New Jersey Health Care Service Firm Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a New Jersey Health Care Service Firm bond
At a Glance:
- Lowest Cost: $100 per year or $10 per month, based on the applicant’s credit
- Bond Amount: $10,000
- Who Needs it: All New Jersey health care service firms with a company net worth of less than $100,000
- Purpose: To protect the public from financial harm if the firm breaches any contracts made with consumers or files for bankruptcy
- Who Regulates Health Care Service Firms in New Jersey: The New Jersey Division of Consumer Affairs
Background
New Jersey administrative code 13:45B-13:3 requires all health care service firms operating in the state to register with the DCA. The New Jersey legislature enacted the registration requirement to ensure that health care service firms engage in ethical business practices. To provide financial security for the enforcement of the registration law, health care service firms with a net worth of less than $100,000 must purchase and maintain a $10,000 surety bond to be eligible for registration.
What is the Purpose of the New Jersey Health Care Service Firm Bond?
New Jersey requires health care service firms with a net worth of less than $100,000 to purchase a surety bond as a prerequisite to obtaining a business registration. The bond ensures that consumers will receive compensation for financial harm if the firm fails to abide by the regulations outlined in New Jersey administrative code 13:45B-13-14. Specifically, the bond protects consumers if the firm fails to provide any services that have been paid for or files for bankruptcy. In short, the bond is a type of insurance that protects the public if the health care service firm violates registration law.
How Can an Insurance Agent Obtain a New Jersey Health Care Service Firm Surety Bond?
BondExchange makes obtaining a New Jersey Health Care Service Firm bond easy. Simply log in to your account and use our keyword search to find the “health care” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the New Jersey Health Care Service Firm Bond?
Surety companies will run a credit check on the owners of the health care service firm to determine eligibility and pricing for the New Jersey Health Care Service Firm bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the New Jersey Health Care Service Firm Bond Cost?
The New Jersey Health Care Service Firm bond can cost anywhere between $100 to $500 per year or $10 to $50 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on a $10,000 bond requirement.
$10,000 Health Care Service Firm Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 625+ | $100 | $10 |
| 600 – 624 | $250 | $25 |
| 575 – 624 | $375 | $38 |
| 575 – 599 | $400 | $40 |
| 500 – 574 | $500 | $50 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase the Bond?
New Jersey only requires health care services firms with a net worth of less than $100,000 to purchase a surety bond prior to receiving a business registration. To paraphrase New Jersey statute 13:45B-13:2, a health care service firm is any business that employs individuals who provide health care, personal care, or companion services either directly in an individual’s home or at a caregiving facility.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do New Jersey Health Care Service Firms Register Their Business?
Health care service firms in New Jersey must navigate several steps to register their business. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – All New Jersey Health Care Service Firm Registrations expire on July 1 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Health care service firms must purchase and maintain a $10,000 surety bond. Firms with a company net worth of at least $100,000 are not required to purchase a bond but instead must submit a certified financial report, prepared by a CPA, which verifies their net worth when submitting their registration application.
Step 2 – Purchase Insurance
All registration applicants are required to purchase general liability insurance with a minimum limit of $1 million.
Step 3 – Complete the Application
All New Jersey Health Care Service Firm Registration applications should be mailed to the following address:
New Jersey Office of the Attorney General
Division of Consumer Affairs
Office of Consumer Protection
Regulated Business Section
124 Halsey Street, 7th Floor, P.O. Box 45028
Newark, NJ 07101
Health care service firms must complete the application in its entirety, and submit the following items:
-
- Company formation documents
- Certificate of insurance
- Surety bond or certified financial report
Additionally, health care service firms must pay a $500 fee when submitting their application.
Step 4 – Pass Inspection
Once the application has been received, the DCA will inspect the firm’s business location to ensure that it is in compliance with all applicable regulations. Firms will need to provide the inspector with the following information/documents.
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- The location where all client and employee documents will be secured
- Registered nursing license and certificate of malpractice insurance (if applicable) for the firm’s Director of Nursing
- Employment application’s for the firm’s registered nurse employees
How do New Jersey Health Care Service Firms Renew Their Registration?
The DCA will contact the health care service firm with instructions on how to renew their registration prior to the expiration date. All New Jersey Health Care Service Firm Registrations expire on July 1 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for New Jersey Health Care Service Firms?
New Jersey requires health care service firms to purchase liability insurance with a minimum limit of $1 million. Additionally, firms with a company net worth of less than $100,000 must purchase and maintain a $10,000 surety bond.
Do New Jersey Health Care Service Firms File Their Bond?
Health care service firms should mail their completed bond form, including the power of attorney, to the following address:
New Jersey Office of the Attorney General
Division of Consumer Affairs
Office of Consumer Protection
Regulated Business Section
124 Halsey Street, 7th Floor, P.O. Box 45028
Newark, NJ 07101
The surety bond requires signatures from both the surety company that issues the bond and from a representative of the health care service firm. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can New Jersey Health Care Service Firms Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, health care service firms in New Jersey must ensure that they:
- Do not breach any contracts made with consumers
- Provide all services that have been paid for
- Do not file for bankruptcy
What Other Insurance Products Can Agents Offer Health Care Service Firms in New Jersey?
New Jersey requires health care service firms to purchase general liability insurance as a prerequisite to obtaining a business registration. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for New Jersey Health Care Service Firm Customers?
New Jersey conveniently provides a public database to search for active health care service firms in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
