New Jersey body shop laws: what insurers and shops must do

What it means in New Jersey

The insured can use any repair shop they choose, but the insurer can't settle a claim with an unlicensed shop. An insurer with shop deals can't deny that choice if your shop accepts the same terms, including price, as its most generous deal. Before any repair, you must have the insured sign the state's notice that accepting those terms may put a manufacturer or dealer warranty or lease at risk. The insurer may recommend a shop, and must if the insured asks.

The customer's shop must accept the same terms, including price, as the insurer's most generous shop arrangement. The N.J.A.C. text is the Department's copy; confirm against the official code.

The law's own words

“the insurer shall not deny a person the right to select an auto body repair shop or other repair facility of his choice for repair of a covered vehicle”

N.J.S.A. 17:33B-36.1, text through P.L.2026, c.50

“Subject to the requirements of (d) above, the insured may use any repair facility of his or her own choice.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

“The insurer may recommend, and if the insured requests, must recommend a qualified repair facility at a location reasonably convenient to the insured motor vehicle who will repair the damaged motor vehicle at the insurer's estimated cost of repairs”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

What it means in New Jersey

Before the insurer stops paying storage, it must give the claimant 3 working days' notice and keep a copy in the claim file. If you charge to store a car, tell the customer the daily storage charge in writing as soon as you can. You have a garage keeper's lien for storage. Separately, a towing company on a police-authorized tow that doesn't notify the owner and lender within 30 days can charge no more than $750 for storage.

The two N.J.A.C. rows are quoted from Cornell LII's copy of the New Jersey Administrative Code (the official code is published commercially); confirm against the official code. The $750 cap applies to non-consensual tows authorized by law enforcement.

The law's own words

Shop

“A garage keeper who shall tow, store, maintain, keep, or repair a motor vehicle or furnish gasoline, accessories or other supplies therefor, at the request or with the consent of the owner or the owner's representative, or at the request of a law enforcement officer of this State or any political subdivision of this State, shall have a lien upon the motor vehicle or any part thereof”

N.J.S.A. 2A:44-21, text through P.L.2026, c.50

Shop

“Every auto body repair facility that charges a fee to store a motor vehicle on its premises shall disclose in writing, as soon as practicable, the amount of such storage charge to the customer on a per diem basis.”

N.J.A.C. 13:21-21.14, amended effective 1/16/2001 (Cornell LII copy)

Insurer

“An insurer shall provide notice to a claimant three working days prior to the termination of payment for automobile storage charges and place a copy of such notice in a claim file.”

N.J.A.C. 11:2-17.10(a)9 (Cornell LII copy)

Tow and storage lot

“If a towing company fails to notify the operator, owner, lessor, and lienholder of the vehicle within 30 days, the towing company may charge a maximum storage fee of $750, and the towing company shall be responsible for all additional towing or related storage services.”

N.J.S.A. 56:13-16, text through P.L.2026, c.50

What it means in New Jersey

You can hold the car without going to court until you're paid, and releasing it doesn't end the lien: after demanding payment, you can peacefully take it back anywhere in New Jersey. Send your customer a certified letter saying money is owed; if they don't go to court, you can auction the car 30 days later, after two weekly newspaper notices and 5 days' notice posted at your shop. A lender with an earlier recorded loan comes first. If your customer thinks the bill is too high, they can sue for the car and get it by paying what the court finds due.

The lien survives letting the car leave: after demand, the garage keeper may peaceably retake it (N.J.S.A. 2A:44-22). In the 2A:44-23 action the owner offers what he thinks is due and gets the car on paying what the court finds due.

The law's own words

Keep the car

From a list that begins: “A garage keeper who shall tow, store, maintain, keep, or repair a motor vehicle or furnish gasoline, accessories or other supplies therefor, at the request or with the consent of the owner or the owner's representative”

“shall have a lien upon the motor vehicle or any part thereof for the sum due for such towing, storing, maintaining, keeping, or repairing of such motor vehicle or for furnishing gasoline or other fuel, accessories or other supplies therefor, and may, without process of law, detain the same at any time it is lawfully in his possession until the sum is paid.”

