PIANJ’s top legislative priority—step-down provisions—introduced in Legislature 

PIANJ has long advocated for banning the use of step-down clauses in personal auto policies—an unfair, hidden trap that blindsides consumers when they need coverage most. After years of steady advocacy, that work is paying off. 

Twin bills—A-6299 and S-5027—have been introduced in the state Assembly and Senate, respectively by Assembly Speaker Craig Coughlin, D-19, and Senate President Nicholas Scutari, D-22, two of the most powerful voices in the Legislature.  

These bills would put an end to step-down clauses in New Jersey once and for all. 

What is a step-down clause? 

A step-down clause is a provision in a personal auto policy that reduces liability or underinsured motorist coverage in specific situations—often without the policyholder realizing it. 

Typically, these clauses are triggered when: 

• A permissive driver is behind the wheel. 
• A family member who’s not a “resident relative” is involved in the accident. 
• An injured passenger is a resident relative of the at-fault driver. 

Even if the declarations page shows high coverage limits—say, $100,000 or $250,000—the presence of a step-down clause can cut that protection down to the state minimum limits. 

In other words, clients who think they’re well-covered could be left dangerously underinsured in the moments that matter most. 

Why does PIANJ want to ban them? 

Step-down clauses are deceptive, unfair and punitive. They contradict what consumers see on their declarations page, and they penalize responsible policyholders who list drivers or allow a sober friend to drive their car, which can allow them to be penalized with reduced coverage. 

These clauses also create judicial inconsistency, confusion among agents and policyholders, and a fundamental breakdown in trust between insurers and insureds. 

PIANJ believes insurance should be clear, fair, and predictable—and step-down clauses undermine all three. 

What does the legislation do? 

The newly introduced bills—A-6299 and S-5027—would ban the use of step-down provisions in personal auto insurance policies. 

Specifically, the legislation would: 

• Prohibit policies from reducing coverage based on the driver’s or passenger’s relationship to the insured. 
• Ensure that all permissive users, listed drivers, resident relatives and passengers are covered at the full policy limits—exactly as listed on the declarations page. 
• Bring personal auto policies in line with commercial auto policies, which already are protected from step-down clauses under New Jersey law. 

This would be a major win for transparency, fairness and consumer protection. 

Next steps 

PIANJ is ramping up its advocacy to support passage of A-6299/S-5027 in the 2025-26 legislative session. Here’s how you can help: 

• Educate your clients: Let them know how step-down clauses work and why they’re problematic. 
• Contact your legislators: Urge them to support the bills and stand with consumers. 
• Stay engaged with PIANJ: We’ll keep you informed every step of the way. 

Insurance should do what it says it will do. No hidden traps. No technical loopholes. Just clear, reliable protection. PIANJ will keep fighting to make that the standard in New Jersey—and with A-6299 and S-5027, we’re closer than ever to getting it done.