Lawmakers advance car insurance bill package despite affordability concerns

A New Jersey Senate panel has proposed a legislative package intended to boost insurance coverage for motor vehicle accident victims – but which critics have warned will raise premiums so high that low-income drivers could completely give up insurance and drive uninsured.

Most of those who testified during the nearly three-hour hearing warned that imposing more insurance coverage would hurt people already struggling with the rising inflation, high gasoline prices and other economic fallout from the pandemic.

The invoice that has sparked some of the most heated debate would raise the minimum amount of personal injury protection that drivers must carry under basic and standard auto insurance policies to $250,000. This is 16 times more than the minimum of $15,000 currently required.

Gary LaSpisa, vice president of the New Jersey Insurance Board, said the change would impact about 46% of all New Jersey drivers, who are now opting for less coverage.

Another one invoice would prevent drivers from relying on their health insurance coverage for injury protection. This would impact 1.27 million drivers, LaSpisa said.

Combined, the two bills would lead to “excessive” premium increases and force drivers to carry more insurance than they need or can afford, he said.

Chuck Bell of Consumer Reports estimated that the two bills could drive rates up to 90%.

“People won’t be able to handle such large increases and as a result many more people will be driving without coverage,” Bell said. “A lot of them will be drivers of color, who will then be subject to roadside checks by the police. This is definitely going in the wrong direction, especially with inflation.

Rory Whelan, regional vice president of the National Association of Mutual Insurance Companies, reminded lawmakers that New Jersey now has the fewest uninsured drivers in the country. He warned them that the bills would “roll back” progress the state has made to ensure auto insurance remains affordable for all drivers.

“Why would you want to raise premiums for average New Jersey drivers when inflation is at record highs, when even finding a car to buy costs more? Fixing a car costs more. Supply chain issues increase expenses,” Whelan said. “This is absolutely not the right time to increase New Jersey drivers’ bonuses.”

Sen. Jon Bramnick (R-Union), a member of the committee, said accident victims too often get insufficient compensation for injuries or property damage they sustain. Bramnick is a personal injury lawyer.

“During this process, we didn’t really direct our attention to the injured party and the consequences of low rates,” Bramnick said. “I understand the impact of insurance rates. I understand the cost. But we’re also talking about two issues — first, the victim and what the victim should be entitled to, and the rates. And as long as we balance those two, we can have a discussion. But if that victim is no longer part of the discussion, then we don’t have a discussion.

Senate Speaker Nicholas Scutari, who sponsored eight of the nine bills, said New Jersey’s minimum coverage limits are the lowest in the nation — and haven’t increased in 50 years.

“We have been waiting for reforms for a long time,” Scutari said in a statement. “We need stronger safeguards for consumers so that policyholders are not denied the rights and compensation they deserve.”

Lawyers told the Senate panel that drivers with low incomes and from communities of color are already paying more than they should for car insurance.

Instead of basing auto insurance rates on a motorist’s driving history and safety record, many insurers use education, occupation, and consumer credit scores to determine rates. That means they often charge higher premiums to those who are least likely to pay them: poor, non-white drivers.

Several lawmakers have introduced bills in the past two legislative sessions to address this problem, but they have not been passed. It was presented again to the Assembly in January but remains stuck there.

Maura Collinsgru, director of policy and advocacy at New Jersey Citizen Action, urged committee members to act on this bill instead.

Most of the five committee members voted to move the nine bills forward. Sen. Robert Singer (R-Ocean) opposed all the measures, citing affordability concerns.

of a invoice lawmakers have argued that minimum liability coverage for commercial vehicles will be increased to $1.5 million, Singer said, “It will destroy small business owners. I guess we don’t care about small businesses.

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Justin D. O'Neill