PHIL MURPHY
Governor
SHEILA OLIVER
Lt. Governor
State of New Jersey
DEPARTMENT OF BANKING AND INSURANCE
OFFICE OF THE COMMISSIONER
PO BOX 325
TRENTON, NJ 08625-0325
TEL (609) 633-7667
MARLENE CARIDE
Commissioner
Visit us on the Web at dobi.nj.gov
New Jersey is an Equal Opportunity Employer • Printed on Recycled Paper and Recyclable
BULLETIN NO. 20-17
TO: ALL INSURANCE PREMIUM FINANCE COMPANIES, INSUREDS, AND
OTHER INTERESTED PARTIES
FROM: MARLENE CARIDE, COMMISSIONER
RE: 90-DAY GRACE PERIOD TO CLIENTS OF INSURANCE PREMIUM
FINANCE COMPANIES DUE TO THE DISRUPTION CAUSED BY
COVID-19
On March 9, 2020, Governor Phil Murphy declared a state of emergency and public health
emergency through the issuance of Exec. Order No. 103 (March 21, 2020) ___ N.J.R. ___ (“EO
103”) to contain the spread of the Coronavirus (“COVID-19”) pandemic. Governor Murphy later
directed New Jersey residents to remain in their homes unless leaving was essential through the
issuance of Exec. Order No. 107 (March 21, 2020) ___ N.J.R. ___ (“EO 107”). These Executive
Orders were issued to contain the spread of the COVID-19 pandemic. On April 9, 2020, Governor
Murphy Issued Exec. Order No. 123 __ N.J.R. __ (“EO 123”). EO 123 directed insurance
premium finance companies to refrain from cancelling any policy or contract for nonpayment for
a period of time as directed by the Commissioner of the Department of Banking and Insurance
(“Commissioner”), to exercise appropriate forbearances on collection documentation, amortizing
any unpaid payments over the remainder of the policy term or a period of up to 12 months, as
appropriate, as directed by the Commissioner, and to refrain from seeking recoupment of paid
claims during the emergency grace period. The Department of Banking and Insurance
(“Department”) is issuing this Bulletin to direct all insurance premium finance companies licensed
pursuant to N.J.S.A. 17:16D-1 to -16 (“Insurance Premium Finance Company Act”) to extend a
grace period for the payment of premiums to their clients as set forth herein.
Since the outbreak of the respiratory disease COVID-19, individuals and businesses in the
State of New Jersey have been negatively impacted in a variety of ways. For example, small
businesses in the travel, entertainment, hospitality, and food service industries, have been
adversely impacted by significant drops in business activities resulting, for some entities, in
dramatic declines in revenue. Employees of these industries will be impacted, which may include
the failure to be paid their regular salary or receive reimbursements when normally due. This, in
turn, can adversely affect the ability of these individuals or businesses to make payments for
obligations, such as insurance coverage, when due.
2
Currently, an insurance premium finance company may cancel an insurance contract for
failure to pay premium upon not less than 10 days’ notice. In response to the disruption caused by
COVID-19, all licensed insurance premium finance companies are directed to provide their clients
who are experiencing a financial hardship due to COVID-19 with a 90-day grace period to pay for
their insurance premiums so that insurance policies are not cancelled for nonpayment of premium
during this challenging time due to circumstances beyond the control of the insured. A
policyholder may elect this 90-day emergency grace period to begin retroactively on April 1, 2020
or opt for the grace period to begin on May 1, 2020. During this extended grace period, insurance
premium finance companies shall not cancel any insurance policy for nonpayment of installment
payments for the term of the insurance policy.
Insurance premium finance companies are also directed to:
• Waive late payment fees, finance charges, and delinquency charges otherwise due,
and not report late payments to credit rating agencies, during the 90-day period;
• Allow premiums due but not paid during the 90-day period to be paid over either
12 months or the remainder of the current policy term, whichever is longer, except
that a premium finance company may provide a longer repayment period; and
• Ensure that late payments during the 90-day period are not considered in any future
premium calculations at any time.
The extended grace periods described above shall apply to policyholders that were in good
standing with their insurance carrier on March 1, 2020. This grace period is intended to be applied
to all installment payments, including renewal down payments, provided that the insured provides
notice to the insurer that the insured wishes to continue coverage. If renewal is due during the
term of the grace period, the contract can be renewed with the same terms with client approval,
even if the client has not paid the installment during the grace period. The grace period is not
intended to change the terms of the issued policy or be considered a forgiveness of installment
payments. Rather, it is directed that the insurance premium finance company grant COVID-19
impacted clients an extended grace period for the payment of installments due without penalty or
interest.
Insurance premium finance companies are further directed to, in addition to posting
information on the its website, provide each policyholder with an easily readable written
description of the terms of the extended grace period offered pursuant to this guidance, which shall
be submitted to the Department at [email protected] as an informational filing.
In addition, to eliminate the need for in person payment methods, in order to protect the
safety of workers and customers, all agents, brokers, and other licensees who accept premium
payments on behalf of insurers must take steps to ensure that customers able to make payments
have the ability to make prompt insurance payments through alternate methods of payment, such
as online payments.
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The Department will monitor events as they develop to determine if this emergency grace
period must be extended.
April 10, 2020
Date Marlene Caride
Commissioner
Jd prem fin co grace pd Bul/COVID 19
