SENATE, No. 140
STATE OF NEW JERSEY
Introduced Pending Technical Review by Legislative Counsel
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Senator LYNCH
An Act requiring multiple dwelling owners to carry liability insurance, providing for insurance coverage under certain circumstances, amending P.L.1968, c.129 and amending and supplementing P.L.1967, c.76.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 13 of P.L.1967, c.76 (C.55:13A-13) is amended to read as follows:
13. (a) Each multiple dwelling and each hotel shall be inspected at least once in every five years for the purpose of determining the extent to which each hotel or multiple dwelling complies with the provisions of this act and regulations promulgated hereunder.
(b) Within 90 days of the most recent inspection, the owner of each hotel shall file with the commissioner, upon forms provided by the commissioner, an application for a certificate of inspection. Said application shall include such information as the commissioner shall prescribe to enforce the provisions of this law. Said application shall be accompanied by a fee as follows: $15 per unit of dwelling space for the first 20 units of dwelling space in any building or project, $12 per unit of dwelling space for the 21st through 100th unit in any building or project, $8 per unit of dwelling space for the 101st through 250th unit in any building or project, and $5 per unit of dwelling space for all units over 250 in any building or project, except that in the case of hotels open and operating less than six months in each year the fee shall be one-half that which would otherwise be required. A certificate of inspection and the fees therefor shall not be required more often than once every five years.
Additionally, there shall be reinspection fees for hotels in the amount of $10 for each dwelling unit reinspected.
Within 90 days of the most recent inspection of any multiple dwelling occupied or intended to be occupied by three or more persons living independently of each other, the owner of each such multiple dwelling shall file with the commissioner, upon forms provided by the commissioner, an application for a certificate of inspection. [Said] The application shall include a certificate of general liability insurance from an insurance company authorized and licensed to do business in this State, as required pursuant to subsection a. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) and such other information as the commissioner shall prescribe to enforce the provisions of this law. Said application shall be accompanied by a fee of $33 per unit of dwelling space for the first 7 units in any building or project, $21 per unit of dwelling space for the 8th through the 24th unit in any building or project, $18 per unit for the 25th through the 48th unit in any building or project, and $12 per unit of dwelling space for all units of dwelling space over 48 in any building or project, provided that the maximum total fee for owner-occupied three-unit multiple dwellings shall be limited to $65 for owners having a household income that is less than 80 percent of the median income for households of similar size in the county in which the multiple dwelling is located, and the maximum total fee for owner-occupied four-unit multiple dwellings shall be limited to $80 for owners having a household income that is less than 80 percent of the median income for households of similar size in the county in which the multiple dwelling is located. Beginning ten months after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and thereafter, the commissioner shall not issue a certificate of inspection for any multiple dwelling unless the certificate of insurance required pursuant to subsection a. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) is on file with the department. A certificate of inspection and the fees therefor shall not be required more often than once every five years.
Additionally, there shall be reinspection fees for multiple dwellings in the amount of $40 for each dwelling unit reinspected, but only after the first reinspection.
The commissioner may waive the inspection fee for any unit upon a finding that the unit has been thoroughly inspected within the previous 12-month period under a municipal ordinance requiring inspection upon change of occupancy in accordance with the maintenance standards established by the commissioner under this act, and has received a municipal certificate of occupancy as a result of that inspection.
If the commissioner finds that (1) a building has been thoroughly inspected prior to resale since the most recent inspection in accordance with this section, (2) the inspection prior to resale was conducted by the municipality in accordance with the maintenance standards established by the commissioner under this act, and (3) a municipal certificate of occupancy was issued as a result of that inspection, the commissioner may accept the inspection done prior to resale in lieu of a current inspection under this section. If the commissioner accepts an inspection prior to resale in lieu of a current inspection, no fee shall be charged for any inspection done by the commissioner within five years after the date of the inspection so accepted.
(c) If the commissioner determines, as a result of the most recent inspection of any hotel or multiple dwelling as required by subsection (a) of this section, that any hotel or multiple dwelling complies with the provisions of this act and regulations promulgated hereunder, then the commissioner shall issue to the owner thereof, upon receipt of the application and fee as required by subsection (b) of this section, a certificate of inspection. Any owner to whom a certificate of inspection is issued shall keep said certificate posted in a conspicuous location in the hotel or multiple dwelling to which the certificate applies. The certificate of inspection shall be in such form as may be prescribed by the commissioner.
