DEADLINES APPROACH: A NEW LAW IS COMING INTO EFFECT THAT REQUIRES NJ BUSINESSES AND RENTAL UNIT OWNERS TO MAINTAIN LIABILITY INSURANCE
You may recall that, on August 5, 2022, New Jersey’s Governor Murphy signed S. 1368/A. 2687 (2022) into law. This law (which has since been codified as N.J.S.A. § 40A:10A-1 et seq.) requires landlords and business owners to procure and maintain liability insurance for negligent acts and omissions. As we explained in our previous breakdown and summary, much of this law came into effect on November 3, 2022, while the remainder of its sections will become effective on February 1, 2023.
As explained, this new law requires that business owners and owners of rental unit or units maintain liability insurance coverage for negligent acts and omissions in a minimum amount of $500,000. The insurance must be for combined property damage and bodily injury to or death of one or more persons in any one accident or occurrence. Most business owners and rental unit owners must be insured in the amount of at least $500,000 (this portion of the law having come into effect on November 3, 2022). These provisions of N.J.S.A. § 40A:10A-2 apply to new insurance policies issued after November 3, 2022. S. 1368/A. 2687, ¶ 3(a) (2022). If an insurance policy was already in effect when the law was approved on August 5, 2022, then this law applies to that insurance policy beginning February 1, 2023. Id.
Additionally, beginning February 1, 2023, the statute will extend aspects of these requirements to smaller landlords. Owners of multi-family homes with four (4) or fewer units, at least one (1) of which is owner-occupied, will be required to maintain insurance in the amount of $300,000. In other words, the $500,000 amount is reduced to $300,000 for those rental units in a multifamily home where there are four (4) or fewer units, and where at least one (1) unit is owner-occupied. The portion of the law applying to smaller landlords affects insurance policies issued or renewed beginning February 1, 2023. S. 1368/A. 2687, ¶ 3(b) (2022).
N.J.S.A. § 40A:10A-2 requires that owners annually register their certificates of insurance demonstrating compliance with this law with the local municipality. The municipality may charge an administrative fee for the certificate. An owner’s failure to comply with the registration requirements in accordance with the law will subject the violator to a fine of a fine between $500 and $5,000.
In addition to traditional landlords, community associations that rent out units should be mindful of facing the potential difficulty of needing to update their governing documents to come into conformity with the new law. In much the same way, should consider updating their governing documents to ensure that owners who rent their units are likewise in compliance with this new law.
If you need assistance ensuring you are acting conformity with this law or require assistance updating your policies, we, at Griffin Alexander, P.C., can help. Our attorneys are experienced in all aspects of Community Association and Landlord-Tenant law. We can help ensure that your property remains in compliance with the advent of this new law.
The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular circumstances. Each legal matter is unique, and prior results do not guarantee a similar outcome.
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