N.J. Enacts Homeowners Summary Bill

New Jersey Gov. Chris Christie has signed into law on May 6 a bill that aims to help homeowners better understand their insurance policies.

The legislation (A3642/S2502) requires homeowners’ insurers to give policyholders a one-page summary of the policy explaining “notable coverages and exclusions under the policy” that are “written in a simple, clear, understandable, and easily readable way.”

The one-page summary will be added to the homeowners insurance consumer information brochure that insurers are already required to provide when a homeowners policy is purchased or renewed.

The new law’s provisions would not be implemented until the New Jersey Department of Banking and Insurance establishes a specific timeline for the requirement.

Last December, the New Jersey Assembly’s insurance committee held a hearing to review insurance issues facing residents in the aftermath of Sandy. Lawmakers said one issue that arose was that many homeowners were simply not aware of what their homeowner’s insurance policy covers and does not cover.

The bill’s sponsors said this legislation is an attempt to provide that information in a simple, easy to understand format that will hopefully allow homeowners to become more aware of their policy.

When the bill was first proposed, insurers expressed concern that the summary might create legal vulnerabilities for insurers. Since then, lawmakers assuaged insurers’ concern by adding an amendment that says the summary “shall explicitly state that it is only guidance and not the actual policy.”