It is no surprise that legislation mandating changes to homeowners insurance in New Jersey has begun to make its way through Trenton following Superstorm Sandy.  Most recently, a bill was signed into law which adds information to be included in the required Homeowners Insurance Consumer Information Brochure which accompanies new and renewal policies. The new law will require the inclusion of a one-page summary of the policy including “notable” coverages and exclusions, as determined by the Commissioner of Banking and Insurance. 
Lawmakers have made clear attempts to insulate insurance companies from liability as it relates to this new requirement.  For starters, the law expressly states that the coverage summary shall not be considered a replacement for the terms outlined in the policy, that it will not alter coverage and that it will not confer new or additional rights beyond those contained in the policy. In addition, the summary will specifically state that it is provided as “guidance” only.  Essentially, the summary will be akin to a Certificate of Insurance, which provides policyholders and/or certificate holders with policy data which they expect to be able to rely upon (what’s the purpose of having them if you aren’t supposed to rely upon the information contained in them) but which is provided for “information only” and is not a substitute for the policy language itself.  
Despite the lawmakers’ best efforts, the summary will likely spawn litigation nonetheless. First and foremost, there will undoubtably be debate over the use of the term “notable.”  It is impossible to predict what portions of a policy may or may not become important following a particular loss. What may not appear “notable” today may become central to a loss next week. “Notable” is a subjective term, open to interpretation, and that’s what insurance coverage litigation is all about. Policyholders with uncovered losses that involve exclusions that were not identified in the summary as "notable” may argue that they were mislead, etc. This will surely be an issue that will arise, however, since the Commissioner will have the final say on what is or is not “notable” it is unclear at this stage how much responsibility and/or liability the carriers will have for the contents of the notification.
Secondly, there are bound to be disputes over semantics.  Despite the “guidance” only disclaimer, there will likely be situations where a Court could determine that reasonable minds could disagree over how the wording used to describe the coverage in the summary can or should be interpreted. In New Jersey, policy ambiguities have traditionally been decided in favor of the insured. Although the summary will not be part of the policy, it is intended to provide guidance and if the wording used can be viewed as  misleading, litigation will follow. 
Third, it is unclear what will happen in the event of policy endorsements.  The law requires the notification to be given “annually at the time of renewal, or as otherwise ordered by the Commissioner.” As it stands now, the law is silent as to whether a revised summary will be issued if mid-term changes are made to a “notable” coverage provision in the policy.  Unless the Commissioner later decides to address this issue, there will undoubtably be disputes if a loss occurs and the policy and the summary are at odds. 
Overall, providing policyholders with more information is a step in the right direction, so long as it explains often confusing insurance policy terms and coverages in plain, simple wording, without muddying the already hard to navigate waters of insurance policy interpretation. Hopefully regulations will be promulgated which clarify some of these issues.  Otherwise litigation will be inevitable. 
It should be noted that the effective date for the change has yet to be determined. The law requires that the Department of Banking and Insurance create a time line for implementation.  Whether it will be required in policies issued before this year’s hurricane season remains to be seen.