New Jersey Property-Liability Insurance Guaranty Association


The New Jersey Property-Liability Insurance Guaranty Association (“Association”) was established in 1974. It was created to provide a safety net for policyholders and claimants of insolvent property-casualty insurance companies by providing statutory benefits to insureds and claimants of such insolvent companies. The Association is a private, non-profit, unincorporated legal entity established pursuant to the New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 et seq. (“Association Act”). The Association Act requires all licensed insurance companies in New Jersey to be members of the Association and contribute funds for its operations.


In New Jersey, an insurance company may be declared insolvent upon the application of the Commissioner of the New Jersey Department of Banking and Insurance. Once an insurance company is declared insolvent by a court of competent jurisdiction in this State or the state in which the property-casualty insurer was domiciled, the Association is authorized, by statute, to administer the claims of policyholders and claimants.


The Association Act provides two primary sources of funds to fulfill the Association’s statutory obligations. First, the Association receives distributions from insolvent estates as reimbursement for payments made on behalf of those estates. Second, the Association can assess member companies which may recover their assessments through policy surcharges.


In 2003, the New Jersey Automobile Insurance Competition and Choice Act transferred responsibility to the Association for the administration of the run-off claims of the New Jersey Automobile Full Insurance Underwriting Association (“JUA”) and the Market Transition Facility.


The Association is also responsible for reimbursing insurance carriers handling certain excess medical benefits (“EMBs”) above $75,000 paid on personal injury protection (“PIP”) claims. This responsibility is only applicable to policies issued or renewed prior to January 1, 2004.