New Jersey's insurance law sits in Title 17 (insurance generally, producer licensing, property and casualty) and Title 17B (life and health) of the New Jersey Statutes Annotated (N.J.S.A.). The Department's rules are in Title 11 of the New Jersey Administrative Code (N.J.A.C.). This guide covers the New Jersey rules on the regulator, producer licensing, appointments, continuing education, unfair practices, fraud, surplus lines and the guaranty associations, with citations. The general concepts (agency law, types of insurers, how regulation works) are in the national Insurance Regulation guide.

About the exam

New Jersey's producer exams are given by PSI. They are long exams with a large state-law section, and there is no combined exam: a life-and-health candidate takes a separate Life exam and Accident & Health exam, and a property-and-casualty candidate takes separate Property and Casualty exams.

• The exam tests the lines applied for, the duties of a producer, and New Jersey insurance law (N.J.S.A. 17:22A-31a). Exam materials must be offered in English and Spanish (N.J.S.A. 17:22A-31e).
• Prelicensing education is required: 20 hours each for life, health, property, casualty or personal lines, and 40 hours for combined life and health or combined property and casualty (N.J.S.A. 17:22A-32a(3)). Prelicensing hours can't be counted as CE (N.J.A.C. 11:17-3.6(a)2).
• A passing score is good for one year: the license application must show the exam was passed no more than one year earlier (N.J.A.C. 11:17-2.7(a)2).
• A candidate who passes gets a temporary work authority at the test center, good for 60 days while working under a licensed producer's supervision (N.J.A.C. 11:17-2.5(a)).
• Using notes or other reference material during the exam is a ground for license discipline (N.J.S.A. 17:22A-40a(11)).

The regulator

• The Department of Banking and Insurance (DOBI) regulates insurers and producers (N.J.S.A. 17:1-1). It is headed by the Commissioner of Banking and Insurance, appointed by the Governor with the advice and consent of the Senate (N.J.S.A. 17:1-2). The title is Commissioner, not Superintendent or Director.
• The Commissioner adopts rules under the Administrative Procedure Act (N.J.S.A. 17:1-15e). Neither the Commissioner nor any Department employee may have an interest in a regulated entity, apart from routine banking services (N.J.S.A. 17:1-2b).
• An insurer needs a certificate of authority from the Commissioner (N.J.S.A. 17B:17-12a). A domestic insurer is formed under New Jersey law, a foreign insurer under another state's law, and an alien insurer under another country's law (N.J.S.A. 17B:17-7).

Who needs a license

The New Jersey Insurance Producer Licensing Act of 2001 (N.J.S.A. 17:22A-26 et seq.) requires a producer license to sell, solicit or negotiate insurance for compensation (N.J.S.A. 17:22A-29).

• Sell means exchanging a policy for money on behalf of an insurer. Solicit means attempting to sell, or urging a person to apply for a particular kind of insurance from a particular insurer. Negotiate means conferring with or advising a buyer about a particular policy's benefits, terms or conditions (N.J.S.A. 17:22A-28).
• An insurance consultant gives advice about policies for a fee or other consideration (N.J.S.A. 17:22A-28).
• The license itself gives no authority to bind an insurer. That authority comes from the agency contract (N.J.S.A. 17:22A-28).
• Exempt: insurer or agency employees doing only executive, administrative, managerial or clerical work and not paid commissions (N.J.S.A. 17:22A-30b(1)(a)), and people who enroll members or issue certificates for group insurance without commission (N.J.S.A. 17:22A-30b(2)).
• No commission may be paid to a person who is required to be licensed and isn't (N.J.S.A. 17:22A-41a). Renewal commissions may go to someone who was licensed at the time of the sale (N.J.S.A. 17:22A-41c).

Lines of authority (N.J.S.A. 17:22A-33a) include life (which includes annuities and may include accidental death and disability income benefits), health, property, casualty, variable life and variable annuity (which also requires a securities license; N.J.A.C. 11:17-2.2(c)), and personal lines (property and casualty sold to individuals and families for noncommercial purposes).

Getting and keeping the license

• Requirements: age 18, no disqualifying acts, prelicensing education, fees and a passed exam (N.J.S.A. 17:22A-32a(1)). Applicants are fingerprinted for a background check at their own cost (N.J.S.A. 17:22A-32e).
• Business entities need their own license and must designate a licensed producer responsible for compliance (N.J.S.A. 17:22A-32b).
• Term: resident licenses expire on the last day of the birth month every two years. The first term runs at least 18 months. Business entity licenses expire biennially on May 31 (N.J.A.C. 11:17-2.1).
• Late renewal: a license not renewed by the expiration date has expired, and the person may not act as a producer (N.J.A.C. 11:17-2.6(b)). Within 12 months it can be reinstated without an exam, with a penalty of up to double the renewal fee (N.J.S.A. 17:22A-33c). After 12 months the person reapplies and retests.
• Address change: report a new address, phone or email within 30 days (N.J.S.A. 17:22A-33f; N.J.A.C. 11:17-2.8(f)). The fine schedule sets $250 for a late report (N.J.A.C. 11:17D-2.4(a)1).
• Assumed names must be reported before use. A name using "insurance" must be joined with a word like "agency" or "brokerage" (N.J.A.C. 11:17-2.8).
• Branch offices are registered within 30 days before business starts there, and each needs at least one licensed producer present (N.J.A.C. 11:17-2.9).
• Temporary license: up to 180 days without an exam, for example for a surviving spouse after a producer's death or disability, or for the designee of a producer entering military service. The Commissioner may require a sponsoring producer or insurer (N.J.S.A. 17:22A-37).
• Veterans: the initial license fee is waived for a New Jersey resident veteran who was honorably discharged (N.J.S.A. 17:22A-44e).

