NJ auto insurance rates could skyrocket for 1 million drivers under new bills, opponents warn

Auto insurance reform legislation that sponsors say is needed to help crash victims would force more than a million New Jersey drivers to pay hundreds of dollars more each year in premiums, warn the opponents.

A bill that a key state Senate committee approved on Monday would require Garden State drivers to select plans with a minimum of $250,000 in injury protection, commonly known as PIP — up from the current lowest rate of $15,000.

Another would prohibit motorists from using private health insurance as the primary payer for injury protection coverage in exchange for a car insurance discount.

Sponsors of the proposed reforms, including State Senate Speaker Nicholas Scutari, a Democrat, and Sen. Jon Bramnick, a Republican, say they are long overdue and needed for people injured in crashes. But opponents say it will lead to skyrocketing costs and fewer insured drivers on New Jersey roads.

“If you are currently on this primary health reduction and have a PIP of $15,000 and have now moved from the secondary PIP of $15,000 to the primary PIP of $250,000, you are considering an increase in the premium of ‘about $650 a year,’ Rory Whelan of the National Association of Mutual Insurance Companies told lawmakers during a committee hearing on the bills on Monday.

There are 1.27 million New Jersey drivers taking advantage of the health insurance discount, and 46% of drivers are opting for less than $250,000 in injury protection, Whelan said.

Whelan estimates motorists who currently buy a $15,000 PIP and keep auto insurance as their primary coverage “could see increases of up to $350 per year,” he said.

“This makes insurance even more unaffordable for many, many New Jersey residents,” Consumer Reports’ Chuck Bell told lawmakers. “People won’t be able to handle such large increases and as a result many more people will be driving without coverage.”

Both bills could drive rates up to 90%, he said.

“I just think it’s going in the really wrong direction, especially with inflation,” Bell said.

But advocates of the legislation say the current system is flawed and needs revamping.

“All we’re saying is raise the limits for people who get hurt and get benefits for them because (insurance companies have) taken them away for 25 years,” Branmick said, R-Union.

Bramnick, an attorney, says he regularly sees clients who are seriously injured in car accidents and are shocked to find they are only entitled to $15,000 – even less if the deductible is taken into account. – and often this does not come close to covering the full cost of injuries.

“Happens all the time. How often do I see it? All the time,” he said.

And while people can still sue the driver with the lower injury protection policy, it probably won’t go anywhere, Bramnick said. The driver probably does not have enough assets.

“Most car policies out there are only $15,000,” Bramnick said.

But opponents disagree.

“That person who is unable to fully recover all of their costs from the other driver in an accident resorts to underinsured and uninsured motorist coverage that they purchase as compulsory coverage for their own police,” Gary LaSpisa, vice president of the Insurance Council of New Jersey, said.

“Motor insurance is a system designed to protect the assets of each insured. It’s not a compensation system for accident victims,” added Christine O’Brien, president of the Insurance Council of New Jersey.

Another part of the package, which cleared a Senate committee on Monday, would relax prosecution rules for crash victims injured by drunk drivers. In those cases, it would eliminate the verbal threshold, which specifies which injuries are eligible for prosecution.

Opponents of the package argue that it shows that at least part of the intent of the reforms is to benefit personal injury lawyers.

“New Jersey drivers who are seriously injured in an accident, whether the driver is drunk or reckless, in cases of death, dismemberment, significant disfigurement, restoration of displaced fractures, loss of a fetus or injury permanent, and this is directly out of the law, quote, are already able to sue for pain and suffering beyond the verbal threshold,” LaSpisa said. minor injuries.”

O’Brien added, “The only group that supported the package of bills is the New Jersey Association for Justice, which is plaintiff’s attorney, so (we’re talking) personal injury attorneys.

But O’Brien agreed that the personal injury protection of $15,000 is a low figure and is willing to work with lawmakers to raise the minimum.

Like Bramnick, Scutari is a lawyer.

“These are common sense reforms to protect consumers from insurance companies,” said Scutari, D-Union. “New Jersey continues to have the lowest minimum coverage limits in the nation and they haven’t been increased in 50 years. We have been waiting for reform for a long time.

Scutari did not return a message to comment on the backlash against the bills. But he was asked about the insurance program – and in particular his day job as a personal injury lawyer – by reporters last Thursday.

“My day job is here now,” Scutari said. “It’s a consumer protection package. This bundle of bills tries to protect consumers from the evils of society — protect them from insurance companies that don’t have their best interests at heart — but make sure the government protects people from the bad ones. decisions. Because people just do what we tell them to do.

He added, “New Jersey has the lowest amount of liability coverage in the country. We died last. We shouldn’t be the last dead. We are one of the richest states in the union. Shouldn’t we have more than the basic minimum coverage? What ends up happening is that taxpayers foot the bill. People have devastating accidents, their cars go unfixed and their medical bills go unpaid – we all pay them. We have to make sure that we protect all of these people.

When asked if the bills would impact his work as a lawyer, Scutari said, “I don’t think so. I hope they will have an impact on members of society who are involved in serious and horrible decisions.

Bramnick admitted that as a lawyer he could benefit because his clients would be eligible for more medical bills in the event of an accident. But he said that was not why he sponsored the bill. He supported it because he believes that insurance companies have gone too far in reducing benefits for accident victims.

“It’s not all about me,” Bramnick said. “I will fight for the victim.”

Meanwhile, opponents of the bills say it will massively affect non-white drivers who are already hurt by current practices.

“Our main issue has been and remains the disproportionate impact that the discriminatory pricing practices that are still used by auto insurers in this state that allow the use of education, occupation, credit score, or even marital status, disproportionately impacting low-income residents and disproportionately impacting communities of color,” said Maura Collinsgru, director of policy and advocacy for New Jersey Citizen Action.

Another bill under the reform would raise the minimum amount of liability coverage for commercial vehicles to $1. 5000000.

The package passed the legislative committee with bipartisan support except for State Senator Robert Singer, who said the commercial vehicle bill “will destroy small business owners.”

“I guess we don’t care about small businesses,” said Singer, R-Ocean.

The bills would need to pass the full Senate and Assembly and be signed by Governor Phil Murphy to become law.

NJ Advance Media Writer Brent Johnson contributed to this report.

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matt arco can be attached to marco@njadvancemedia.com. Follow him on Twitter at @MatthieuArco.