Prohibits insurers from using credit history when evaluating homeowners insurance policies.
Summary
Assembly Bill 5096 would prohibit insurers and insurance producers from using an applicant’s or insured’s credit history when evaluating homeowners insurance policies. Specifically, the bill bars an insurer from denying, canceling, refusing to renew, or increasing the premium on a homeowners policy based in whole or in part on credit history. It also prohibits the use of credit history in setting discounts, assigning rating tiers, placing an insured with an agent, or determining eligibility for certain payment plans.
The bill is intended to change how homeowners insurance is underwritten and priced in New Jersey by removing credit-based insurance scoring from the process. Under the bill, insurers could no longer rely on credit history as a factor in assessing risk for homeowners coverage, which would likely affect how premiums are calculated and how policyholders are categorized for pricing and payment options. The act would take effect 90 days after enactment.
Impact
The bill would amend and supplement Title 17 of the Revised Statutes to create a new restriction on homeowners insurers and insurance producers in New Jersey. It would prohibit the use of credit history in underwriting, rating, discounting, agent placement, and payment-plan eligibility decisions for homeowners insurance, thereby limiting a common insurance-pricing practice and potentially changing premium outcomes for many applicants and policyholders.
Sentiment
The available materials suggest generally favorable intent around consumer fairness and equity in homeowners insurance. The sponsor’s statement frames the bill as a way to prevent residents with lower credit scores from being charged higher premiums and to make access to homeowners insurance more equitable. No committee testimony or recorded votes were provided, so there is no evidence of formal opposition or support beyond the bill’s stated consumer-protection rationale.
Contention
The main point of contention is the bill’s restriction on insurers’ ability to use credit-based insurance scores, which insurers often argue are useful for assessing risk and setting premiums. Supporters, as reflected in the statement, view credit history as an unfair proxy that can raise costs for homeowners with lower credit scores. Opponents, if any, would likely focus on potential impacts to underwriting accuracy, premium differentiation, and insurer pricing flexibility, but no direct opposition is included in the provided record.