WHAT THIS BILL REGULATES · 1 REQUIREMENT TYPE
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
1. As used in this act: "Artificial intelligenceArtificial intelligence"Artificial intelligence" means a technology system that: (1) is trained on data; (2) is designed to simulate human communication through one or more of the following: (a) text; (b) audio; or (c) visual communication; and (3) generates non-scripted outputs with limited or no human oversight.Section 1" means a technology system that: (1) is trained on data; (2) is designed to simulate human communication through one or more of the following: (a) text; (b) audio; or (c) visual communication; and (3) generates non-scripted outputs with limited or no human oversight. "InsurerInsurer"Insurer" means a person engaged in the business of homeowners, flood, or automobile insurance in this State.Section 1" means a person engaged in the business of homeowners, flood, or automobile insurance in this State.
Section 1 defines the two operative terms for the Act. The definition of artificial intelligence is unusually narrow: it captures only systems that simulate human communication (text, audio, or visual) and generate non-scripted outputs with limited or no human oversight. Deterministic actuarial or rules-based claims-scoring models that do not simulate communication would likely fall outside this definition, materially narrowing the prohibition's reach.
The definition of insurer limits coverage to persons engaged in the business of homeowners, flood, or automobile insurance in New Jersey.
a. 1 2. a. An insurerInsurer"Insurer" means a person engaged in the business of homeowners, flood, or automobile insurance in this State.Section 1 shall not use artificial intelligenceArtificial intelligence"Artificial intelligence" means a technology system that: (1) is trained on data; (2) is designed to simulate human communication through one or more of the following: (a) text; (b) audio; or (c) visual communication; and (3) generates non-scripted outputs with limited or no human oversight.Section 1 to make the final decision to deny a claim filed under an automobile, homeowners, or flood insurance policy.
b. b. An insurerInsurer"Insurer" means a person engaged in the business of homeowners, flood, or automobile insurance in this State.Section 1 who violates this act shall be subject to a penalty of up to $5,000 for each violation. The penalty shall be collected in a summary proceeding in accordance with the "Penalty Enforcement Law of 1999," P.L.1999, C.274 (C.2A:58-10 et seq.).
Section 2 is the core operative provision. It bars an insurer from using artificial intelligence to make the final decision to deny a claim under an automobile, homeowners, or flood insurance policy. As the accompanying statement makes clear, the intent is to require a human claims adjuster or investigator to make the final denial determination.
The prohibition is limited to the final denial decision — it does not restrict AI use in earlier stages of claims triage, fraud detection, or processing, nor does it reach approvals, delays, or downcoding. Violations carry a civil penalty of up to $5,000 per violation, collected by the State in a summary proceeding under the Penalty Enforcement Law of 1999.
3. This act shall take effect immediately.
Section 3 provides that the Act takes effect immediately upon enactment.