New Jersey Lawmakers Introduce Slew of Car Insurance Bills

New Jersey state house and capitol complexWhile New Jersey insurance regulators have proposed a long list of changes to the way the state’s no-fault system operates, state lawmakers have introduced a whole host of bills that would also alter the state’s car coverage laws. The following are summaries of some pieces of legislation that have been introduced in recent weeks:

A327/S243 — Makes certain types of driving data off-limits to insurers when pricing policies or deciding whether to issue coverage to an applicant. Under the bill, insurers would not be able to consider negative driving events that took place while the applicant was operating a vehicle for volunteer purposes. That would include any unpaid use of a vehicle for a nonprofit corporation. The authors of the bill wrote that they hope it will encourage residents to volunteer and to not be discouraged by the possibility of getting into an accident while doing so.

A871 — Adds an extra requirement for being able to sue with a limited-lawsuit option. When residents buy New Jersey car insurance policies, they have the option of forfeiting their right to sue the responsible party after most car accidents in exchange for a break on premiums. This provision of state law is supposed to reduce the number of lawsuits entering the judicial system.

There are a number of exceptions, though. Policyholders who choose the limited option can still sue if the accident resulted in death, dismemberment, disfigurement or significant scarring, displaced fracture, loss of a fetus, or permanent injury. The legislation would require the last item to include only permanent injuries that cause serious impact and inhibit the person from participating in all parts of his or her daily routine.

A902 — Raises the dollar threshold for at-fault accidents. This bill would bump up the at-fault accident threshold from $500 to $1,000. Since having an at-fault accident on record generally will push up insurance rates for drivers, this bill could reduce the number of relatively minor accidents affecting people’s premiums.

A944 — Fortifies regulations against abuse of the state’s coverage system. Among a number of measures included in the bill is the establishment of a system for addressing and preventing “reverse rate evasion,” a perennial problem in New Jersey and other high-premium states in which residents go out of state to purchase more affordable coverage and then return.

A1113 — Requires insurers to maintain a sales force in urban rating territories. Residents of urban areas of New Jersey see much higher premiums than rural or suburban residents and are generally riskier to insure. This bill would require insurers to keep at least three employees active in selling and maintaining policies in those higher-risk, higher-priced territories.

A1392 — Allows insurers to use driving data collected through monitoring devices to decide whether to issue coverage to individual drivers.

A1426/S536 — Stops insurers from using applicants’ educational level or occupation in deciding how much to charge them for coverage or whether to issue them a policy. Coverage providers would not be allowed to ask for this information at all.

A1428 — Requires insurers to notify applicants if they were charged a higher rate because of their educational level or occupation.

A1601 — Adds an extra exception to the lawsuit restrictions imposed by choosing the limited-lawsuit option. In addition to the six existing exceptions, drivers with limited-lawsuit policies would still be able to sue if the at-fault driver in a crash is convicted of driving under the influence.

A1844 — Makes suspension of a driver’s license an optional penalty for those caught driving uninsured for the first time. New Jersey currently has some of the harshest penalties for driving uninsured. For a first offense, offenders pay a fine between $300 and $1,000, perform community service and lose their license for a year. The bill would leave the decision of whether to suspend a license up to the court for first offenses, and would change the suspension period to between two months and one year.

S300 — Clarifies the fact that drivers and health care providers can handle disputes regarding PIP compensation in the state’s judicial system instead of through the PIP arbitration system.

S313 — Makes it so that drivers who purchase a basic liability policy will have to purchase at least $10,000 in bodily injury liability coverage. For motorists choosing the “basic” option, that bodily injury coverage is currently only optional .

S320 — Expands the demographics that can purchase the “special” auto insurance policies already available to some low-income groups. The bill would provide access to the policies to veterans who “have a service-connected disability of 40 percent” and have a monthly income of $2,600 or less.

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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