N.J. Stat. tit. 17, ch. 16D

in effect

N.J. Stat. § 17:16D-1 Short title

This act shall be known and may be cited as the "Insurance Premium Finance Company Act." L.1968, c. 221, s. 1.

N.J. Stat. § 17:16D-2 Definitions

For the purposes of this act-- (a) "Insurance premium finance company" means a person engaged in the business of entering into insurance premium finance agreements or acquiring premium finance agreements from insurance agents or insurance brokers. (b) "Insurance premium finance agreement" means an agreement by which an insured or prospective insured promises to pay to a premium finance company either directly or indirectly the amount advanced or to be advanced under the agreement by said premium finance company to an insurer or to an insurance agent or insurance broker in payment of premiums on an insurance contract together with a finance charge as authorized and limited by this act. (c) "Licensee" means an insurance premium finance company holding a license issued by the commissioner under this act. L.1968, c. 221, s. 2.

N.J. Stat. § 17:16D-3 Application

The provisions of this act shall not apply with respect to: (a) Any insurance company authorized to do business in the State of New Jersey, (b) State associations and Federal associations, as defined in P.L.1963, chapter 144, section 5 (C. 17:12B-5), (c) The inclusion or deduction of a charge for insurance made pursuant to any other law of this State expressly or impliedly authorizing the financing of insurance premiums in connection with transactions of loan or of the sale of goods or services, or both goods and services, including, but not limited to charges for premiums for either or both credit life insurance and credit accident and health insurance issued pursuant to "An act to provide for the regulation of credit life insurance and credit accident and health insurance, as defined, and supplementing Title 17 of the Revised Statutes," approved January 27, 1959 (P.L.1958, c. 169). (d) The financing of insurance premiums in New Jersey in accordance with the provisions of Revised Statutes 31:1-1 relating to legal interest rate. L.1968, c. 221, s. 3. Amended by L.1969, c. 101, s. 1, eff. June 26, 1969.

N.J. Stat. § 17:16D-4 Licenses.

4. Licenses. No person shall engage in the business of financing insurance premiums in this State without first having obtained a license as a premium finance company from the Commissioner of Banking and Insurance, except that any State or national bank authorized to do business in this State shall be authorized to transact business as a premium finance company, subject to all of the provisions of this act, except that it shall not be required to obtain a license or pay a license fee hereunder. Any person who shall engage in the business of financing insurance premiums in this State without a valid license as provided hereunder shall, upon conviction as provided in R.S. 17:33-2, be subject to a fine of not more than $300. With respect to a license fee imposed prior to the implementation of the assessment pursuant to P.L.2005, c.199 (C.17:1C-33 et al.), the commissioner shall charge for a license such fee as he shall prescribe by rule or regulation, not to exceed $1,000. Upon implementation of the assessment pursuant to P.L.2005, c.199 (C.17:1C-33 et al.), a license fee shall no longer be imposed or collected by the commissioner pursuant to this section, however an insurance premium finance agency shall pay to the commissioner at the time of application a nonrefundable application fee not to exceed $1,000. The license shall run from the date of issuance to the end of the licensing period of not less than two years as set by the commissioner by regulation. The fee imposed prior to implementation of the assessment pursuant to P.L.2005, c.199 (C.17:1C-33 et al.), for said license shall be paid to the commissioner for the use of the State. No portion of the license fee imposed prior to implementation of the assessment pursuant to P.L.2005, c.199 (C.17:1C-33 et al.), shall be refunded if the license is surrendered by the licensee or suspended or revoked by the commissioner. Before any licensee changes his address he shall return his license to the commissioner who shall indorse the license indicating the change. The person to whom the license or the renewal thereof may be issued shall file sworn answers, subject to the penalties of perjury, to such interrogatories as the commissioner may require. The commissioner shall have authority, at any time, to require the applicant fully to disclose the identity of all stockholders, partners, officers and employees, and he may, in his discretion, refuse to issue or renew a license in the name of any firm, partnership, or corporation if he is not satisfied that any officer, employee, stockholder, or partner thereof who may materially influence the applicant's conduct meets the standards of this act. L.1968,c.221,s.4; amended 1981, c.321, ss.4,13; 2005, c.199, s.23; 2007, c.81, s.23.

N.J. Stat. § 17:16D-5 Action by commissioner on application

Upon the filing of an application and the payment of the license fee the commissioner shall make an investigation of each applicant and shall issue a license if he finds the applicant is qualified in accordance with this act. If the commissioner does not so find, he shall, within 30 days after he has received such application, so notify the applicant and at the request of the applicant, give the applicant a full hearing. The commissioner shall issue or renew a license as may be applied for when he is satisfied that the person to be licensed-- (a) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for, (b) Has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for, and (c) If a corporation is a corporation incorporated under the laws of this State or a foreign corporation authorized to transact business in this State. L.1968, c. 221, s. 5.