N.J.S.A. 2A:44-21, text through P.L.2026, c.50

Sell or title it

“A motor vehicle is considered detained when the owner or person entitled to possession of the motor vehicle is advised by the garage keeper, by a writing sent by certified mail return receipt requested to the address supplied by the owner or person entitled to possession of the motor vehicle, that goods or services have been supplied or performed, and that there is a sum due for those goods or services.”

N.J.S.A. 2A:44-21, text through P.L.2026, c.50

Sell or title it

“If no proceedings are taken for the repossession of the motor vehicle or part thereof by the motor vehicle owner or person entitled to possession of the motor vehicle, such property so held by the garage keeper shall, after the expiration of not less than 30 days from the date of the detention, be sold at public auction”

N.J.S.A. 2A:44-29, text through P.L.2026, c.50

Sell or title it

“Notice of the sale, under section 2A:44-29 of this title shall be published for two weeks at least once in each week, in some newspaper circulating in the municipality in which the garage is situate and not less than five days' notice of such sale shall be given by posting the notice at the garage keeper's place of business.”

N.J.S.A. 2A:44-30, text through P.L.2026, c.50

Challenge in court

“If upon receiving such statement he considers the amount thereof excessive, he may offer what he considers to be reasonably due and demand possession of the motor vehicle or part thereof so detained. If possession is refused, he may immediately bring an action for possession thereof in the Superior Court, Law Division, Special Civil Part or in any other court.”

N.J.S.A. 2A:44-23, text through P.L.2026, c.50

What it means in New Jersey

New Jersey's collection has no rule on whether the insurer can require aftermarket parts or must flag them. Carmakers must tell new-car buyers within 90 days that federal law bars voiding a warranty solely because an aftermarket or recycled part was used. The insurer must give the insured a detailed written estimate after inspecting, and restore the car at no extra cost if its named shop's repair isn't safe and proper. Beyond that, ask the Department of Banking and Insurance or a lawyer.

The warranty notice duty falls on the manufacturer, distributor or factory branch, not on shops or insurers; failing to give it is an unlawful practice under C.56:8-2. The notice itself says the protection does not apply to a new vehicle bought solely for commercial or industrial use. The N.J.A.C. text is the Department of Banking and Insurance's own publication, which can lag an amendment, and it binds insurers.

The law's own words

Parts standard

“Within 90 days after the purchase or lease of a new motor vehicle in the State of New Jersey, the motor vehicle manufacturer, distributor, or factory branch shall mail to the buyer or lessee a written statement,”

N.J.S.A. 56:12-34.1, text through P.L.2026, c.50

Parts standard

“The Magnuson-Moss Warranty Act, 15 U.S.C. s.2301 et seq., makes it illegal for motor vehicle manufacturers to void a motor vehicle warranty or deny warranty coverage solely because an aftermarket or recycled part has been used to repair the vehicle or someone other than the authorized service provider performed service on the vehicle.”

N.J.S.A. 56:12-34.1, text through P.L.2026, c.50

Insurer

“(9) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following: (a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;”

N.J.S.A. 17:29B-4, text through P.L.2026, c.50

Insurer

“If the insurer inspects the damaged vehicle or causes it to be inspected, the insurer shall promptly upon completing the inspection furnish the insured or the designated representative of the insured with a detailed written estimate of the cost of repairing the damage resulting from the loss, specifying all appropriate deductions.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

Insurer

From a list that begins: “If the insured's vehicle is repaired at a repair facility whose name is furnished by the insurer under (e) above for a sum estimated by the insurer as the reasonable cost to repair the vehicle, the insurer:”

“Shall cause the damaged vehicle to be restored to the condition it was in prior to the loss, at no additional cost to the insured and within a reasonable time, if the repair facility does not repair the damaged vehicle in accordance with generally accepted standards for a safe and proper repair.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

What it means in New Jersey

New Jersey doesn't require an appraisal clause, but on your customer's own total loss it points to the policy's appraisal section. If your customer tells the insurer in writing within 30 days of getting the check that they can't buy a comparable car for that amount, the insurer must reopen the claim, and either side can then settle it through the policy's appraisal section, if there is one; the result binds both. The insurer must explain these rights in writing with the check.

