The New Jersey Surplus Lines Insurance Guaranty Fund (“Fund”) was established in 1984 pursuant to the New Jersey Surplus Lines Insurance Guaranty Fund Act, N.J.S.A. 17:22-6.70 et seq. (“Fund Act”). The Fund provides a safety net for policyholders and claimants of insolvent surplus lines companies by providing statutory benefits to insureds and claimants of such insolvent companies. The Fund Act requires all eligible, nonadmitted insurers to be members of the Fund.

By statute, surplus lines insurers are required to make an initial one time payment of $25,000 into the Fund. In addition, the Fund Act authorizes a surcharge on surplus policy premiums. The surcharge has been inactive since 1993 but is subject to possible reenactment.

In 2002, the Fund Act was amended to limit the application of the Fund to specific types of “covered claims”. On or after June 25, 2002, the Fund’s coverage was reduced and only provides coverage for eligible surplus lines insurers issuing medical malpractice liability insurance or property insurance covering owner occupied dwellings of less than four dwelling units.

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