N.J. Stat. § 17:16D-6 Revocation and suspension of licenses

The commissioner may revoke or suspend the license of any premium finance company when and if after investigation the commissioner finds that (a) Any license issued to such company was obtained by fraud, (b) There was any misrepresentation in the application for the license, (c) The holder of such license has otherwise shown himself untrustworthy or incompetent to act as premium finance company, or (d) Such company has violated any of the provisions of this act. Before the commissioner shall revoke, suspend or refuse to renew the license of any premium finance company, he shall give to such person an opportunity to be fully heard and to introduce evidence in his behalf. In lieu of revoking or suspending the license for any of the causes enumerated in this section, after hearing as herein provided, the commissioner may subject such company to a penalty of not more than $200.00 for each offense when in his judgment he finds that the public interest would not be harmed by the continued operation of such company. The amount of any such penalty shall be paid by such company to the commissioner for the use of the State. At any hearing provided by this section, the commissioner shall have authority to administer oaths to witnesses. Anyone testifying falsely, after having been administered such oath, shall be subject to the penalty of perjury. Any action of the commissioner in refusing to issue or renew a license shall be subject to review in the Superior Court by a proceeding in lieu of prerogative writ. L.1968, c. 221, s. 6.

N.J. Stat. § 17:16D-7 Books and records; annual report; violations, penalties.

7. Every licensee shall maintain records of its premium finance transactions which will enable the commissioner to enforce full compliance with this act and the said records shall be open to examination and investigation by the commissioner. The commissioner shall have the power to make such examination of the books, records and accounts of any licensee as he shall deem necessary. The expenses incurred in making any such examination shall be assessed against and paid by the licensee so examined. The commissioner may, at any time, require any licensee to bring such records as he may direct to the commissioner's office for examination. Every licensee shall preserve its records of such premium finance transactions, including cards used in a card system for at least 3 years after making final entry in respect to any premium finance agreement. The preservation of records in photographic form shall constitute compliance with this requirement. Each licensee shall file a report with the commissioner giving such information in the form and within the time as the commissioner may require by regulation concerning the licensee's business and operation during the preceding calendar year. A licensee that fails to make and file its annual report in the form and within the time provided in this section shall be subject to a penalty of not more than $100 for each day's failure, and the commissioner may revoke or suspend its authority to do business in this State. The penalty may be collected in a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). A warrant may issue in lieu of a summons. L.1968,c.221,s.7; amended 2007, c.81, s.24.

N.J. Stat. § 17:16D-8 Power to make rules

The commissioner may make and enforce such reasonable rules and regulations as may be necessary in making effective the provisions of this act, but such rules and regulations shall not be contrary to nor inconsistent with the provisions of this act. L.1968, c. 221, s. 8.

N.J. Stat. § 17:16D-9 Form of premium finance agreement

A premium finance agreement shall-- (a) Be dated, signed by or on behalf of the insured, and the printed portion thereof shall be in at least 8-point type, (b) Contain the name and place of business of the insurance agent or insurance broker negotiating the related insurance contract, the name and residence or place of business of the insured as specified by him, the name and place of business of the premium finance company to which payments are to be made, a description of the insurance contracts involved and the amount of the premium therefor; and (c) Set forth the following items where applicable: (1) the total amount of the premiums, (2) the amount of the down payment, (3) the principal balance (the difference between items (1) and (2)), (4) the amount of the finance charge, including the additional charge of $10.00, (5) the balance payable by the insured (sum of items (3) and (4)), and (6) the number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof. (d) Contain a notice reading as follows: Notice to Insured: (1) Read this agreement before you sign, (2) Do not sign this agreement if it contains blank spaces, (3) You are entitled to a copy of this agreement at the time you sign, (4) Keep your copy of this agreement to protect your legal rights. The items set out in subsection (c) of this section need not be stated in the sequence or order in which they appear in such clause, and additional items may be included to explain the computations made in determining the amount to be paid by the insured. The licensee or the insurance agent or insurance broker shall deliver to the insured, or mail to him at his address shown in the agreement, a complete copy of the agreement. No premium finance agreement shall be signed by an insured when it contains any blank spaces to be filled in after it has been signed except that if the insurance contract involved has not yet been issued, the name of the insurer and the policy number may be left blank and later inserted in the original agreement. No premium finance agreement shall contain a power of attorney to confess judgment in this State. L.1968, c. 221, s. 9.

