What is the New Jersey law regarding excess lines and 'follow the form' coverage?

In New Jersey, the law regarding excess lines and 'follow the form' coverage mandates that surplus lines policies must substantially adhere to the terms of the underlying admitted policy. This requirement is essential to ensure that the coverage provided by surplus lines insurers is consistent with the original policy’s intents and terms. By adhering to the original policy's provisions, the surplus lines coverage offers a layer of protection that mirrors what the insured had in the standard admitted market, facilitating a smoother claims process and expectations for policyholders.

This adherence helps maintain the integrity of the insurance coverage and ensures that there are no unexpected gaps or changes in coverage when transitioning from an admitted to a surplus lines policy. The term ‘substantially adhere’ indicates that while some minor deviations may be permissible, the fundamental coverage features should generally remain intact to protect policyholders' interests.

Understanding this principle is critical when evaluating surplus lines coverage and ensuring compliance with New Jersey's insurance regulations.