N.J. Admin. Code § 11:13-7.3
Current through Register Vol. 56, No. 21, November 4, 2024
Section 11:13-7.3 - Defense costs within policy limits(a) No commercial insurance policy shall be issued or renewed on a form required to be filed pursuant to N.J.S.A. 17:29AA-1 et seq. which contains a provision that includes defense costs within policy limits, except as provided in this section. 1. Regardless of whether the policy form provides defense costs within or outside of policy limits, no defense costs shall be charged against any deductible amount.(b) Lawyers and medical malpractice professional liability insurance policies may contain a provision that includes defense costs within policy limits provided it conforms to the standards set forth in (c) below or, in the case of medical malpractice liability insurance, to the standards set forth in (d) below.(c) Lawyers and medical malpractice professional liability insurance policy forms that include defense costs within policy limits shall contain policy provisions, which may be in the form of a mandatory endorsement, so as to incorporate the standards set forth below into the terms of each policy. 1. The policy form shall provide a minimum limit of liability of $ 1,000,000.2. Defense costs shall not reduce the portion of the limit of liability that remains available to pay claims until defense costs have been incurred in an amount that equals or exceeds 50 percent of the policy limit of liability. The portion of the limit of liability that remains available to pay claims may be reduced only by the portion of incurred defense costs greater than 50 percent of the policy limit of liability.3. The portion of the limit of liability available to pay claims shall not be reduced to an amount less than 50 percent of the policy limit of liability, regardless of the amount of defense costs incurred.(d) Notwithstanding that they do not conform with (c) above, medical malpractice professional liability insurance policy forms that include defense costs within policy limits may be offered if:1. The policy form provides a minimum limit of liability of $ 1,000,000;2. The insurer at a minimum also offers the applicant a policy with identical limits providing defense costs outside the limit of liability;3. The insurer secures a certification on a policyholder notice signed by the applicant confirming that a policy providing defense costs outside the limit of liability was offered to the applicant and the applicant declined such coverage, and further confirming that the applicant is aware that the amount of coverage available for payment of a liability claim will be commensurately reduced based on defense costs. The notice shall be required with respect to initial applications. It shall not be required on renewals of existing policies unless a change is made upon renewal to include defense costs within limits. The form of the policyholder notice shall be filed with the Department with the filing of the policy form providing defense costs within limits, and the signed certifications shall be maintained by the insurer for a period of five years from the expiration of the policy; and4. The insurer shall file rates for medical malpractice liability insurance policies that contain a provision that includes defense costs within policy limits which shall be commensurately reduced to reflect the coverage provided.(e) Regardless of whether they include defense costs within policy limits, all medical malpractice professional liability insurance policies covering physicians issued by carriers authorized to write such policies in this State shall comply with the provisions of 45:9-19.1 7.1.a and any applicable rules of the State Board of Medical Examiners at N.J.A.C. 13:35.N.J. Admin. Code § 11:13-7.3
Amended by R.2003 d.21, effective 1/6/2003.
See: 34 N.J.R. 2947(a), 35 N.J.R. 252(a).
Added (a)1; inserted "and medical malpractice" following "Lawyers" in (b) and (c); deleted (c)4.
Amended by R.2005 d.59, effective 2/7/2005.
See: 36 N.J.R. 4873(a), 37 N.J.R. 530(a).
Added (d).
Amended by R.2008 d.330, effective 11/3/2008.
See: 40 N.J.R. 1062(a), 40 N.J.R. 6464(c).
In the introductory paragraph of (a), updated the N.J.S.A. reference; in (a)1, substituted "Regardless of whether the policy form provides defense costs within or outside of policy limits, no" for "No"; in (b), inserted "or, in the case of medical malpractice liability insurance, to the standards set forth in (d) below"; in the introductory paragraph of (c), substituted "that include" for "including the" and "terms" for "term", and substituted a period for a colon at the end; added new (d); and recodified former (d) as (e).