The state Legislature may have been on summer recess, but its impact was still felt as two compulsory insurance bills were signed into law by Gov. Phil Murphy on Aug. 5.
Increase in auto limits
S-481, sponsored by Sen. Nicholas Scutari, D-22, and Assemblyman Louis Greenwald, D-6, the new law eventually will 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.
Under the law, New Jersey’s minimum limits will increase to $25,000/$50,000/$25,000 on Jan. 1, 2023.
Starting Jan. 1, 2026, the minimum limits will increase to $35,000/$70,000/$25,000. The tiered increase was a compromise between elected officials, who wanted to increase the minimum limits more significantly and advocacy groups and insurance carriers. Advocates argued that increasing the minimum limits would disproportionately impact low-income individuals. Insurance carriers balked at initial suggestions of raising the minimum limits to $35,000/$70,000 as very few carriers—if any—have those rates filed with the Department of Banking and Insurance currently. 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 was the only insurance association to publicly 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. With this new law, New Jersey becomes the only state to require limits of $35,000/$70,000. Several states require minimum limits of $30,000/$60,000, but no state requires $35,000/$70,000 limits.
Liability for business and rental owners
S-1368, sponsored by Sen. Nicholas Scutari, D-22, and Assemblyman Raj Mukherji, D-32, will require business owners and rental owners to maintain certain liability insurance policies. The law requires 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.
The law has two different effective dates:
- Nov. 3, 2022
- Any business that purchases a new insurance policy on or after this date will be required to purchase at least the limits required by this new law.
- Feb. 1, 2023
- Any business with a policy that renews on or after this date will be required to comply with this new law.
- Owners of multi-family dwellings of four or few units will have until this date, regardless of whether a policy is new or a renewal, in which to comply with the new insurance limit requirements.