The regulation has now been put into place in New Jersey to make sure residents understand their coverage.
A new law in New Jersey is now requiring homeowners insurance companies to provide their policyholders with a one-page description of what is and is not covered by their policies.
This was a direct response to the massive confusion among policyholders in the aftermath of Sandy.
The measure has now been signed by New Jersey Governor, Chris Christie. This was announced by the Assembly Democrats in a news release The goal of the new law is to avoid a repetition of the confusion that was caused after Superstorm Sandy, when many homeowners insurance customers discovered the limitations of their coverage, far too late.
For instance, many homeowners insurance policyholders didn’t realize that they were not covered for floods.
Many people in New Jersey were stunned to find that their homeowners insurance did not cover damage from flooding. Moreover, they also didn’t realize that hurricane deductibles ban from the governor was not applicable to supplementary “wind and hail” or “windstorm” deductibles, which had been used by some policyholders in order to keep their premiums down.
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The new homeowners insurance law states that a one-page summary must be provided, which will draw attention to all of the major covered items, as well as each of the primary exceptions to the coverage. It must be provided to the policyholder within the information packet that is given to the customer with all new and renewed policies.
That said, homeowners insurance companies will not need to start distributing these summary pages immediately. Instead, the Department of Banking and Insurance will first need to create a timeline for the implementation of this additional requirement for the insurers. Before the date is finalized, a proposal will be put forward for public comment.
New Jersey lawmakers have also stated that the summary page is meant only to help to provide policyholders with a guideline as to what is and is not covered by their homeowners insurance policies, but cannot be used as a substitution for any of the policy’s actual terms. This statement was specifically made to help assuage concerns that had been voiced by the industry.