Lawmakers may give auto insurance minimums another look

New Jersey lawmakers may take a second look at raising some car insurance coverage minimums after most bills in a reform package championed by Senate President Nicholas Scutari failed to advance this summer.

Sen. Joe Lagana (D-Bergen) on Monday introduced a bill that would require auto insurance policies to include at least $50,000 in personal injury protection coverage, up from the $15,000 mandated under existing law.

Lagana said the aim is to protect people injured in automobile accidents who can’t afford to pay their medical bills. Scutari has previously said New Jersey’s current requirements are so low they force taxpayers to subsidize victims’ unpaid medical bills.

“I’ve seen people spend two months at a chiropractor, get an MRI and maybe an epidural injection for a herniated disk and blow through $15,000. I’ve seen people not make it out of the hospital without blowing $15,000,” Lagana, an attorney, said in an interview. “The amount of premium a person is paying — which isn’t low — for really subpar medical coverage is not really appropriate, I think.

The bill’s introduction comes after the Legislature approved and Gov. Phil Murphy in August signed a separate bill, sponsored by Scutari, that sets new floors for bodily injury liability and uninsured/underinsured motorist coverage.

Those changes will require auto policies to offer at least $25,000 in bodily injury liability coverage — which is meant to pay for injuries others suffer as a result of an accident caused by the policyholder — by 2023 and $35,000 by 2026. Industry officials have said this will add about $125 to New Jerseyans’ auto insurance premiums.

Personal injury protection pays for injuries sustained by the policyholder. One of the bills in Scutari’s package that did not win approval from the Legislature would have raised those minimums to $250,000.

Insurance industry groups have criticized these bills, saying they would drive up costs for policyholders.

“All of these changes we’re seeing at the legislative level will impact the bottom line for any young driver and every new driver,” said Christine O’Brien, president of the Insurance Council of New Jersey.

She said the state should hold off on further regulatory changes until after 2026, when it’s clear what effect the law signed by Murphy in August has had on premiums. At the least, she said, they should hold any new changes through the end of the current legislative session.

Lagana said he expects the bill to have a modest impact on premiums, but acknowledged ongoing affordability issues in the state could make a delay sensible.

“I will sit with them and see what kind of timing we can put on this. Maybe it’ll become effective after a year or two,” he said. “I’m certainly willing to work with them while we are dealing with other changes that have been implemented.”

It’s not clear yet exactly how a change to insurance coverage minimums will affect premiums, though it will likely cause at least a small rise as a significant number of policyholders are forced by regulation to move to plans that offer greater coverage.

New Jersey drivers must have either basic or standard auto insurance policies. About 2.1 million policyholders held a standard auto insurance plan with $15,000 in personal injury protection coverage at the end of last year, according to a semi-annual report published by the Department of Banking and Insurance. That’s roughly 36% of all standard auto plans in the state.

All other drivers with standard plans carried at least $50,000 in personal injury protection coverage.

Basic plans are intended for new drivers and others who cannot afford or don’t want broader coverage offered by a standard plan. The report says 43,584 New Jersey policyholders had a basic auto plan, which provides up to $15,000 in personal injury protection under current law.

Lagana acknowledged that potentially driving up the cost of a basic plan is a potential speed bump for the bill.

“People who are choosing basic policies, I’m just assuming there’s an affordability issue, so I am cognizant of that,” Lagana said. “But the standard policies, there may not be affordability issues with people. They may just be unaware that they’re making a bad decision with $15,000.”

O’Brien said basic plans could become more common following New Jersey’s rollout of driver’s licenses for residents with independent taxpayer identification numbers, numbers that are typically used by immigrants who are not citizens and do not have social security numbers. The Motor Vehicle Commission began accepting applications for such licenses last May.

“We welcome a whole new driving population, a legal driving population. What can they afford?” O’Brien said. “It is a balance. I’m not saying it’s an easy balance to strike, which is why I think the Legislature should cautiously approach what can the driving public sustain.”