PIANJ’s top legislative priority—Step-down ban introduced in state Senate 

State Senate President Nicholas P. Scutari, D-22, has introduced S-3187 in the 2026-27 legislative session—a bill that would finally put an end to step-down clauses in personal auto policies in New Jersey. For those of us who have been fighting this battle for years, this is a major moment. 

The bill is straightforward in its mission: it prohibits a motor vehicle liability policy from restricting the amount that may be recovered under the policy based on who is driving or riding in the vehicle. In other words, if a client buys $250,000 in coverage, the driver would get $250,000 in coverage—period. 

No fine print surprises. No hidden reductions. No gotchas. 

Why this matters 

As outlined in PIANJ’s memorandum in support of S-3187, step-down clauses allow coverage limits to be reduced to the state minimum—currently $35,000/$70,000 in many cases—even when a policyholder has paid for significantly higher limits. 

Think about that. 

Clients carefully select 100/300 coverage to protect their family. Their adult child, listed on the policy, borrows the car and gets into a serious accident. The family expects the 100/300 limits to apply. Instead, they learn—after the claim—that coverage has been “stepped down” to 35/70 because the driver doesn’t meet a technical definition buried in the policy. 

Or picture this: A parent is driving their child and their child’s friend to soccer practice. The friend receives the full $100,000 limit. The insured’s own child? Stepped down to the state minimum because of an intra-family exclusion. 

These are not hypothetical situations dreamed up in a classroom. These are real-world scenarios drawn from actual New Jersey cases. 

And, every time one of these claims happens, who gets the call? 

The insurance agent. 

The core problem 

Step-down clauses contradict one of the most basic principles agents explain to clients: coverage follows the car. 

Clients reasonably believe that the limit shown on the declarations page is the limit that applies. When that’s not the case, it undermines trust—not just in carriers, but in the entire system. And producers are left trying to explain policy language that even seasoned professionals sometimes struggle to parse. 

S-3187 would address this issue directly. Under the bill, a policy would not provide less bodily injury, property damage or uninsured/underinsured motorist coverage to a permissive user, named insured, listed driver, resident relative or passenger than the maximum limits shown in the policy. 

If enacted, the maximum limit listed on the declarations page becomes the actual maximum available—regardless of who is behind the wheel or sitting in the passenger seat. 

That’s clarity. That’s consistency. 

A long time coming 

PIANJ has been advocating for this reform for years. Step-down clauses are deceptive, confusing and fundamentally unfair to policyholders who are trying to do the right thing by purchasing higher limits. 

They also create errors-and-omissions exposure concerns for producers. When a client says, “I thought I had 100/300,” and you must explain why only 35/70 applies, it’s not a comfortable conversation. Eliminating step-down provisions reduces that risk and restores alignment between what is sold and what is delivered. 

This legislation also would align personal auto policies more closely with commercial auto policies, where step-down provisions already are restricted. 

What happens next—and what you can do 

The bill has been referred to the Senate Commerce Committee for consideration. Having it introduced by Senate leadership is significant—but introduction is only the first step. 

This is why grassroots advocacy matters. 

Here’s how you can help: 

• Educate your clients. Make sure they understand what step-down clauses are and how they can impact coverage. 

• Participate in PIANJ’s District Office Program. 

• Engage with PIANJ alerts. When we ask you to contact your legislators, please do it. A short email or call from a local business owner carries weight.