New Jersey’s licensing reforms might bring major improvements to home repair contractors regarding consumer protection and industry accountability. Under the latest regulations of the New Jersey Division of Banking and Insurance (DOBI) along with the Division of Consumer Affairs, the new regulations expand the home improvement contractor licensing requirements to include not just the customary General Liability Insurance but mandatory Workers’ Compensation Coverage and Compliance Bonds to renew the license. This update, effective for all New Jersey home repair contractors, marks a considerable shift in the licensing landscape.
Let’s Understand the New Requirements
Every contractor in New Jersey must obtain a home repair contractor license to execute financed home repair contracts for goods or services provided to local homeowners. An exception to this requirement applies in situations where a contractor accepts payment in cash by installment for a duration no longer than 90 days or accepts payments via credit card, in which cases a contractor would not be required to secure one.
In every instance, all contractors are furthermore required to contact the NJ Division of Consumer Affairs regarding mandatory registration. For specific information or any questions, consumers and contractors may contact 973-504-6370 or visit NJ Division of Consumer Affairs – Home Improvement Contracts.
Also, home repair salespersons shall be covered under this licensing scheme. Any salesperson who secures a financed home repair contract on behalf of a licensed contractor must also obtain a home repair salesperson license. Each salesperson can, however, be registered with one contractor only at a time to enforce direct accountability between the contractor and the consumer.
Next, Let’s Understand the Bond Limits and Premium Rates
It is with the coming into force of the new laws that two of these changes have followed:
- Workers’ Compensation Insurance: General Liability Insurance has long been standard, but the new requirement raises the bar for financial security from contractors, and, in effect, manufacturers, protecting workers and consumers alike. Also, with Workers’ Compensation now required, contractors must end up covering their employees for on-the-job injuries, which ultimately adds up to higher industry standards focused on protecting the workforce.
- Compliance Bonds: Contractors now have to obtain a surety bond as a financial guarantee. This requirement impacts all NJ Home Improvement Contractor Businesses (NJHIC) and NJ Home Elevation Contractor Businesses (NJHEC), according to the NJ Division of Consumer Affairs. Bonds will be received from Jan 1, 2025, to Mar 31, 2025. The state of New Jersey has established three bond limits based on the value of services performed within the preceding 12 months:
- A $50,000 bond is required for individual contracts exceeding $120,000 or when annual contract values reach at least $750,000.
- A $25,000 bond is needed for contracts valued between $10,000 and $120,000, or when the cumulative contract value is between $150,000 and $750,000.
- A $10,000 bond is applicable for smaller contracts under $10,000 or when the annual contract volume is less than $150,000.
These changes emphasize that both Workers’ Compensation and Bonds are no longer optional but essential components of the renewal process.
In addition various term options (1, 2, and 3-year bonds) are available at discounted rates for a prepaid multi-year bond. The state itself has not made specific instructions regarding which you should elect, but the general rule on your end is to set the bond’s effective date as close to the contractor’s license renewal date as possible.
Premium rates are competitive and are structured as follows:
- For a $10,000 Bond: $100 for a 1-year term, $175 for a 2-year term, and $250 for a 3-year term.
- For a $25,000 Bond: $250 for a 1-year term, $438 for a 2-year term, and $625 for a 3-year term.
- For a $50,000 Bond: $500 for a 1-year term, $875 for a 2-year term, and $1,250 for a 3-year term.
The minimum premium required is $100. Additionally, multi-year bonds (available in 1-, 2-, or 3-year terms) offer discounted rates when prepaid, providing contractors with flexibility to choose a plan that aligns with their business needs and financial circumstances. Contractors are advised to set the bond’s effective date as close to their license renewal date as possible.
Securing Your Bond with Gonzalez Insurance
To help contractors navigate these new requirements, Gonzalez Insurance is proud to partner with top bonding carriers in the country, offering the competitive rates mentioned above. Instead of directing contractors to a third-party website, we invite you to secure your bond directly with us.
For your convenience, we use an application—FORM 10-E—that gathers the essential information needed to secure you a competitive quote.
To secure your bond, please provide the following details (required for all applications):
Personal Information
- Full name
- Residential address
- Telephone number
- Social security number
- Do you own real estate?
Business Information
- Business/corporate name
- Business address
- Years in business
- Years licensed
- Bond type & amount requested
- Desired effective date
Compliance History—Has the business or any owner ever:
- Been convicted of a crime?
- Had a license suspended, revoked, or denied?
- Been party to a surety bond claim?
Email the completed form to your Gonzalez Insurance agent, and we’ll handle the rest. No signatures or indemnity agreements are required.
Final Thoughts
These updated requirements go beyond paperwork; they show a commitment to high standards and consumer protection in New Jersey’s home improvement sector. By getting the insurance and bonds in place, contractors can not only avoid registration delays but will also foster more confidence with their clients.
Contractors may have to invest in additional insurance and bonding services in the short term to comply with the new requirements. However, the long-term benefits—a safer work environment, enhanced consumer confidence, and a stronger reputation—far outweigh the costs.
Deadline Alert: March 31, 2025
Delays jeopardize your license. Start your application today to:
- Avoid project halts.
- Maintain client trust.
- Ensure uninterrupted operations.
Act Now with Gonzalez Insurance
- All-in-One Solution: Secure General Liability, Workers’ Comp, and Bonds in one place.
- Industry Expertise: Decades of experience navigating New Jersey’s regulatory landscape.
- Hassle-Free Process: Avoid third-party portals—we handle paperwork directly.
- Trusted Partnerships: Access competitive rates through our network of top U.S. bonding carriers.
Contact us today to get a free quote and secure your coverage well before the renewal deadline. Don’t wait until the last minute—ensure your business stays compliant and protected!
For any questions or assistance, reach out to us. We are here as a resource for all of your bonding needs.