N.J.: Bill targets premium increases after not-at-fault auto accidents

A newly introduced bill in Trenton is taking aim at a long-debated question in auto insurance: Whether drivers should see their premiums increase after an accident they didn’t cause.

A-4570—sponsored by Assemblywomen Rosaura Bagolie, D-27, and Annette Quijano, D-20—would prohibit auto insurers from increasing premiums for policyholders involved in not-at-fault automobile accidents. While the concept may sound straightforward, the issue it addresses—and how the industry currently operates—is more nuanced.

What the bill says

At its core, the bill would ensure that drivers who are not responsible for an accident are not financially penalized through higher insurance premiums. The bill would restrict insurers from using underwriting or rating practices that result in a premium increase tied to a not-at-fault loss.

This includes not just direct surcharges, but also indirect mechanisms that may lead to higher premiums at renewal.

The problem it aims to fix

Many policyholders assume that a not-at-fault accident means their insurance costs won’t go up. In practice, that’s not always the case.

Under current New Jersey regulations, insurers are allowed to use tiered rating systems and other underwriting tools. Following a claim—even one in which the insured bears no responsibility—a policyholder may be moved into a different rating tier, lose a claims-free or accident-free discount, or be re-evaluated under different underwriting criteria.

While these changes are not classified as formal surcharges, they still can result in a higher premium. This practice is sometimes referred to as re-tiering.

From consumers’ perspective, the distinction can feel academic—the outcome is the same: a higher bill after an accident they didn’t cause.

How the bill would address the issue

The newly introduced legislation attempts to close that gap by focusing on outcomes rather than labels. Instead of distinguishing between surcharges and other rating actions, the bill would prohibit premium increases that stem—directly or indirectly—from a not-at-fault accident.

The goal is to align pricing more closely with the principle of fault-based accountability, and to reduce confusion for consumers who expect nonchargeable accidents to have no financial impact.

At the same time, the bill raises broader questions about how insurers assess risk and structure rating plans, particularly in a regulatory environment that currently allows flexibility in tier placement and underwriting criteria.

For agents, the proposal highlights an issue that often surfaces in client conversations—how not-at-fault claims can affect premiums. While the bill aims to bring greater alignment between consumer expectations and pricing outcomes, any changes to rating practices also could influence how carriers structure premiums and underwriting going forward.

What comes next

A-4570 has been referred to the Assembly Financial Institutions and Insurance Committee for consideration. Currently, there is no Senate companion bill.

PIANJ will continue to monitor this bill as it moves through the legislative process.