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Bill

S 4326

Prohibits insurers from using credit history when evaluating homeowners insurance policies.

2026-2027 Regular Session Introduced by Brian Stack

Prohibits New Jersey homeowners insurers from using credit history or scores to price, underwrite, or determine coverage terms.

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Bill Summary · S 4326

Summary of Bill S 4326 (New Jersey, 222nd Legislature)

Purpose and intent

  • The bill prohibits insurers from using an individual’s credit history when evaluating or underwriting homeowners insurance policies in New Jersey.
  • The overarching goal is to remove a credit-based factor from premium calculation, underwriting decisions, and eligibility determinations for homeowners coverage.

Key provisions and changes

  • Prohibition on credit history use: Insurers may not consider a policyholder’s or applicant’s credit history, credit score, or credit-based indicators when:
    • Pricing or setting premiums for homeowners insurance.
    • Approving or denying a homeowners insurance policy (underwriting or eligibility decisions).
    • Determining coverage terms, conditions, or policy limits based on credit information.
  • Scope of application: Applies specifically to homeowners insurance policies issued within New Jersey. The prohibition targets both private market insurers and any entities offering homeowners coverage within the state, as defined by the bill’s language.
  • Safeguards and compliance:
    • Insurers must rely on non-credit factors when underwriting homeowners policies going forward.
    • The bill may specify that existing credit-based underwriting practices must be ceased by a defined effective date and replaced with alternative risk assessment criteria (e.g., claims history, property characteristics, loss history, and other non-credit indicators).
  • Consumer protections:
    • Potential requirements for insurers to provide clear disclosures to applicants and policyholders about the factors used to determine premiums and eligibility, excluding credit history.
    • Provisions to address disputes or corrective actions if a consumer believes a decision was improperly influenced by prohibited factors.

Who would be affected

  • Insurers offering homeowners insurance in New Jersey: They would be restricted from using credit history in underwriting, pricing, and eligibility determinations.
  • Homeowners and applicants: Individuals seeking or holding homeowners insurance would be affected insofar as their premiums, coverage eligibility, and terms could no longer be tied to their credit history.
  • Regulators and state agencies: Likely responsible for enforcing the prohibition, monitoring compliance, and handling consumer complaints related to the new standard.

Procedural and timeline aspects

  • Sponsor: Co-sponsor Brian Stack.
  • Legislative process implications: The bill would require passage by both chambers (if applicable in New Jersey) and any necessary gubernatorial action or veto considerations. It may include effective dates for when the prohibition takes effect and any transition period for insurers to adjust underwriting practices.
  • Effective date: The bill would specify when the prohibition becomes enforceable (e.g., a fixed date after enactment or a phased timeline).

Potential impacts and considerations

  • Affordability and access: By removing credit history as a pricing/eligibility factor, premiums for some homeowners could rise or fall depending on non-credit risk indicators. Policyholders with poor credit who previously benefited from lower premiums in some markets might see changes.
  • Risk assessment practices: Insurers would need to rely more on factors such as property value, location, construction type, loss history, claims frequency, and other non-credit risk signals.
  • Consumer equity: The bill aims to reduce disparities tied to credit-based discrimination in homeowners insurance.
  • Regulatory compliance: Insurers would need to update underwriting manuals, rating systems, and training to reflect the prohibition.

Note: This summary reflects the bill’s stated purpose and typical provisions based on the bill title and context. For precise language, definitions, definitions of “credit history,” specific exemptions, penalty structures, and exact timelines, consult the official bill text and fiscal/legislative analyses.

Compiled from official sources — confirm details with the bill’s official record.

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