Appraisal is one of four options after a reopened total loss; the insurer may instead find a comparable car within 25 miles, pay the difference, or offer a replacement. On repairs, the insurer must make all reasonable efforts to agree on a price with the shop your customer picked. N.J.A.C. 11:3-10 binds insurers and is the Department's own nj.gov text, not the official code, so it can lag an amendment.

The law's own words

Other dispute rules

From a list that begins: “Committing or performing with such frequency as to indicate a general business practice any of the following:”

“(g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;”

N.J.S.A. 17:29B-4, text through P.L.2026, c.50

Appraisal right

“(b) If the insurer is notified in writing within 30 calendar days of the receipt of the claim draft that the insured cannot purchase a comparable vehicle at the market value established by the insurer, the insurer shall reopen its claim file and the following procedures will apply:”

N.J.A.C. 11:3-10.4, DOBI copy, readopted 11/3/2021 (PDF)

Appraisal right

“4. The insurer or insured may conclude the loss settlement as provided for under the appraisal section of the insurance contract in force at the time of loss. This appraisal shall be considered as binding against both parties, but shall not preclude or waive any other rights either party has under the insurance contract or under law.”

N.J.A.C. 11:3-10.4, DOBI copy, readopted 11/3/2021 (PDF)

How appraisal works

“(c) The insurer shall advise the insured in writing of the rights of recourse at the time the settlement draft is issued and retain a copy of the notice in its claim file.”

N.J.A.C. 11:3-10.4, DOBI copy, readopted 11/3/2021 (PDF)

Other dispute rules

“The insurer must make all reasonable efforts to obtain an agreed price with the facility selected by the insured. The insurer may recommend, and if the insured requests, must recommend a qualified repair facility at a location reasonably convenient to the insured motor vehicle who will repair the damaged motor vehicle at the insurer's estimated cost of repairs,”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

What it means in New Jersey

New Jersey has no labor rate or survey law. An insurer with a shop network can't deny your customer the right to use you, as long as you accept the same terms, including price, as its most generous arrangement. It must negotiate in good faith and make all reasonable efforts to reach an agreed price with the shop the insured picks. Department guidance from 2007, mainly about paint and materials, says insurers should be ready to justify repair allowances.

Under 17:33B-36.1, before repairs your shop must give the insured a signed notice that accepting the network's terms may jeopardize a manufacturer or dealer warranty or lease. N.J.A.C. 11:3-10.3 is the Department's own publication of the rule and covers the insured's own physical damage claim. Bulletin 07-20 (guidance, issued 10/25/2007) is not law and cites no statute or rule. Bulletin 07-20 is chiefly about paint and materials allowances.

The law's own words

What the insurer pays

“the insurer shall not deny a person the right to select an auto body repair shop or other repair facility of his choice for repair of a covered vehicle, provided that such auto body repair shop or other repair facility elected by the person accepts the same terms and conditions from the insurer, including, but not limited to, price, as the shop, facility, or network with which the insurer has the most generous arrangement.”

N.J.S.A. 17:33B-36.1, text through P.L.2026, c.50

Related claim rule

From a list that begins: “Committing or performing with such frequency as to indicate a general business practice any of the following:”

“(f) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;”

N.J.S.A. 17:29B-4, text through P.L.2026, c.50

Related claim rule

“(b) Negotiations must be conducted in good faith, with the basic goal of promptly arriving at an agreed price. Early in negotiations, the insurer must inform and confirm in writing to the insured or the insured's designated representative all deductions that will be made from the agreed price, including the amount of applicable deductible.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

What the insurer pays

“The insurer must make all reasonable efforts to obtain an agreed price with the facility selected by the insured. The insurer may recommend, and if the insured requests, must recommend a qualified repair facility at a location reasonably convenient to the insured motor vehicle who will repair the damaged motor vehicle at the insurer's estimated cost of repairs”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

Related claim rule

“The Department is monitoring insurer claim practices to confirm that allowances for all aspects of the repair process are sufficient. As complaints are received by insurers and the Department, our Office of Consumer Protection Services will be conducting appropriate reviews during the market analysis and market conduct examination process. Insurers are expected to be prepared to justify their repair allowances.”

