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New Jersey general contractor license and insurance requirements

Matt Crawford image
By Matt Crawford
Oct 11, 2020 min read

Whether you’ve been in business for years or you’re just getting started, if you’re a general contractor who works on residential or noncommercial buildings in New Jersey, you need to register as a home improvement contractor to do business in the state. 

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 obtain 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 business owners, sole proprietors, 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, certificate of liability insurance and $110 fee[1] 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 alternate name. If your business was formed in a state other than New Jersey, you must provide a certificate of authority showing you have permission to work in New Jersey.

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

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

How to renew your New Jersey contractors license

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.

Penalties for working without a license

If you work without a general contractor license in New Jersey, you could face some steep penalties, including a fine of $10,000 for your first offense and $20,000 for each additional violation.[2] 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 the work you do is within the scope of the license you already have.

Public utilities, community associations, and home improvement retailers with a net worth of $50 million or more are exempt from the registration requirement.

Commercial 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 a license, 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 fee for applying is $225, which you must include with your application.[2]

Paterson

You must be licensed by the Department of Community Development if you want to work as a contractor in Paterson. To apply for a license, you must send an application and $100 fee [3] to the Community Development Director. 

When the director receives your application, they’ll send it to the police department to verify the information you provided and obtain your police record, if you have one. They’ll also get the police records of any partners, officers or owners with a 10% or greater interest in the company. 

After your information has been reviewed and verified, the Director of Community Development will either approve or deny your application.

Atlantic City

Atlantic City requires commercial contractors to have either a Class I or Class II construction contractor license. Before you can apply 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 application and the following documents to the city’s Mercantile office:

  • Proof of liability insurance of at least $1 million per occurrence [4]
  • An affidavit stating you’re an equal opportunity employer
  • A $625 fee if you’re applying for a Class I license and a $325 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 conviction: 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.

Insurance requirements for New Jersey General Contractors

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

General Liability insurance for New Jersey contractors

To register with the state as a general contractor, you must have general liability insurance of at least $500,000 per occurrence.[5] 

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.

Commercial Auto insurance for general contractors

Do you have a van or truck you use 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

New Jersey businesses that have at least one employee and aren’t covered by a federal program must 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 Insurance protects New Jersey general contractors

At Next Insurance, we’re dedicated to helping contractors like you get the tailored coverage you need to get a license and protect your business from unexpected costs after an accident. 

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

Get started now with a free online instant quote. If you need help, our U.S.-based insurance advisors are ready and waiting to answer all of your questions.

Do you have projects in a different U.S. state? Visit our summary of general contractor license requirements in every state.

Sources:

[1] https://www.njconsumeraffairs.gov/hic

[2] https://www.njconsumeraffairs.gov/hic/Pages/FAQ.aspx#:~:text=Any%20contractor%20who%20fails%20to%20register%20as%20required,and%20up%20to%20%2420%2C000%20for%20each%20subsequent%20offense.

[3] https://ecode360.com/8550536

[4] https://ecode360.com/15208559

[5] https://www.njconsumeraffairs.gov/hic/Pages/FAQ.aspx#:~:text=Any%20contractor%20who%20fails%20to%20register%20as%20required,and%20up%20to%20%2420%2C000%20for%20each%20subsequent%20offense.

Matt Crawford image
By Matt Crawford
Matt Crawford is Associate Content Director at Next Insurance and a small business insurance specialist. He has worked throughout his career to help small business owners grow and protect their businesses.
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