New Jersey Statutes Title 55. Tenement Houses and Public Housing 55 § 14K-101

a. The agency is authorized to defend and indemnify the federal government, any department, board, body, agency or other entity thereof, the Government National Mortgage Association and its successors and assigns, the Federal National Mortgage Association and its successors and assigns, and the Federal Home Loan Mortgage Corporation and its successors and assigns, against claims, causes of action, demands, costs or judgments against that entity arising as a direct result of that entity's agreement with the agency, upon the terms and limitations the agency deems reasonable and appropriate. An agreement to defend and indemnify pursuant to this subsection shall not bar, reduce, limit or affect any remedies the agency may have to enforce the agency's agreement or to assert a claim for damages to which the agency may be entitled arising out of the entity's failure to perform the agreement, or for the recovery of funds expended for the defense of an entity if the defense was undertaken in response to a claim or cause of action brought against the entity which arose from gross negligence, willful misconduct, fraud, intentional tort, bad faith, or criminal conduct of the entity or one or more of its officials or employees. No one other than an entity which is a party to the agreement with the agency may enforce any agreement for defense or indemnification between that entity and the agency.

b. The agency may create a reserve fund, procure insurance or take other such appropriate action in order to meet its future obligations, if any, created by such indemnification obligations. Any agreement to indemnify pursuant to subsection a. may be made only as necessary or appropriate to the exercise of any power herein granted or reasonably implied, provided that: (1) such indemnification shall be payable solely from the funds of the agency on deposit in its General Fund or placed in a reserve fund for that purpose; and (2) such indemnification shall not constitute a debt, obligation or liability of the State, and the State shall not be liable for any obligation as a result of the agency's indemnification obligation.