Key Takeaways

• Updated Regulations: New Jersey’s Contractors Business Registration Act now requires additional insurance and security measures for contractors.
• Insurance Requirements: Contractors must have workers’ compensation, commercial general liability insurance, and a compliance bond or similar security.
• Renewal Deadline: Current registrations will expire on March 31, 2025, with renewal applications due starting January 2025.
• Compliance Is Crucial: Non-compliance by the deadline may result in renewal delays or denials, impacting business operations.

The Contractors Business Registration Act (CBRA) in New Jersey has undergone significant amendments, leading to the creation of the Home Improvement and Home Elevation Contractor Licensing Act and the establishment of the New Jersey State Board of Home Improvement and Home Elevation Contractors. This blog aims to unpack the updated regulations and what they mean for contractors in the state.

Overview of Changes

The CBRA now encompasses broader requirements for Home Improvement Contractor Businesses and Home Elevation Contractor Businesses (HICBs/HECBs), previously referred to as HICs/HECs. These changes aim to enhance the regulation of contractors and ensure consumer protection. Key amendments include:

1. Mandatory Workers’ Compensation Insurance: All HICBs and HECBs must carry workers’ compensation insurance unless they qualify for an exemption under N.J.S.A 34:15-1 et seq. This insurance is crucial for providing medical care and financial support for employees in case of work-related injuries. You may also want to review the New Jersey Department of Labor and Workforce Development guide. While workers’ compensation was already required in New Jersey, the new regulations add a stipulation to provide proof of coverage as part of the licensing process.
2. Additional Security Requirements: In addition to maintaining workers’ compensation insurance, HICBs and HECBs are now required to secure additional protections through a compliance bond, an irrevocable letter of credit, or other approved securities. This ensures that contractors are financially accountable for their contractual obligations. The amount of additional security varies based on the contract value:
   • $50,000 for contracts over $120,000 or annual contracts totaling at least $750,000.
   • $25,000 for contracts between $10,000 and $120,000 or annual contracts between $150,000 and $750,000.
   • $10,000 for contracts under $10,000 or annual contracts under $150,000.
3. Commercial General Liability Insurance: There is also a stipulation for maintaining commercial general liability insurance—$500,000 per occurrence for HICBs and $1,000,000 for HECBs. While general liability insurance was already required, the updated regulations include a slight adjustment, increasing the coverage requirement to $1 million for some contractors instead of $500,000.

The most significant and challenging update is the introduction of the surety requirement, which may be difficult for some contractors to meet. Not all surety bond companies were prepared for this change, and some are not yet offering these bonds. Others have chosen to limit availability to contractors who also carry their general liability insurance. However, at least one provider, which we have access to, offers these bonds independently of the contractor’s insurance provider, providing a valuable option for those needing to meet the new requirements.

Registration Compliance

To obtain, renew, or reinstate registration, contractors must now demonstrate compliance with these insurance and security requirements. This change is effective immediately, and current registrations will expire on March 31, 2025. Contractors are encouraged to begin the renewal process in January 2025 by using the registration renewal portal.

Contractors should prepare for the renewal process by ensuring they have the necessary coverage and securities in place. Failure to comply with these requirements could delay or even prevent registration renewal.

Conclusion

The updates to the Contractors Business Registration Act mark a significant step towards improving regulation and safety standards for contractors in New Jersey. These changes enhance consumer protection and require contractors to meet higher accountability and safety standards. As the 2025 registration renewal deadline approaches, contractors should familiarize themselves with the new requirements and adjust their operations accordingly. By doing so, they can prevent potential delays or issues with their registration renewal and continue to operate successfully in New Jersey’s construction industry.

FAQs

1. What are the new insurance requirements for NJ contractors?

All Home Improvement and Home Elevation Contractors in New Jersey must now have workers’ compensation insurance, additional security measures like compliance bonds, and commercial general liability insurance.

2. Who needs to comply with the updated Contractors Business Registration Act?

The updated act applies to all Home Improvement Contractor Businesses (HICBs) and Home Elevation Contractor Businesses (HECBs) operating in New Jersey. Both existing and new contractors must comply with these regulations to obtain, renew, or reinstate their registration.

3. What happens if I don’t meet the new requirements by the 2025 deadline?

Contractors who fail to meet the new requirements by March 31, 2025, risk delays or denial of their registration renewal. It’s crucial to prepare early by ensuring all necessary insurance and securities are in place to avoid interruption in your business operations.