Murphy OKs higher auto insurance coverage requirements

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Auto insurance policies will have to provide more liability, uninsured and underinsured motorist protection after Gov. Phil Murphy signed a bill raising the minimum coverage requirements.

Murphy’s action on Senate Bill 481/Assembly Bill 4291 came late on Aug. 5, one of several measures approved that day. The measure cleared both houses of the Legislature on June 29.

Under the new law, the minimum amount of liability coverage increases from $15,000 to $25,000 beginning in 2023, and a minimum of $35,000 starting in 2026. The floor for uninsured motorist and underinsured motorist coverage increases to $50,000 for an accident causing bodily injury or death to a single person and to $100,000 for an accident causing the injury or death of more than one person.

In addition, policies will be required to provide liability coverage of at least $50,000 on account of injury to, or death of, one person in any one accident; $100,000 for injury to, or death of, more than one person in any one accident; and amount $25,000, exclusive of interest for damage to property in any one accident.

Proponents, including prime sponsor state Senate President Nicholas Scutari, D-22nd District, said higher minimums are needed to protect accident victims. Scutari has argued that taxpayers often end up paying costs associated with under-covered drivers.

But opponents, led by John Harmon, president of the African American Chamber of Commerce of New Jersey, contended that the measure will unnecessarily impose higher costs on drivers who don’t need the extra coverage and can’t afford it. “We’re forcing people to make choices that are not good for anybody,” Harmon told NJBIZ in an interview not long after the bill landed on Murphy’s desk.

Scutari maintained that regulators and market pressures will prevent insurers from raising rates in conjunction with the new limits. But Eric Poe, the CEO of CURE Auto Insurance, said insurers have already filed for higher rates and the Department of Banking and Insurance will not deny increases for companies that can show they are necessary to cover costs. “So if I’m offering more insurance, of course, it’s going to cost us more money that we have to pass on in order to stay in business,” he said.” If I show that I’m losing $10,000 a year for a specific coverage the Department of Insurance can’t deny it, they can only deny whether or not my statistics are in fact sound.”

The law takes effect immediately.