The commissioner may, upon finding a consistent pattern of compliance with the maintenance standards established under this act in at least 20 percent of the units in a building or project, issue a certificate of inspection for the building or project, in which case the inspection fee shall be charged on the basis of the number of units inspected.
The commissioner may by rule establish standards for self-inspection by condominium associations exercising control over buildings of not more than three stories, constructed after 1976, and certified by the local enforcing agency having jurisdiction as being in compliance with the Uniform Fire Code promulgated pursuant to P.L.1983, c.383 (C.52:27D-192 et seq.), in which at least 80 percent of the dwelling units are occupied by the unit owners. The commissioner shall issue a certificate of acceptance, which shall be in lieu of a certificate of inspection, upon acceptance of any such self-inspection and upon payment of a fee of $25.
(d) If the commissioner determines, as a result of the most recent inspection of any hotel or multiple dwelling as required by subsection (a) of this section, that any hotel or multiple dwelling does not comply with the provisions of this act and regulations promulgated thereunder, then the commissioner shall issue to the owner thereof a written notice stating the manner in which any such hotel or multiple dwelling does not comply with this act or regulations promulgated thereunder. Said notice shall fix such date, not less than 60 days nor more than 180 days, on or before which any such hotel or multiple dwelling must comply with the provisions of this act and regulations promulgated thereunder. If any such hotel or multiple dwelling is made to comply with the provisions of this act and regulations promulgated thereunder on or before the date fixed in said notice, then the commissioner shall issue to the owner thereof a certificate of inspection as described in subsection (c) of this section. If any such hotel or multiple dwelling is not made to comply with the provisions of this act and regulations promulgated thereunder on or before the date fixed in said notice, then the commissioner shall not issue to the owner thereof a certificate of inspection as described in subsection (c) of this section, and shall enforce the provisions of this act against the owner thereof.
(e) The commissioner shall annually review the cost of implementing and enforcing this act, including the cost to municipalities of carrying out inspections pursuant to section 21 of this act, and shall establish by rule, not more frequently than once every three years, such fees as may be necessary to cover the costs of such implementation and enforcement; provided, however, that any increase or decrease shall be applied as a uniform percentage to each category of fee established herein, and provided, further, that the percentage amount of any increase shall not exceed the percentage increase in salaries paid to State employees since the then current fee schedule was established. The commissioner shall provide by rule to owners the option of paying inspection fees in installments in the form of an annual fee. The commissioner shall annually prepare and file with the presiding officers of the Senate and General Assembly and the legislative committees having jurisdiction in housing matters a report setting forth the amounts of fees and penalties received by the Bureau of Housing Inspection, the cost to the bureau of enforcing this act, and information concerning the productivity of the bureau. Copies of the report shall also be submitted to the Office of Administrative Law for publication in the New Jersey Register and to the members of the Hotel and Multiple Dwelling Health and Safety Board. If in any State fiscal year the fee revenue received by the bureau exceeds the cost of enforcement of this act, the excess revenue shall be distributed pro rata to persons who paid inspection fees during that fiscal year. Such distribution shall be made within three months after the end of the fiscal year.
(f) Except as otherwise provided in section 2 of P.L.1991, c.179 (C.55:13A-26.1), the fees established by or pursuant to the provisions of this section are dedicated to meeting the costs of implementing and enforcing this act and shall not be used for any other purpose. All receipts in excess of $2,200,000 are hereby appropriated for the purposes of this act.
(cf: P.L.1991, c.179, s.1)
2. (New section) a. Every multiple dwelling owner in this State shall secure and maintain general liability insurance in an amount of not less than $100,000 for bodily injury to or death of one or more persons in any one accident or occurrence in connection with an occurrence or accident occurring in or on the multiple dwelling property. Each such owner shall, within ten months after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), file with the commissioner a certificate of general liability insurance from an insurance company authorized and licensed to do business in the State.
b. Every certificate of insurance required to be filed with the Commissioner of Community Affairs pursuant to subsection a. of this section shall provide that the cancellation of the insurance policy shall not be effective unless and until at least 10 days' notice of intention to cancel has been received in writing by the commissioner.
c. Any owner who violates any provision of P.L. , c. (C. ) (pending before the Legislature as this act) or any rule or regulation promulgated thereto shall be liable to a penalty of not more than $50,000 per violation, to be collected with costs in a summary proceeding pursuant to the "penalty enforcement law," N.J.S.2A:58-1 et seq.
3. Section 1 of P.L.1968, c.129 (C.17:37A-1) is amended to read as follows:
1. It is hereby declared that an adequate market for fire and extended coverage insurance and liability insurance is necessary to attract private capital to central city areas; that without such insurance it is impossible to supply needed goods and services, and expand job opportunities; that orderly community development depends upon an adequate supply of such insurance to enable homeowners and multiple dwelling owners to obtain financing for the purchase and improvement of their property and protection of the inhabitants who dwell therein; that while the need for such insurance is growing there is reason to believe that the market for same is constricting, and likely to become more constricted in the future; that voluntary efforts to provide fire and extended coverage insurance in areas likely to be unprofitable deserve praise, but are insufficient to meet the needs of these areas; that the State has an obligation to require every insurance company writing fire and extended coverage insurance and liability insurance in New Jersey to meet its public responsibilities, instead of shifting the entire burden to a few public spirited companies; that it is the purpose of this act to accept this obligation; and that any mandatory program to provide fire and extended coverage insurance and liability insurance for all citizens of New Jersey should be supervised by the Commissioner of [Banking and] Insurance and periodically reviewed in the light of experience and intervening events by the Legislature.
(cf: P.L.1968, c. 129, s.1)
4. Section 2 of P.L.1968, c.129 (C.17:37A-2) is amended to read as follows:
2. As used in this act, the following words and terms shall have the following meanings, unless the context indicates or requires another or different meaning or intent:
(a) "Essential property insurance" means liability insurance or insurance against direct loss to property as defined and limited in the standard fire policy and extended coverage endorsement thereon, as approved by the commissioner, and insurance for such types, classes, and locations of property against the perils of vandalism, malicious mischief, burglary, or theft, or such other classes of insurance as the commissioner may designate in order to comply with Federal legislation and obtain Federal reinsurance;
(b) "Basic property insurance" means insurance against loss to property as defined and limited in: the standard fire policy and extended coverage endorsement thereon, the allied line policy or endorsement, the homeowners' multiple peril policy, the commercial multiple peril policy, the burglary or theft coverage policy and other like policies;
(c) "Association" means the New Jersey Insurance Underwriting Association established pursuant to the provisions of this act;
(d) "Plan of operation" means the plan of operation of the association approved or promulgated by the commissioner pursuant to the provisions of this act;
(e) "Insurable property" means real property at fixed locations in urban areas in this State, or the tangible personal property located thereon, but shall not include insurance on automobile and farm risks, with an insurable value not in excess of the limits provided in the plan of operation of the association and in no event more than $1,500,000.00, which property is determined by the association, after inspection and pursuant to the criteria specified in the plan of operation to be in an insurable condition; provided, however, that neighborhood, area, location, environmental hazards beyond the control of the applicant or ownership of the property shall not be considered in determining insurable condition;
(f) "Commissioner" means the Commissioner of [Banking and] Insurance of New Jersey;
(g) "Net direct premiums" means gross direct premiums (excluding reinsurance assumed and ceded) written on property in this State for fire and extended coverage insurance, including the fire and extended coverage components of homeowners and commercial multiple peril package policies, as computed by the commissioner, less return premiums upon canceled contracts, dividends paid or credited to policyholders or the unused or unabsorbed portions of premium deposits;
(h) "Urban area" means any municipality or other political subdivision (1) which the Secretary of the United States Department of Housing and Urban Development has approved as eligible for an urban renewal project after a local public agency has been formed in that community to avail itself of a United States Housing and Urban Renewal Program or (2) designated by the association with the approval of the commissioner or (3) which the commissioner may designate;
(i) "Liability insurance" means insurance against damages, including the cost of defense, legal costs and fees, and other claims expenses, because of injuries to other persons.
