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Thursday, July 18, 2024


State to Require Liability Coverage


By Vince Conti

AVALON – Gov. Phil Murphy signed S-1368 Aug. 5. The new statute requires business owners and landlords of multi-family rental units to carry liability insurance of $500,000. The amount is lowered to $300,000 for small multifamily properties that are also owner-occupied. 
In addition, the law requires that owners and landlords annually register a certificate of insurance with the municipality in which the business or property is located. 
The original version of the law designated the Department of Community Affairs as the enforcement agency for the statute, but that was changed via an amendment to pass the responsibility to municipalities. The law takes effect in 90 days, leaving municipalities to scramble for ways to enact the certification process. The deadline for a registration system is Nov. 3. 
The state did not make any allocation to municipalities for the cost of establishing and maintaining the annual registrations, but it does permit a “reasonable administrative fee” for a certificate of registration. The law does not provide any details or guidance on what a certificate of insurance should contain. 
The bill’s sponsors, including Senate President Nickolas Scutari and Senator John Bramnick, said the law is intended to protect renters and others from the potentially catastrophic costs associated with accidents. 
At the Avalon council meeting Sept. 28, the agenda included a closed executive session “pertaining to proprietary procedural information and anticipated litigation concerning new state legislation regarding liability insurance.” In Avalon, leaders appear to anticipate that some of this could end up in the courts.
The New Jersey League of Municipalities raised concerns with the bill’s sponsors and the Governor’s Office when the onus for enforcement of the state-mandated policy shifted to individual municipalities. The effort to avoid another burden on municipal governments was unsuccessful.
Critics of the law have raised concerns about affordability at a time when business and consumers are battling high inflation. Others have raised questions concerning the fact that both Scutari and Bramnick are personal injury lawyers. Both have denied any conflict of interest. 
Meanwhile, municipalities are left to create the registration mechanism with less than 60 days remaining before the law takes effect. 
Thoughts on the liability insurance legislation? Email

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