New Jersey Now Requiring Landlords to Maintain Liability Insurance
On August 5, 2022, New Jersey’s Governor Murphy signed S. 1368/A. 2687 (2022) into law, which has since been approved as P.L.2022, c.92 and codified as N.J.S.A. § 40A:10A-1 et seq. Much of this new law took effect on November 3, 2022, however, some of it has yet to come into effect. It requires business owners—specifically, rental unit owners and certain multi-family homeowners—to maintain liability insurance.
The law itself is relatively short. In so many words, it mandates that business owners and owners of rental unit or units maintain liability insurance for negligent acts and omissions. 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. However, the amount is reduced to $300,000 for those rent units in a multifamily home where: there are four (4) or fewer units, and at least one (1) unit is owner-occupied—this portion of the law coming into effect on February 1, 2023.
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. Likewise, this section authorizes municipalities to establish administrative fees and to enforce penalties for noncompliance with annual registration requirements (i.e., failing to submit certificate of insurance). Consequently, in the wake of this new law, expect that municipalities will be passing ordinances requiring these annual registrations and submissions of insurance certificates with fines and penalties for failure to do so. A business owner or unit 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. These specific requirements came into effect on November 3, 2022.
For reference, the text of the new statute is as follows:
Except as provided in subsection b. of this section, the owner of a business or the owner of a rental unit or units shall maintain liability insurance for negligent acts and omissions in an amount of no less than $500,000 for combined property damage and bodily injury to or death of one or more persons in any one accident or occurrence.
The owner of a multifamily home which is four or fewer units, one of which is owner-occupied, shall maintain liability insurance for negligent acts and omissions in an amount of no less than $300,000 for combined property damage and bodily injury to or death of one or more persons in any one accident or occurrence.
The owner of a business, owner of a rental unit or units, and the owner of a multi-family home of four or fewer units, one of which is owner occupied, shall annually register the certificate of insurance demonstrating compliance with section 1 [C.40A:10A-1] of this act with the municipality in which the business, rental units, or multi-family home is located.
The governing body of a municipality may, by ordinance, establish a reasonable administrative fee for the certificate of registration required pursuant to subsection a. of this section for properties located in that municipality. The governing body of a municipality may collect, through a summary proceeding pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.), a fine of not less than $500 but no more than $5,000 against an owner who failed to comply with the provisions of this act.
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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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 Landlord Tenant law and can help ensure that your property remains in compliance with the advent of this new law.
To schedule a consultation with an attorney, contact Griffin Alexander, P.C. at 973-366-1188 or through our website here!