NJPLIGA) mitigates the financial losses of policyholders and claimants of its members if a member should become insolvent. Being a non-governmental organization, NJPLIGA does not operate on state funds but is funded by assessing the association’s members. If a member of the association is liquidated by a court of competent jurisdiction, the court will appoint a receiver to assess the assets and liability of the insolvent insurer.
After the assessment, the receiver forwards the report to the court to authorize NJPLIGA to go through and make payment for covered claims up to the $300,000 limit. Non-covered claims or claims that do not qualify for payment can be filed against the estate of the insolvent insurance company. Depending on the policyholder’s choice, or the court’s judgment, a policy may be continued or canceled outrightly. If a policyholder decides to continue a policy, the NJPLIGA may transfer the policy to a more capable insurer.
For more insight into how the New Jersey property and casualty insurance guaranty association works, below are some FAQs.
Will I be notified if my insurer is under liquidation?
Yes, the court clerk will mail you a notice to inform you of the liquidation. Also, it will be published in New Jersey newspapers to notify the public.
How do I file a claim if my insurance company is under liquidation?
To make a claim, you must file a proof of claim (POC) with the liquidator (receiver) appointed by the court. A proof of claim will be sent to you by the court clerk to provide the necessary information and attach copies of all the necessary documents before mailing it to the court’s approved address. The proof of claim must be filed and sent to the court before the final date set by the court. You can file a proof of claim:
By mailing it to the court through the address listed on the notice.
Through the court’s official website.
Through a third-party bankruptcy agent or their website.
Will I get a refund for my paid premiums?
In New Jersey, you may get a refund for unearned premiums for property-casualty policies if you meet the statutory requirements. However, the unearned premiums, returns, or audit premiums on workers’ compensation policies canceled during the liquidation procedure are non-refundable. You can make such claims against the insolvent insurer’s estate.
What if I have two different policies for the same insurable risk?
If you have two different policies for the same insurable risk under an insolvent insurer, your claim payment will only apply to one of the policies. In the event of insolvency, the total amount payable to an individual will not exceed the amount stated in the NJPLIGA act, irrespective of how many policies you have with the insolvent insurer.
What is an excess medical benefit (EMB)?
Excess benefit claims are benefits paid to the insurer for medical expenses that exceed $75,000 under N.J.S.A. 39:6A-4a, 39:6A-4.3, or 39:6A-3.1. Such costs must be from personal injury to any one person in any accident.
How do I file an uninsured motorist/uninsured pedestrian claim?
You may be entitled to a benefit if you are injured in an accident involving an uninsured motorist if you do not have any other coverage. To make a claim, you must first fill out a Notice of Intention to Make a Claim (NOI) by downloading and filling out an NOI form within 180 days. Filing of NOI must meet the requirements of N.J.S.A. 39:6-61 et seq of the New Jersey laws. If you are a pedestrian with no insurance that is involved in an accident with an uninsured private vehicle, you must file a notice of intention to claim within two years of the injury.
Note: claims should be done separately for individual claimants.
What documents do I need to file a claim against the UCJF?
To file a claim against the UCJF, you must first file an NOI. In addition, you will have to fill and submit the following forms that you can download through the UCJF website:
Affidavit in support of UCJF eligibility - This is a sworn statement in support of your claim.
PIP Application - This is a no-fault automobile insurance form to support your claim.
Certificate of Medicare Eligibility - This form shows your Medicare eligibility status.
HIPAA Privacy Authorization - This form authorizes the New Jersey UCJF access to protected health information.
