New Jersey Property Study Guide

New Jersey’s property market is shaped by two things the national curriculum will not teach you: a rate-regulation regime stricter than almost anywhere, and a coastline that has been hit hard twice in living memory. Add a surplus-lines guaranty fund that covers far less than its name suggests, and you have the state-law core of this exam.

Rate regulation — prior approval, and New Jersey means it

Most states have drifted toward file-and-use, and generic study material reflects that drift. New Jersey has not. Property and casualty rates, rules and forms must be filed with and approved by the Commissioner before use (N.J.S.A. 17:29A-1 et seq.). Homeowners has an expedited flex filing option for limited increases, but the default is genuine prior approval.

The practical consequence — and a fair exam framing — is that a New Jersey insurer cannot respond to a hardening market as quickly as one in a file-and-use state. That is part of why the residual market matters here.

Credit scoring — permitted, but hemmed in on every side

An insurance score may not be the sole rating factor. Models must be filed with DOBI, and they may not use race, ethnicity, sex, age, religion, income or address. And for two categories of driver, credit scoring is prohibited outright: Basic policy holders and dollar-a-day (SAIP) policyholders.

So the shape, not a number: permitted, never alone, long prohibited-characteristics list, banned entirely for the lowest-cost auto policies. A question offering “prohibited in New Jersey” and “unrestricted in New Jersey” is offering two wrong answers.

The residual market and the coast

The insurer of last resort is the New Jersey Insurance Underwriting Association (NJIUA) — the FAIR Plan (Fair Access to Insurance Requirements), created by the Legislature in 1968 to provide essential property insurance to anyone unable to obtain it voluntarily. It also administers a Crime Indemnity Plan.

The dominant catastrophe perils are coastal windstorm and hurricane — Sandy in 2012, Ida in 2021 — along with nor’easters, severe winter storms, and both coastal and inland flooding. DOBI regulates standardised hurricane deductibles as part of that picture. And as always, standard homeowners policies exclude flood: that is NFIP or private flood, and along the Jersey Shore it matters enormously.

Surplus lines — three declinations, and a guaranty fund that barely guarantees

New Jersey has a large excess-and-surplus market, and a surplus lines licence requires the producer to already hold both resident Property and Casualty authority — N.J.S.A. 17:22A-38: “No license granting surplus lines authority shall be issued or renewed unless the applicant holds or will hold property and casualty authorities.”

Before exporting a risk, the producer must obtain and document declinations from three authorised (admitted) insurers — unless the risk sits on the Commissioner’s Exportable List, or the insured is an exempt commercial purchaser. The number itself is in N.J.A.C. 11:1-33.2, which defines diligent effort as placement “after the risk has been declined by three authorized insurers.” The affidavit is form SLPS-6-CERT-1, completed by the retail or originating producer per insured. Legal and medical malpractice risks require it regardless of the Exportable List.

Premium tax is 5% of total premium (3% for policies effective before 1 July 2009), filed electronically through SLIP within 45 days after quarter end. Fees are not taxable.

Then the fact worth carrying into a client conversation: