from AMA Advocacy Resource Center

A physician who maintains a professional medical practice in New Jersey and has a responsibility for patient care is required to be covered by medcal malpractice liability insurance issued by a carrier authorized to write medical malpractice liability insurance policies in the Statem in the sum of $1 per occurance and $3 million per policy year unless renewal coverage includes the premium retroactivr date, the polich shall proive for extended reporting endorsement coverage for claim mades policies, also known as “tail coverage,” or, if such liability coverage is nott avaliable, a letter of credit for at least $500.000.

 

State Statutes

Physicians

N.J.STAT.ANN. § 45:9-19.17 – Physicians, mandatory medical malpractice liability insurance coverage– a. A physician who maintains a professional medical practice in this State and has responsibility for patient care is required to be covered by medical malpractice liability insurance issued by a carrier authorized to write medical malpractice liability insurance policies in this State, in the sum of $1,000,000 per occurrence and $3,000,000 per policy year and unless renewal coverage includes the premium retroactive date, the policy shall provide for extended reporting endorsement coverage for claims made policies, also known as “tail coverage,” or, if such liability coverage is not available, by a letter of credit for at least $500,000.

The physician shall notify the State Board of Medical Examiners of the name and address of the insurance carrier or the institution issuing the letter of credit, pursuant to section 7 of P.L.1989, c. 300 (C.45:9-19.7).

b. A physician who is in violation of this section is subject to disciplinary action and civil penalties pursuant to sections 8, 9 and 12 of P.L.1978, c. 73 (C.45:1-21 to 22 and 45:1-25).

c. The State Board of Medical Examiners may, pursuant to the “Administrative Procedure Act,” P.L.1968,c. 410 (C.52:14B-1 et seq.), establish by regulation, minimum amounts for medical malpractice liability insurance coverage and lines of credit in excess of those amounts required pursuant to subsection a. of this section.

d. The State Board of Medical Examiners shall notify all physicians licensed by the board of the requirements of this section within 30 days of the date of enactment of P.L.2004, c. 17.

N.J.STAT.ANN. § 45:9-22.4 – Definitions – For the purposes of this act:

“Practitioner” means a physician, chiropractor or podiatrist licensed pursuant to Title 45 of the Revised Statutes.

New Jersey Medical Malpractice Liability Insurance Act

N.J.STAT.ANN. § 17:30D-2 – Purpose; application to medical malpractice liability insurance – a. The purpose of this act is to assure that medical malpractice liability insurance is readily available to licensed medical practitioners and health care facilities by establishing a reinsurance association, requiring the association to reinsure medical malpractice liability insurance policies issued by certain providers and permitting the association to write such policies on a direct basis, to determine when the association has Advocacy Resource Center © 2012 American Medical Association. All rights reserved.23 sustained a deficit, and to provide for recoupment of losses resulting from the operation of the association through surcharges on insureds and to grant the Commissioner of Insurance temporary emergency powers to set up and operate the reinsurance association if such insurance is unavailable for any class of licensed medical practitioners or health care facilities.

b. This act shall apply to medical malpractice liability insurance as defined herein.

N.J.STAT.ANN. § 17:30D-3 – Definitions – As used in this act:

c. “Licensed medical practitioner” means and includes all persons licensed in this State to practice medicine and surgery, chiropractic, podiatric medicine, dentistry, optometry, psychology, pharmacy, nursing, physical therapy and as a bioanalytical laboratory director.

N.J.STAT.ANN. § 17:30D-10 – Additional premium charges on policies of medical malpractice liability insurance – For the purpose of providing moneys necessary to establish the recovery fund in an amount sufficient to meet the requirements of this act, the commissioner shall establish reasonable provisions through additional premium charges for policies of the various categories and subcategories of medical malpractice relationship to the loss experience both past and prospective of the association and its members attributable to such category or subcategory.

understanding new jersey surplus lines

What is a surplus-lines policy?

It is a policy written by an insurance company that is not authorized (not licensed) in the state of New Jersey. A surplus-lines policy from an unauthorized company may be legally written through surplus-lines producers, when the insurer is deemed to be an eligible surplus-lines insurer. This means the insurer has met the standards for financial integrity and other standards of New Jersey law. Eligible surplus-lines insurers hold a certificate of eligibility issued by the Department of Banking and Insurance and are included on the department’s eligible surplus-lines insurer list (also known as the “white list”).

Is a surplus-lines company less safe than other companies?

Not at all. A surplus-lines company is no more likely to become insolvent than an authorized company. The difference is that the DOBI is not monitoring in depth the company’s financial records on an ongoing basis, although certain qualifying standards must be maintained to remain on the list of unauthorized insurance companies that may transact surplus-lines insurance in New Jersey

For your protection, significant oversight is achieved through other means. Regulators in the jurisdiction where the company is domiciled examine the company’s financial records, as well as various independent rating agencies, such as A.M. Best.

Isn’t there a state fund to protect policyholders from company insolvencies?

There is protection under New Jersey’s guaranty funds for the insolvency of insurance companies that are authorized in New Jersey. However, with only two exceptions, surplus-lines policies are not covered by any state guaranty fund (only medical malpractice liability insurance and property insurance covering owner-occupied dwellings of less than four dwelling units are covered by the New Jersey Surplus Lines Guaranty Fund). This is a significant distinction for policyholders insured by a surplus-lines company, and the lack of insolvency protection must be considered when making the purchase decision. Nevertheless, placement with a financially sound surplus-lines insurance company may be more prudent than placement with an authorized insurance company that is financially impaired.

Why would my insurance producer offer me a surplus- lines policy?

There are several reasons why it may be necessary to look for coverage in the surplus- lines market. First, the risk of loss may be too great for acceptance by regular markets. Second, the risk may be too little understood by regular markets to select and price the risk appropriately. Third, there may be no other way to access an exclusive program for a particular type of risk.

Nevertheless, placement of risks in the surplus-lines market usually is considered a last resort, when authorized insurance companies have not been able to satisfy your insurance needs. Before placement can be made with a surplus-lines company, a diligent effort to place coverage with authorized companies usually will be required, unless the type of risk is one that has been placed on the department’s “exportable list”—a list of risks assumed to be difficult to place with authorized companies.

What should I know about forms and rates used by a surplus-lines company?

Effective Sept. 1, 2003, policy forms used by a surplus-lines company no longer are regulated by the DOBI. These policy forms can deviate significantly from standard forms, which means they must be read carefully, especially the exclusions. Rates generally cannot be lower than the lowest rate filed by any authorized insurance company. Otherwise, a surplus-lines company does not need DOBI approval for its rates, except that rates are not permissible if they are deemed to be excessive, inadequate or unfairly discriminatory.

What about adherence to cancellation and nonrenewal laws?

Unlike the authorized companies, surplus-lines insurance companies are not subject to New Jersey cancellation and nonrenewal laws. Consequently, the terms for canceling and nonrenewing the policy must be found in the policy itself. For example, before coverage is bound by the insurance company, you should determine what the minimum-earned premium will be if the policy is canceled a short time later.

Why am I being billed for a New Jersey state tax on my policy?

The 5 percent surplus-lines tax you see on your bill serves as a substitute for the franchise tax that would have been collected from the insurer were it authorized in New Jersey.

How has your business changed over the past year?

It’s a good idea to review your insurance needs annually, so please take a few moments to complete the checklist below. Answering these questions will help to identify whether your existing business insurance coverage is appropriate or if changes
are necessary.

Coverage Checklist
General Information
1. Has the name of your business changed? Y  N 
2. Have you restructured your company’s ownership (e.g., gone from sole proprietorship Y  N 
to LLC or corporation) or added any DBA’s (doing business as)? Y  N 
3. Has your business changed owners, partners or officers?
4. Has the nature of your business operations changed? For example: Y  N 
a. Do you now also service the products you manufacture? Y  N 
b. Have you changed or expanded the types of products you sell and/or services you offer? Y  N 
5. Have you added new locations, expanded into new states or outside of the United States? Y  N 
6. Have you closed or moved any locations? Y  N 
7. Has the mailing address of your business changed? Y  N 
8. Has the physical location of your business changed? Y  N 
Business Property
1. Do you own the building your business is located in? Y  N 
If yes …
a. Have you taken any steps to protect your building? This includes the installation of alarm Y  N 
or security systems, fire suppression systems and/or surveillance equipment.
b. Has it been longer than 12 months since you reviewed what it would cost to replace Y  N 
your building?
2. Has it been longer than 12 months since you reviewed the amount of insurance provided for your Y  N 
business personal property? Keep in mind that inflation can impact the value of personal property.
3. Have you entered into any new purchase or lease agreements for your business property? Y  N 
Business Liability
1. Has there been any increase/decrease in your company’s payroll or sales? Y  N 
2. Have you entered into any new customer contracts? Y  N 
Workers’ Compensation
1. Has there been any increase/decrease in your company’s payroll? This information is necessary Y  N 
because the price you pay for workers’ comp is based, in part, on annual gross payroll.
2. In the past 12 months, has your employee headcount increased or decreased? Y  N 
3. Do you have employees who work from home on a regular basis? Y  N 
4. Do you use subcontractors, volunteers or interns? Y  N 
5. Do you or your employees travel to other states or foreign countries? Y  N 

Business Automobile
1. Have you added or eliminated vehicles used in your business operations? Y  N 
2. Has the usage of vehicles covered by your policy changed (e.g., distance they are traveling Y  N 
or what they’re used for)?
3. Do you use your personal vehicle for business, allow employees to use your personal vehicle Y  N 
for business or allow employees to use their own personal vehicles for your business?
4. Has it been longer than 12 months since you reviewed the limits of liability provided by your policy? Y  N 
5. Has it been longer than 12 months since you reviewed the deductible(s) required by your policy? Y  N 
But that’s not all …
Below are additional coverage options that can help protect your business. Consider each statement and check the
ones you’re interested in hearing more about. Your comments will provide guidance about which of these options are just right for your business.
I want to know more about insurance that will help …
Replace my lost business income if:
 I need to suspend operations due to the direct physical loss of power, communication or water services.
(Off Premises Utility Services coverage)
 The third party I rely on for a large portion of my business income (e.g., supplier or manufacturer) is unable to
provide inventory or products due to a covered property loss at their location. (Dependent Properties coverage)
 One of my largest customers suspends operations due to a covered property loss.
(Dependent Properties coverage)
 I use the Internet to generate a portion of my income, and my website is vandalized – prohibiting me from
generating that income. (Electronic Vandalism coverage)
 After resuming operations following a covered loss, I do not regain the income level that existed prior to the loss.
(Extended Business Income coverage)
Protect me if:
 The sensitive personal information (e.g., Social Security number, debit/credit card information, medical
records/charts) I collect and/or store on my employees, customers and/or patients is lost or stolen.
(Data Breach coverage)
 I am sued by one of my employees for an employment-related claim, such as discrimination, harassment or
wrongful termination. (Employment Practices Liability coverage)
 An error or omission is made in the administration of the employee benefits program available to my employees, such as improper benefits advice or failing to enroll an employee when they’re eligible.
(Employee Benefits Liability coverage)
 I suffer a financial loss because an employee steals money, securities or other property owned by my business.
(Employee Dishonesty coverage)
 The computers, data and software used in my business need to be repaired or replaced due to a computer
virus or power failure, for example. (Computers & Media coverage)
 I am sued because one of my employees was in an accident while running an errand for my business such as picking up office supplies, or picking up/dropping off mail at the post office. (Hired & Non-Owned Auto coverage)
 I am sued and my business owner’s policy doesn’t fully cover the amount I am liable to pay. (Umbrella coverage)
Cost saving options
Many of the coverages offered as optional are also available as industry-focused, cost-effective packages. This approach provides the flexibility to tailor an insurance program that meets your unique needs while giving you the best option for your insurance dollar

Claims Made Vs. Occurrence

As you probably know, professional liability insurance is available in two forms – occurrence or claims-made.  Although both provide protection, there are major differences between the two.

An occurrence policy provides coverage, regardless of when the claim is reported, for an injury or damage that takes place anytime during the policy period.  This provides long-term protection for any covered claim that may arise at any time in the future – up to the limits of the policy in force at the time of the incident that led to the claim.

 

Under a claims-made policy, coverage is provided for claims made against the policyholder and reported to the insurance company while the policy remains in force and during any applicable extended reporting period.

 

So as long as the policyholder has maintained continuous coverage, the company underwriting the policy at the time the incident is reported would be responsible for paying any covered claims. Unlike an occurrence policy, this may not be the same company underwriting the policy at the time the incident occurred if the policyholder moved to a new insurer.