(cf: P.L.1969, c.84, s.1)
5. Section 7 of P.L.1968, c.129 (C.17:37A-7) is amended to read as follows:
7. a. (1) Within 90 days after the effective date of [this act] P.L.1968, c.129 (C.17:37A-1 et seq.), the directors of the association shall submit to the commissioner, for his review and approval, a proposed plan of operation. Such proposed plan shall provide for economical, fair and non-discriminatory administration, and for the prompt and efficient provision of essential property insurance to promote orderly community development. Such proposed plan shall include: preliminary assessment of all members for initial expenses necessary to commence operations; establishment of necessary facilities; management of the association; assessment of members to defray losses and expenses; underwriting standards; procedures for acceptance and cession of reinsurance; procedures for determining amounts of insurance to be provided; time limits and procedures for processing applications for insurance; and such other provisions as may be deemed necessary by the commissioner to carry out the purposes of [this act] P.L.1968, c.129 (C.17:37A-1 et seq.).
(2) Within 60 days after the effective date of P.L. c. (C. ) (pending before the Legislature as this bill), the directors of the association shall submit to the commissioner, for his review and approval, an amended plan of operation incorporating the extension of essential property insurance to include liability insurance. The amended plan shall include any necessary adjustments to: underwriting standards; procedures for acceptance and cession of reinsurance; procedures for determining amounts of insurance to be provided; and time limits and procedures for processing applications for insurance in light of the extension of essential property insurance to include liability insurance.
b. The proposed plan, as amended pursuant to paragraph (2) of subsection a. of this section, shall be reviewed by the commissioner and approved by him if he finds that such plan fulfills the purposes provided by section 1 of [this act] P.L.1968, c.129 (C.17:37A-1). In his review of the [proposed] amended plan the commissioner may, in his discretion, consult with the directors and other members of the association and any other individual or organization. If the commissioner approves the [proposed] amended plan he shall certify such approval to the directors and said plan shall take effect 10 days after such certification. If the commissioner disapproves all or any part of the [proposed] amended plan of operation he shall return same to the directors with a statement, in writing, of the reasons for his disapproval and any recommendations he may wish to make. The directors may accept the commissioner's recommendations, or may propose a new plan, which accepted recommendations or a new plan shall be submitted to the commissioner within 30 days after the return of a disapproved plan to the directors. If the directors do not submit [a proposed] an amended plan of operation within [90] 72 days after the [effective date of this act] submission of the amended plan to the commissioner by the directors of the association pursuant to paragraph (2), subsection a. of this section, or a new plan which is acceptable to the commissioner, or accept the recommendations of the commissioner within 30 days after the disapproval of a proposed plan, the commissioner shall promulgate a plan of operation and certify same to the directors. Any such plan promulgated by the commissioner shall take effect 10 days after certification to the directors; provided, however, that until a plan of operation is in effect pursuant to the provisions of this act, any existing temporary placement facility shall be continued in effect on a mandatory basis on such terms as the commissioner shall determine.
c. The directors of the association may, on their own initiative, amend the plan of operation at any time, subject to the approval by the commissioner.
d. The commissioner may review the plan of operation whenever he deems expedient, and shall review same at least once a year, and may amend said plan after consultation with the directors and upon certification to the directors of such amendment.
(cf: P.L.1968, c.129, s.7)
6. This act shall take effect on the first day of the third month next following enactment.
STATEMENT
This bill requires each multiple dwelling to be covered by general liability insurance. It also requires the New Jersey Insurance Underwriting Association to broaden its essential property insurance to include liability insurance.
Specifically, the bill prohibits the Commissioner of Community Affairs from issuing a certificate of inspection under the "Hotel and Multiple Dwelling Law" to a multiple dwelling owner unless the owner has submitted to the department a certificate of general liability insurance from an insurance company authorized and licensed to do business in this State. This provision shall be applicable one year after the effective date of this act and thereafter. The minimum amount of general liability insurance shall be $100,000 for bodily injury to or death of one or more persons in any one accident or occurrence.
The bill requires each certificate of insurance issued to provide that the cancellation of the insurance policy shall not be effective unless and until at least 10 days' notice of intention to cancel has been received in writing by the Commissioner of Community Affairs.
The bill also amends P.L.1968, c.129 to require the New Jersey Insurance Underwriting Association to expand its essential property insurance coverage to include liability insurance. In addition, the bill amends the findings and declarations of that enactment to convey the intent of the Legislature to enable multiple dwelling owners to obtain such insurance.
Finally, the bill imposes a maximum penalty of $50,000 per violation upon any owner who violates any provision of this act, or any regulation promulgated pursuant thereto.
Requires multiple dwelling owners to carry liability insurance and provides for coverage under certain circumstances.