Nonresidents and people who move

• A nonresident license goes to a producer in good standing in the home state if that state treats New Jersey residents the same way (reciprocity; N.J.S.A. 17:22A-34a). Nonresidents appoint the Commissioner as agent for service of process (N.J.S.A. 17:22A-34f).
• A producer who moves to New Jersey applies within 90 days and doesn't need prelicensing or an exam for lines already held (N.J.S.A. 17:22A-35). A resident who moves out files the change of address and the new state's certification within 30 days (N.J.S.A. 17:22A-34c).
• Meeting home-state CE satisfies New Jersey CE for a nonresident (N.J.S.A. 17:22A-46c).

Continuing education

• 24 credits per two-year term, including 3 ethics credits. One ethics credit may be replaced with an insurance-fraud credit (N.J.A.C. 11:17-3.6(a)).
• Up to 12 excess credits can carry over once. Ethics credits can't carry over (N.J.A.C. 11:17-3.6(a)4).
• A producer who writes flood insurance must take a 3-credit flood/NFIP course for the first renewal, counted inside the 24 (N.J.A.C. 11:17-3.6(a)1).
• A contact credit hour is at least 50 minutes of instruction. A course counts only once per term, and instructors earn twice the student credit (N.J.A.C. 11:17-3.6).

Appointments and terminations

• The insurer files notice of an appointment within 15 days after the agency contract is signed or the first application is submitted (N.J.A.C. 11:17-2.10(a)2). It must confirm the producer is licensed before contracting and can't accept business written before licensure (N.J.A.C. 11:17-2.10(a)3).
• Appointments are renewed annually on May 1 through NIPR (N.J.A.C. 11:17-2.10(a)5).
• Termination: the insurer files written notice with the Commissioner within 15 days, giving the date and reason. The appointment doesn't end until the notice is filed (N.J.S.A. 17:22A-42b). If misconduct is involved, an extra copy with supporting information goes to the Department (N.J.A.C. 11:17-2.10(a)7). Statements made in these reports are immune from civil liability absent actual malice (N.J.S.A. 17:22A-43a).
• Even without an agency contract, an insurer is treated as having authorized the producer to collect a premium paid within 90 days after it was due (N.J.A.C. 11:17-2.10(a)9).
• An employer is responsible for an employed producer's insurance conduct (N.J.A.C. 11:17-2.10(b)4).

Discipline and reporting

Grounds for refusal, suspension, revocation or fines (N.J.S.A. 17:22A-40a) include false information on an application, misappropriating or converting premium money, cheating on the exam, knowingly accepting business from an unlicensed producer, and failing to obey a child support order.

• Penalties: up to $5,000 for a first offense and $10,000 for each later offense, plus restitution and investigation costs (N.J.S.A. 17:22A-45c). The Commissioner can still act after a license is surrendered or lapses (N.J.S.A. 17:22A-40d).
• Self-reporting: an administrative action in another jurisdiction within 30 days of final disposition, and a criminal prosecution within 30 days of the initial pretrial hearing (N.J.S.A. 17:22A-47). Failing to notify the Commissioner within 30 days of a conviction, indictment or criminal charge is itself a ground for discipline (N.J.S.A. 17:22A-40a(18)).
• A person may request a hearing within 20 calendar days of a notice of intent (N.J.A.C. 11:17D-2.1(d)1).

Unfair trade and claims practices

Two parallel statutes apply: N.J.S.A. 17B:30 for life and health, and N.J.S.A. 17:29B for other lines.

• Misrepresentation of policy terms, benefits or dividends, including misleading illustrations (N.J.S.A. 17B:30-3).
• Twisting: misleading comparisons to induce a lapse or replacement (N.J.S.A. 17B:30-6).
• Defamation of an insurer, and boycott, coercion or intimidation (N.J.S.A. 17:29B-4(3), (4); 17B:30-7, -8).
• False advertising (N.J.S.A. 17B:30-4).
• Rebating is prohibited: for life, annuities and health (N.J.S.A. 17B:30-13), and for property and casualty, any inducement not in the policy or an approved rating system (N.J.S.A. 17:29A-15; 17:29AA-14). The insured may not knowingly accept one either. A producer who gives promotional items keeps the invoice for five years (N.J.A.C. 11:17A-2.4(a)).
• Unfair discrimination between people of the same class and hazard (N.J.S.A. 17B:30-12). New Jersey also bars life or health decisions based solely on living organ donor status, life underwriting on lawful future foreign travel, and unfair use of genetic test results (N.J.S.A. 17B:30-12f, g, i).
• Unfair claims practices include unreasonable delay, failing to affirm or deny within a reasonable time after proof of loss, and lowball offers that force insureds to sue (N.J.S.A. 17:29B-4(9)).
• Enforcement: a hearing on at least 10 days' notice, then a cease and desist order. Violating a final order costs up to $5,000 per violation (N.J.S.A. 17:29B-6, -7, -11; 17B:30-20).

