Bills that would affect N.J.’s auto insurance market pass insurance committees

Senate

Six months into the job as state Senate President, Sen. Nicholas Scurtari, D-22, is looking to put his stamp on New Jersey’s automobile insurance marketplace. Last week a series of bills—sponsored by Scurtari—passed the Senate Commerce Committee. If signed into law, these bills would make significant changes to the state’s auto insurance marketplace. Included in these bills are two PIANJ-supported pieces of legislation: a consult-a-producer bill and a bill that would increase auto limits.

Consult-a-producer bill

S-480 would prohibit an auto insurer from issuing an auto policy to an individual unless the individual consults with an insurance producer prior to purchase. The bill would allow for direct sales by a carrier, but the carrier is required to provide a cost-benefit analysis prior to the selling the policy.

The bill provides little information on the definition of a cost-benefit analysis or consultation. Instead, the bill directs the Department of Banking and Insurance to adopt rules and regulations to determine what those two terms mean. The bill is an attempt to increase consumer insurance education prior to the purchase of a policy. PIANJ is a strong proponent for educating the insurance-buying public and supports this legislation.

What this means for agents. While in practice, the bill would require a person to consult with an insurance producer, it does not actually create any obligation on the part of the insurance producer. The bill is worded to be directed at insurance carriers, not insurance producers. Carriers cannot issue a policy unless a consultation has taken place. In that way, the consultation is treated more like a box that a carrier needs to check, than an obligation on the producer.

Increase to auto limits

S-481 would increase the minimum auto limits required in an auto policy from $15,000/$30,000/$500 to $50,000/$100,000/$25,000 and require uninsured motorist/underinsured motorist coverage in the amount of $50,000/$100,000.

New Jersey is one of only four states to offer 15/30 limits (California, Louisiana and Pennsylvania are the others). If this bill were to pass, New Jersey would join Maine and Alaska in requiring 50/100—the highest minimum limits in the country.

PIANJ has long supported increasing the minimum limits in the state. The rising cost of medical care has rendered New Jersey’s current minimum limits—the lowest in the country—inadequate to protect New Jerseyans. Increasing the minimum limits will help to address this inadequacy.

Required PIP coverage for standard auto policies

S-471 would require personal insurance protection coverage in the amount of $250,000 for standard and basic auto insurance policies. Currently, consumers can choose PIP limits anywhere from $15,000 (the state minimum), to $250,000 (the state maximum). Under the legislation, all coverage options lower than $250,000 would be eliminated.

Commercial auto liability limits

S-2841 would require a commercial motor vehicle to carry to carry at least $1.5 million in liability coverage. The bill uses a definition of commercial motor vehicle that exists in statute now and would impact mostly commercial trucking and transportation vehicles like buses, including school buses.

PIP coverage for auto policies

S-2254 would eliminate the option of the policyholder to elect other health insurance coverage in lieu of PIP on auto policies. Instead, the bill would require the PIP coverage of be the primary (and only) coverage for those covered on an auto policy.

Additionally, the Assembly Financial Institutes and Insurance Committee passed several PIANJ-supported bills last week. If signed into law, these bills would impact the auto and commercial insurance marketplace.

Assembly

The Assembly Financial Institutions and Insurance Committee met on June 23, 2022, and it considered several bills that could impact the commercial and auto marketplaces.

Liability for business and rental owners

A-2687, sponsored by Assemblyman Raj Mukherji, D-32, 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.

This bill was amended in committee to require business or rental owner to file a certificate of insurance demonstrating compliance with this 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 that do not comply. The committee also amended S-1368—A-2687’s Senate companion bill—to match. PIANJ supports this legislation.

Increase to auto limits

A-4291, sponsored by Assemblymen Louis Greenwald, D-6, and Herb Conaway Jr., D-218, would increase the minimum limits required in an auto policy. As originally drafted, the legislation would have mirrored similar legislation that passed the Senate Commerce Committee last week (see above). It would have increased the state minimum limits from $15,000/$30,000/$500 to $50,000/$100,000/25,000 and require uninsured motorist/underinsured motorist coverage in the amount of $50,000/$100,000.

However, the legislation was amended in committee to both gradually increase the minimum limits over the course three years and cap the limits at a lower figure. 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.