New Jersey general contractor license and insurance requirements

To operate in New Jersey as a home improvement contractor, whether you’ve been in business for years or are just starting, you must register as a home improvement contractor.

If you work exclusively on commercial properties, you don’t need to register with the state, but you may need to obtain a commercial contractor license from the city or county where you work.

Compared to other states, the application process for a New Jersey contractor license is relatively simple — in fact, the state refers to it as a registration process. It doesn’t involve a ton of paperwork and shouldn’t take up too much of your time.

In this article, we’ll take a look at:

• How to get a general contractor license in New Jersey
• New Jersey general contractor license requirements
• Common challenges for obtaining a New Jersey contractor license
• Insurance requirements for New Jersey general contractors
• How NEXT helps protect New Jersey general contractors

How to get a general contractor license in New Jersey

The Contractors’ Registration Act requires anyone working as a general contractor in New Jersey to register with the Division of Consumer Affairs. This includes any type of business owner, such as sole proprietorship, full-time and part-time employees, sub-contractors and out-of-state contractors who work in New Jersey.

The law applies to people doing the following types of work on residential or noncommercial buildings:

• Construction
• Renovations and remodeling
• Restorations and repairs
• Modernizing 
• Installing
• Demolishing

To register with the state, you must submit an application, a certificate of liability insurance, and a $110 fee to the New Jersey Division of Consumer Affairs. 

Depending on your business structure, you may also need to submit your trade name certificate, certificate of incorporation, certificate of formation or registration of an alternate business name.  If you formed your business in a state other than New Jersey, you must provide a certificate of authority showing you have permission to work in New Jersey.

The state will issue you a registration number if your application is approved. You must include the number in all advertisements, business documents, contracts, correspondence with customers, and on all commercial vehicles. You must also display your original registration certificate at your place of business. 

If you offer customers financing options for their home construction or improvement projects, you may also need to obtain a home repair contractor license through the state’s Department of Banking and Insurance.

Penalties for working without a general contractor license

If you work without meeting the requirements of a general contractor license in New Jersey, you could face some steep penalties, including jail time and a $10,000 fine for your first offense and $20,000 for each additional violation. Plus, municipalities aren’t allowed to issue construction permits to contractors who aren’t registered with the state.

Exceptions to licensing requirements

While most contractors are required to register, there are a few exceptions. 

People doing work on their own homes, a family member’s home, or a charity or other non-profit organization don’t need a license. If you hold a specialized license (e.g., plumber, electrician, architect, engineer, etc.), you don’t have to register with the state as a home improvement contractor as long as your work is within the scope of the license you already have.

Home improvement retailers with a net worth of $50 million or more, as well as people handling maintenance for public utilities or community associations, are exempt from the registration requirement.

New Jersey general contractor license requirements

Requirements for commercial contractors may vary by location, so it’s important to check with your local government for licensing guidelines. Here are a few examples of what you might expect when you apply for a commercial contractor license in your area.

Newark

If you plan to work as a building contractor in Newark, you need a license to get started. To obtain licensure, you must submit an application to the Director of Finance along with:

• A copy of your driver’s license or state ID card
• Your New Jersey business registration certificate
• A police warrant record check and state bureau of investigation report
• Certificate of incorporation of partnership formation
• Proof of payroll

The application fee starts at $200, which you must include with your application.

Passaic

You must be a licensed contractor by the City of Passaic Construction Department if you want to work as a commercial contractor in Passaic. You must send an application and a $100 fee to apply for a license.

The application requires you to choose a contractor classification, such as general contractor, demolition, swimming pool, roofing and siding, sign and billboard, or another type of contractor. It must also include the principal officer’s name if you apply under a corporation, company, or partnership, and proof of liability insurance.

Atlantic City

Atlantic City requires commercial contractors to have either a Class I or Class II construction contractor license. Before applying for a license, you must pass an exam to demonstrate you’re qualified to be a commercial contractor.

If you pass the exam, you must submit your license application and the following documents to the city’s Mercantile office:

• Proof of liability insurance of at least $1 million per occurrence
• An affidavit stating you’re an equal-opportunity employer
• A $600 fee if you’re applying for a Class I license and a $300 fee if you’re applying for a Class II license

Common challenges for obtaining a New Jersey contractor license

Although New Jersey’s application process is less stringent than other states, there are a few circumstances that may affect your ability to get approved, including:

• Administrative or civil action: If your business or anyone with an ownership interest of 10% or more has been found liable of fraud, negligence or deceptive business practices, you need to provide documentation that shows how the incident was resolved.
• Criminal history: If you were previously convicted of a crime, you must provide documentation that shows your sentence, probation or parole status and evidence of rehabilitation.
• Student loan default: If your student loans are in default, your application may be denied until you can show that you’ve brought your account current or worked out a payment plan with your lender.
• Failure to pay child support: If you’re behind on your child support payments, you may need to prove that you’ve made payment arrangements with the court system before your application is approved.

To maintain your license, you must renew it before March 31 every year. If you don’t renew your license by the deadline and want to continue to work as a general contractor, you’ll need to submit a reinstatement form.

Insurance requirements for New Jersey general contractors

If you’re working as a general contractor, here’s what you need to know about the types of New Jersey business insurance you may be required and recommended to maintain.

General liability insurance for New Jersey contractors

To register with the state as a general contractor, you must have NJ general liability insurance of at least $500,000 per occurrence.

General liability insurance helps protect your business from expenses related to property damage and injuries to people other than you and your employees. For example, if you’re remodeling a client’s home and you or an employee break a window, general liability insurance can help pay to repair the damage.

Tools and equipment insurance

Tools and equipment insurance is important to general contractors in New Jersey. It protects against financial losses if tools and equipment are stolen, damaged, or destroyed. It also helps cover the costs of repairs or replacement if necessary.

For example, if your trailer containing expensive tools and equipment was broken into, and the items were stolen, the insurance could help cover the cost of replacing the equipment. 

Commercial property insurance

Fire, theft, vandalism, and other damage can happen when you least expect it. Commercial property insurance for general contractors can help. It covers property you own and rent for your contracting business.

Commercial auto insurance for general contractors

Do you have a van or truck to haul supplies and equipment back and forth to job sites? If so, commercial auto insurance can help pay for expenses related to injuries and or damage sustained in an accident.

If you’re driving for business reasons, your personal auto insurance most likely won’t cover expenses if you get in an accident. It’s important to review your policy documents closely.

Workers’ compensation insurance for general contractors

The state of New Jersey requires businesses with at least one employee not covered by a federal program to have workers’ compensation insurance or be approved for self-insurance. Out-of-state employers may also need to purchase workers’ compensation insurance if they work in New Jersey.

Workers’ comp coverage helps pay for medical expenses and time missed from work if an employee is hurt on the job.

How NEXT helps protect New Jersey general contractors

NEXT is dedicated to helping contractors like you get the affordable, tailored general contractor coverage you need to get a license and protect your business from unexpected costs after an accident.

Our online application makes it easy to view coverage options, purchase policies, and get your certificate of insurance in a matter of minutes.

Start a free quote with NEXT.

How NEXT helps protect New Jersey general contractors

NEXT is dedicated to helping contractors like you get the affordable, tailored general contractor coverage you need to get a license and protect your business from unexpected costs after an accident.

Our online application makes it easy to view coverage options, purchase policies, and get your certificate of insurance in a matter of minutes.

Start a free quote with NEXT.