New Jersey lawmakers may take a second look at raising some car insurance minimums after most bills in a reform package championed by Senate Speaker Nicholas Scutari this summer failed to move forward.
Sen. Joe Lagana (D-Bergen) was introduced Monday an invoice that would require auto insurance policies to include at least $50,000 in personal injury protection, versus the $15,000 required under current law.
Lagana said the goal is to protect people who have been injured in car accidents and cannot afford to pay their medical bills. Scutari has previously said that New Jersey’s current requirements are so low that they force taxpayers to subsidize victims’ unpaid medical bills.
“I’ve seen people who’ve spent two months with a chiropractor, had an MRI and maybe an epidural for a herniated disc, and blown $15,000. I’ve seen people who couldn’t make it out of the hospital without blowing up $15,000,” Lagana, an attorney, said in an interview. “The amount of premium that a person pays – which isn’t low – for really subpar health insurance isn’t really reasonable in my opinion.
The bill comes after the Legislature approved and Gov. Phil Murphy signed one into law in August separate billsponsored by Scutari, which is setting new standards for personal injury liability and coverage for uninsured/underinsured motorists.
These changes require auto policies to offer at least $25,000 in personal injury liability insurance by 2023, paying for injuries suffered by others as a result of an accident caused by the policyholder, and $35,000 by 2026. Industry officials have announced that this will add about $125 to New Jerseyers’ auto insurance premiums.
Personal protection pays for damage suffered by the policyholder. One of the bills in Scutari’s package, which was not approved by the Legislature, would have raised that minimum to $250,000.
Insurance industry groups have criticized these bills, saying they increase costs for policyholders.
“All of these changes that we’re seeing at the legislative level are going to impact the bottom line of every young driver and every new driver,” said Christine O’Brien, president of the New Jersey Insurance Council.
She said the state should wait until after 2026 for further regulatory changes, when it is clear what impact the law, which Murphy signed into law in August, had on premiums. At the very least, she said, they should hold out any new changes until the end of the current legislature.
Lagana said he expects the bill to have a modest impact on premiums, but acknowledged ongoing affordability issues in the state could make a delay worthwhile.
“I’ll sit down with them and see what timing we can set for that. Maybe after a year or two it will take effect,” he said. “I’m definitely willing to work with them as we address other changes that have been implemented.”
It’s not yet clear exactly how a change in minimum insurance contributions will affect premiums, although it will likely result in at least a small increase, as regulations are forcing a significant number of policyholders to switch to plans that offer greater coverage .
Drivers in New Jersey must have either basic or standard auto insurance. At the end of last year, about 2.1 million policyholders had a standard auto insurance plan with $15,000 in personal injury protection, according to a semi-annual report released by the Department of Banking and Insurance. That’s about 36% of all standard auto plans in the state.
All other drivers with standard plans carried at least $50,000 in personal injury protection.
Basic plans are intended for new drivers and others who cannot or do not want broader coverage from a standard plan. According to the report, 43,584 New Jersey policyholders had a basic auto plan that provides up to $15,000 in personal injury protection under current law.
Lagana acknowledged that the potential increase in the cost of a baseline is a potential bump on the bill.
“For people who go for basic policies, I just assume there’s an affordability issue, so I’m aware of that,” Lagana said. “But with the standard policies, there may not be affordability issues with people. They may just not realize that with $15,000 they are making a bad decision.”
O’Brien said basic plans could become more common following the introduction of driver’s licenses in New Jersey for residents with independent taxpayer identification numbers, numbers typically used by non-citizen immigrants who do not have Social Security numbers. The Motor Vehicle Commission began accepting applications for such licenses last May.
“We are welcoming a whole new driving population, a legal driving population. What can you afford?” said O’Brien. “It’s a balance. I’m not saying it’s an easy balance, which is why I think the legislature should be cautious about what the driving public can sustain.”
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