Claims handling timelines (N.J.A.C. 11:2-17)

These rules apply to property and casualty claims.

• A broker reports a claim to the insurer within 3 working days of learning of it. Notice to an insurer's agent counts as notice to the insurer (N.J.A.C. 11:2-17.6).
• The insurer acknowledges a claim within 10 working days (unless it pays within that time), starts its investigation within 10 working days, and answers a Department inquiry within 15 working days (N.J.A.C. 11:2-17.6, -17.7(a)).
• Payment deadlines: first-party claims (other than PIP and auto physical damage) 30 days after proof of loss; third-party property damage 45 days; third-party bodily injury 90 days (N.J.A.C. 11:2-17.7(c)). If more time is needed, the insurer explains why in writing and updates every 45 days.
• An agreed settlement is paid within 10 working days (N.J.A.C. 11:2-17.7(f)).

Insurance fraud

• The Insurance Fraud Prevention Act (N.J.S.A. 17:33A) covers false statements in claims and in applications. Penalties are $5,000 for a first violation, $10,000 for a second and $15,000 for each later one, plus restitution (N.J.S.A. 17:33A-5).
• The Office of the Insurance Fraud Prosecutor (OIFP) is in the Division of Criminal Justice, under the Attorney General (N.J.S.A. 17:33A-16).
• Anyone who believes a violation occurred must notify the bureau and OIFP immediately after discovery. Good-faith reporters are immune from civil liability (N.J.S.A. 17:33A-9).
• Claim forms and applications must carry a fraud warning (N.J.S.A. 17:33A-6). Health and private passenger auto insurers file an anti-fraud plan (N.J.S.A. 17:33A-15a).
• Criminal insurance fraud is generally a crime of the third degree, and the second degree for five or more acts totaling at least $1,000 (N.J.S.A. 2C:21-4.6).

Surplus lines

• Coverage may be exported only if it isn't available from authorized insurers after a diligent effort (N.J.S.A. 17:22-6.43(a)). It must go through a licensed New Jersey surplus lines agent to an eligible surplus lines insurer (N.J.S.A. 17:22-6.42(c), -6.45).
• The rate can't be lower than the lowest rate filed by an authorized insurer (N.J.S.A. 17:22-6.43(b)).
• A 5% premium receipts tax applies. The agent collects it from the insured and may not absorb or rebate it (N.J.S.A. 17:22-6.59).

Guaranty associations

Both protect only policyholders of admitted insurers.

• New Jersey Life and Health Insurance Guaranty Association (N.J.S.A. 17B:32A-3): $500,000 in life death benefits, $100,000 in life cash value, $500,000 in annuity present value (no more than $250,000 in cash surrender value), unlimited health benefits (still limited by the policy's own terms), $500,000 aggregate per individual, and $2,000,000 per unallocated annuity contract. An insurer must give a summary document at or before policy delivery, and using the association to sell insurance is prohibited (N.J.S.A. 17B:32A-17).
• New Jersey Property-Liability Insurance Guaranty Association (PLIGA): pays the part of each covered claim that is less than $300,000 per claimant, never above the policy limit. The cap doesn't apply to PIP or workers' compensation claims (N.J.S.A. 17:30A-8a(1)). First-party claims of an insured with a net worth over $25 million are excluded (N.J.S.A. 17:30A-5). Surplus lines insurers aren't covered.
• The separate Surplus Lines Insurance Guaranty Fund is capped at $300,000 per occurrence (N.J.S.A. 17:22-6.74).

Privacy and certificates of insurance

• An authorization to disclose personal information must be dated, signed and obtained no more than one year before the disclosure (N.J.S.A. 17:23A-13a(2)).
• A certificate of insurance isn't a policy and can't change coverage. One that contains false information or claims to alter coverage is void (N.J.S.A. 17:29A-57, -58).

Common exam traps

• Termination filing: 15 days, and the appointment doesn't end until the filing is made. It isn't 30 days.
• CE: 24 credits with 3 ethics. Twelve excess credits may carry over, but ethics credits never carry over.
• Late renewal: within 12 months at up to double the fee, without retesting.
• Two rebating statutes: 17B:30-13 for life and health, 17:29A-15 for property and casualty. Both also bind the person receiving the rebate.
• PLIGA's cap is "less than $300,000" per claimant, and PIP and workers' compensation claims are exempt from it.
• No combined exams. Life and A&H are separate exams, and so are Property and Casualty.