TRENTON — Lawmakers could vote this week to increase the minimum amount of auto insurance coverage drivers must have, likely adding $120 or more to the annual premiums of 1.1 million drivers.
The minimum required for liability coverage – $15,000 for an accident in which one person is injured and $30,000 for injuries to two or more people – has not been increased since 1972 and does not cover costs resulting from the average accident in which an insurance claim is filed.
But the 21% of drivers who have this minimum insurance usually only have it because it’s compulsory and they can’t afford more. And so, even though the bill moving the Legislative Assembly was amended to remove some provisions that could have raised the average bill more than $300, the idea still has plenty of criticism.
James Lynch, president of the New Jersey Association for Justice, a group of personal injury and civil law attorneys, said he knows no one likes to pay for insurance, but after people get involved in an accident, they wished they had paid for additional coverage. .
“Someone who doesn’t have a lot of money, maybe that extra $10,000 in recovery would be extremely meaningful to them — extraordinarily,” Lynch said.
The bill requires the current $15,000/$30,000 liability coverage to increase to $25,000/$50,000 beginning in January 2023. A second step toward a $35,000/$70,000 minimum would come in effective in 2026. In addition, property damage coverage would be reduced to a minimum. of $25,000.
More uninsured drivers?
Gary LaSpisa, vice chairman of the New Jersey Insurance Board, said the second increase in 2026 should be removed from the bill and revisited later, though he’s glad other provisions of the plan were removed. – increasing to $50,000/$100,000 minimum and increasing the minimum Personal Injury Protection, or PIP, coverage.
“I still think we’ll see a spike in the rate of uninsured motorists because some people just can’t afford even the $130 that we’re talking about,” LaSpisa said.
Allison Cooper, vice president of government affairs for the American Property Casualty Insurance Association, warned lawmakers not to approve the increase when inflation is at a 40-year high.
“The cost of everything is rising, and we’re concerned that those on fixed incomes who are forced to choose between paying for basic necessities such as gas, rent, groceries, etc., they may very well choose to give up the insurance altogether,” Cooper said.
That, in turn, could increase insurance rates for everyone, thanks to what gets paid to account for uninsured drivers. New Jersey has the lowest rate of uninsured drivers in the country at 3.1%.
The cover will not cover the average accident
The bill was approved by the Assembly’s Financial Institutions and Insurance Committee on Thursday. A version of the bill with provisions deleted by the Assembly was approved earlier last week by a Senate committee, and the Senate budget committee is due to review the bill on Monday – including changes made by the Assembly , very probably.
Assemblyman Raj Mukherji, D-Hudson, said a change was needed because minimum liability coverage doesn’t even cover the $18,000 average costs of an accident, let alone the outer limits of an accident. exposure.
“When someone suffers losses or injuries exceeding this amount, they are not even cured,” Mukherji said.
Assemblyman Joe Danielsen, D-Somerset, said the bill takes options away from residents who can least afford it and will choose to go without car insurance, eat less or not drive at all.
“And the affordability, not just with insurance and transportation, but just living in New Jersey, it’s painful. It’s tiring. It’s exhaustive,” Danielsen said.
Danielsen voted to release the bill from the Assembly committee because otherwise he would have stalled 6-6 and not be in position for a final vote. But he indicated he would oppose it in a floor vote in the Plenary Assembly.
“Those who could least afford it”
Assemblyman John McKeon, D-Essex, voted in favor and explained why it was needed, calling the $15,000 blanket a “lack of money.” But McKeon also said he was worried about the financial impact on drivers.
“The fact is, with few exceptions, the million policyholders, the 20%, who have minimal coverage and those who could least afford it,” McKeon said. “And that’s another $120 out of pocket. And that’s why I have significant concerns.
The 2026 increase will impose a second rate hike on drivers, but the amount is not known because the insurance cover that will be the minimum required is not currently sold and therefore not yet priced.
Maura Collinsgru, director of policy and advocacy for New Jersey Citizen Action, said low-income drivers already pay higher rates not because of their personal driving history, but because rates can be set by using things like credit scores, occupation, and education.
“You set the clock to inflict new damage on that same population on January 1,” Collinsgru said.
Michael Symons is the Statehouse Bureau Chief for New Jersey 101.5. You can reach him at [email protected]
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