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New Jersey Enacts Property Flood Risk Disclosure Law

A recently enacted New Jersey law may impact New Jersey property insurers.

The new law went into effect on March 20, 2024, requiring landlords and sellers of real estate to disclose flood risk information to prospective buyers and tenants. Under the law, both sellers of real property and landlords must disclose whether the property is located in a FEMA-designated Special Flood Hazard Area or Moderate Flood Hazard Area.  Additionally, sellers must disclose any actual knowledge of flood risks at the property, including any prior flood claims and whether the property has ever experienced flood damage.  

Property insurers underwriting new risks in New Jersey may reasonably conclude – in the wake of this law – that real estate buyers, also seeking insurance on the property, will be reasonably informed about the property’s flood history. Property insurance applications which include questions regarding flood risks will likely reveal whether a property is in a FEMA-designated flood zone, but also whether the property has previously experienced flood damage.

Although the impact of this new law on property insurance underwriting and claims handling remains to be seen, property insurers underwriting new risks in New Jersey, at minimum, should be able to better rely on flood-related risk information in insurance applications as potential insureds are forced to be informed regarding the flood history at an insured location.

The full text of the new law is available here.