N.J. Stat. § 17:16D-10 Maximum finance charge

A premium finance company shall not charge, contract for, receive, or collect a finance charge other than as permitted by this act. The finance charge shall be computed, using the actuarial method on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the premium finance agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable. Notwithstanding the provisions of R.S. 31:1-1 or any other law to the contrary, the finance charge shall be computed at a rate or rates agreed to by the premium finance company and the insured plus an additional charge of $12.00 per premium finance agreement which additional charge need not be refunded upon prepayment. However, any insured may prepay his premium finance agreement in full at any time before due date of the final installment and in such event the unearned finance charge shall be refunded. Effective on the first day of the twelfth month following the effective date of this act, when the unpaid balance of a premium finance agreement is paid in full, or the maturity of the unpaid balance of each agreement is accelerated before the date scheduled for the payment of the final installment, the holder of the agreement shall allow a credit on account of the finance charge, calculated according to the actuarial refund method, as if all payments were made as scheduled, or if deferred, as deferred; provided, however, that if the contract is prepaid within 12 months after the first payment is due, a holder may charge a prepayment penalty of not more than (a) $20.00 on any contract up to and including $2,000.00; (b) an amount equal to 1% of the loan on any contract greater than $2,000.00 and up to and including $5,000.00; and (c) $100.00 on any contract exceeding $5,000.00. L.1968, c. 221, s. 10. Amended by L.1979, c. 287, s. 1, eff. Jan. 14, 1980; L.1981, c. 103, s. 16, eff. March 31, 1981.

N.J. Stat. § 17:16D-11 Statement of accounts; receipts

Upon the request of an insured a premium finance company shall give to the insured a written statement of his account. No more than 2 such statements shall be required in any 12-month period. An insured shall be given a written receipt for any payment made in cash. When the premium finance agreement has been paid in full, the licensee shall, upon request of the insured, return to the insured the premium finance agreement marked paid or canceled. L.1968, c. 221, s. 11.

N.J. Stat. § 17:16D-12 Delinquency charges

12. a. Delinquency charges. A premium finance agreement may provide for the payment by the insured of a delinquency charge of $1.00 to a maximum of 5% of the delinquent installment but not to exceed $5.00 on any installment which is in default for a period of 10 days or more, except that, if the loan is primarily for other than personal, family or household purposes, the delinquency charge may be 1.5% of the amount of the delinquent installment, but there may be a minimum delinquency charge of $25. If the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge; such charge shall be $5.00, less any delinquency charge on the installment in default. b. A delinquency charge under this section may be collected only once on any installment, however long it remains in default. A delinquency charge may be collected at the time it accrues or at any time afterward. c. No delinquency charge may be collected under this section on an installment which is paid in full within 10 days after its scheduled due date even though an earlier maturing installment or a delinquency charge on an earlier installment has not been paid in full. L.1968,c.221,s.12; amended 1995,c.348,s.1.

N.J. Stat. § 17:16D-13 Cancellation of insurance contract upon default

(a) When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless such cancellation is effectuated in accordance with this section. (b) Not less than 10 days' written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such 10-day period. A copy of said notice shall also be sent to the insurance agent or insurance broker indicated on the premium finance agreement. (c) After expiration of such 10-day period, the premium finance company may thereafter request in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer a notice of cancellation, and the insurance contract shall be canceled as if such notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract or contracts. The premium finance company shall also mail a notice of cancellation to the insured at his last known address and to the insurance agent or insurance broker indicated on the premium finance agreement. The effective date of such cancellation shall not be earlier than 3 days after the date of mailing of such notice to the insured and to the insurance agent or insurance broker. (d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice in behalf of itself or the insured to any governmental agency, mortgagee, or other third party on or before the second business day after the day it receives the notice of cancellation from the premium finance company and shall determine the effective date of cancellation taking into consideration the number of days notice required to complete the cancellation. L.1968, c. 221, s. 13.

N.J. Stat. § 17:16D-14 Application of unearned premiums

(a) Whenever a financed insurance contract is canceled, the insurer on notice of such financing shall return whatever gross unearned premiums are due under the insurance contract to the premium finance company for the account of the insured or insureds within a reasonable time, not to exceed 60 days after the effective date of cancellation, or 60 days after the completion of any payroll audit necessary to determine the amount of premium earned while the policy was in force. Such audit shall be performed within 30 days after the effective date of cancellation. (b) In the event that the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund such excess to the insured provided that no such refund shall be required if it amounts to less than $1.00. (c) In the event that the premium finance company fails to return the amount due to the insured within the period designated, the company shall, as a penalty, in addition to the amount due to the insured, return to the insured an additional amount equal to 5% of the amount due to the insured computed on a monthly basis for each month or part thereof past the final date on which the refund was due. L.1968, c. 221, s. 14. Amended by L.1973, c. 252, s. 2, eff. Nov. 26, 1973; L.1979, c. 299, s. 1, eff. Jan. 17, 1980.

N.J. Stat. § 17:16D-15 Exemption from any filing requirements

No filing of the premium finance agreement shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrancers, successors, or assigns. L.1968, c. 221, s. 15.

N.J. Stat. § 17:16D-16 Severability

If any provision of this act is held invalid, the invalidity thereof shall not affect other provisions of the act which can be given effect without the invalid provision and to this end the provisions of this act are severable. L.1968, c. 221, s. 16.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026