N.J. DOBI Bulletin 07-20, issued 10/25/2007 (PDF)

What it means in New Jersey

New Jersey has no statute or rule banning paint and materials caps. 2007 Department guidance, which isn't law, says some insurers' paint and materials allowance methods were out of date, expects allowances enough to restore the car to pre-accident condition, encourages calculator manuals and programs, and says insurers must be ready to justify allowances. On your customer's own claim, the rules require good faith negotiation and a detailed written estimate. How this applies is for the Department of Banking and Insurance or a lawyer.

Bulletin 07-20 (issued 10/25/2007) is guidance to insurers, not law or a rule, states no shop duty and creates no private right; the collection did not check whether the Department still applies it. The N.J.A.C. 11:3-10 text is the Department's own publication, which can lag the official Code.

The law's own words

Related claim rule

From a list that begins: “Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following:”

“Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;”

N.J.S.A. 17:29B-4, text through P.L.2026, c.50

Related claim rule

“Negotiations must be conducted in good faith, with the basic goal of promptly arriving at an agreed price.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

Related claim rule

“If the insurer inspects the damaged vehicle or causes it to be inspected, the insurer shall promptly upon completing the inspection furnish the insured or the designated representative of the insured with a detailed written estimate of the cost of repairing the damage resulting from the loss, specifying all appropriate deductions.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

What the insurer pays

“Insurers are expected to provide repair allowances that are sufficient to restore damaged vehicles to their pre-accident condition. The use of available paint and materials cost calculator manuals and programs to determine allowances is encouraged to assist insurers in achieving consistent compliance.”

N.J. DOBI Bulletin 07-20, issued 10/25/2007 (agency guidance, not a statute or rule) (PDF)

What the insurer pays

“As complaints are received by insurers and the Department, our Office of Consumer Protection Services will be conducting appropriate reviews during the market analysis and market conduct examination process. Insurers are expected to be prepared to justify their repair allowances.”

N.J. DOBI Bulletin 07-20, issued 10/25/2007 (agency guidance, not a statute or rule) (PDF)

What it means in New Jersey

On your customer's own collision or comprehensive claim, an insurer that wants to inspect before repair has 7 working days after notice of loss to inspect, start negotiating and make a good faith offer. Once your customer accepts, payment is due within 5 working days, and the claim should be paid within 30 calendar days of notice unless clearly justified. Under the state's unfair practices law, the Commissioner can fine up to $1,000 per violation, $5,000 if knowing.

N.J.A.C. 11:3-10 covers collision and comprehensive claims, the insured's own coverage, so these deadlines don't reach third-party liability claims. Total losses get 14 working days for the inspection and offer steps, and any claim element unresolved after 30 days needs a written explanation, repeated every 30 days. The rule text is the Department's own publication, which can lag the official Code. The Department's general claim-handling rules (N.J.A.C. 11:2-17) are not in this collection.

The law's own words

Respond

From a list that begins: “Committing or performing with such frequency as to indicate a general business practice any of the following:”

“(b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;”

N.J.S.A. 17:29B-4, text through P.L.2026, c.50

If late

“the commissioner may order payment of a penalty not to exceed $1,000.00 for each and every act or violation unless the person knew or reasonably should have known he was in violation of this chapter, in which case the penalty shall be not more than $5,000.00 for every act or violation.”

N.J.S.A. 17:29B-7, effective 1/11/1982, text through P.L.2026, c.50

Accept or deny

“(a) If the insurer intends to exercise its right to inspect, or cause to be inspected by an independent appraiser, damages prior to repair, the insurer shall have seven working days following receipt of notice of loss to inspect the insured's damaged vehicle, which is available for inspection, at a place and time reasonably convenient to the insured; commence negotiations; and make a good faith offer of settlement.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

Pay

“(k) The insurer must mail or hand deliver to the insured or the designated representative its proof of loss or payment within five working days after the insured has accepted the insurer's offer.”

N.J.A.C. 11:3-10.3, DOBI copy, readopted 11/3/2021 (PDF)

Pay

“(a) Unless a clear justification exists, physical damage claims will have a maximum payment period of 30 calendar days. A payment period is the period between the date of the receipt of the notice of loss by the insurer, and:”

N.J.A.C. 11:3-10.5, DOBI copy, readopted 11/3/2021 (PDF)