Two bills passed the New Jersey state Legislature last week, which would impact the personal auto and commercial insurance marketplace, respectively. The auto limits bill was amended in the state Senate.
Increase in auto limits
S-481, sponsored by Sen. Nicholas Scutari, D-22 and Assemblyman Louis Greenwald, D-6, passed both the state Senate (23-15) and Assembly (44-29) on June 29. If signed, the legislation eventually would increase the minimum auto limits required in a personal auto policy from $15,000/$30,000/$5,000 to $35,000/$70,000/$25,000.
As originally drafted, the legislation would have increased the state minimum limits from $15,000/$30,000/$500 to $50,000/$100,000/$25,000 and required uninsured motorist/underinsured motorist coverage in the amount of $50,000/$100,000. However, the legislation was amended in the Senate Budget and Appropriations Committee to increase the minimum limits gradually over the course of three years and to decrease the eventual minimal limits level.
Under the amendments, New Jersey’s minimum limits would increase to $25,000/$50,000/$25,000 on Jan. 1, 2023. Starting Jan. 1, 2026, the minimum limits would increase to $35,000/$70,000/$25,000. These amendments were added to address concerns from advocacy groups and insurance carriers.
Advocates argued that increasing the minimum limits would disproportionately impact low-income policyholders. Insurance carriers balked at initial suggestions of raising the minimum limits to 35/70 as very few carriers, if any, currently have those rates filed with the Department of Banking and Insurance. Gradually increasing the minimum limits will allow insurance carriers time to file new rates and give the DOBI time to review and approve them.
PIANJ is the only insurance association to support an increase in the minimum limits. Currently, New Jersey has the lowest minimum limits in the country. As medical costs continue to rise, the current minimum limits are inadequate to protect New Jersey citizens. If signed into law, New Jersey would be unique in requiring limits of $35,000/$70,000. Several states require minimum limits of 30/60, but no state requires 35/70 limits.
Liability for business and rental owners
S-1368, sponsored by Sen. Nicholas Scutari, D-22, and Assemblyman Raj Mukherji, D-32, passed both the state Senate (26-13) and state Assembly (49-28) on June 29. This bill would require business owners and rental owners to maintain certain liability insurance policies. This legislation would require business owners to purchase liability insurance in an amount not less than $500,000 for combined property damage and bodily injury to or death of one or more persons in any one accident or occurrence.
Owners of multifamily homes with four or fewer units are required to maintain liability insurance in an amount not less than $300,000. Business or rental owners will be required to file a certificate of insurance demonstrating compliance with this insurance requirement with the local municipality in which the business or rental unit is located. Municipalities are permitted to charge a filing fee, as well as fine business or rental units, up to $5,000, that do not comply.
If signed into law, the bill would go into effect 90 days after signature. However, that effective date only applies to businesses purchasing new policies. Businesses with existing commercial insurance policies have 180 days to demonstrate compliance. Owners of rental units will have 180 days, regardless of whether a policy is new or a renewal.
PIANJ has long supported this legislation and it was integral in amending an earlier version of the bill to clarify the insurance requirements.
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.