Opponents warn that auto insurance reform legislation that sponsors say is needed to help accident victims will force more than one million New Jersey drivers to pay hundreds of dollars in additional premiums each year.
The bill that passed a key Senate committee on Monday would require Garden State drivers to define plans for a minimum of $250,000 in personal injury protection, commonly called a PIP — above the current minimum rate of $15,000.
Other motorists may be prevented from using private health insurance coverage as the primary payer for personal injury protection coverage in exchange for the auto insurance deduction.
Sponsors of the proposed reforms, including state Senate President Nicholas Scutari, a Democrat, and Senator John Bramnik, a Republican, say they are long overdue and are necessary for those injured in the crashes. But opponents say it will lead to a significant increase in costs and a decrease in the number of insured drivers on New Jersey’s roads.
“If you are currently enjoying this healthy primary deductible and have a $15,000 PIP and are now moving from a $15,000 PIP to a $250,000 PIP, you are looking to increase your premiums of about $650 per year,” Rory Whelan, the National Association of Mutual Insurance Companies, told lawmakers at a committee hearing on the bills on Monday.
Whelan said there are 1.27 million New Jersey drivers who benefit from the health insurance deduction and 46% of drivers choose less than $250,000 for personal injury protection.
Whelan estimates that motorists who currently buy $15,000 in PIP and who keep auto insurance as their initial coverage “could see increases of up to $350 annually,” he said.
“It makes insurance more difficult for a lot of New Jersey residents,” Chuck Bell of Consumer Reports told lawmakers. “People will not be able to handle such sharp increases, and as a result, many people will be driving without coverage.”
He said the two bills could raise interest rates by up to 90%.
“I just think that’s really going in the wrong direction, especially with inflation,” Bell said.
But defenders of the legislation say the current system is flawed and needs reform.
“All we’re saying is to raise the limits for people who are harmed and get some benefit for them because (insurance companies) have taken them away for 25 years,” said Branemic, R-Union.
Attorney Bramnik says he regularly sees clients who have been badly injured in car accidents and are shocked to find out that they are only worth $15,000 — even less if the deductible is taken into account — and often that doesn’t come close to covering the full cost of the injuries.
“It happens all the time. How often do I see it? All the time,” he said.
Bramnik said that while people can always sue the driver with a lower personal injury protection policy, it probably won’t go any further. The driver may not have enough assets.
“Most auto policies abroad are under $15,000,” Bramnik said.
But opponents disagree.
“That person who cannot recover all of their costs in full from the other driver in an accident is turning to the insured and uninsured driver coverage that they purchase as mandatory coverage for their own policy,” said Gary Laspisa, vice president of the New Jersey Insurance Board.
“Auto insurance is a system designed to protect the assets of every policyholder. It is not an accident compensation system,” added Christine O’Brien, president of the New Jersey Insurance Council.
Another part of the package, approved by the Senate committee on Monday, would loosen lawsuit rules for accident victims injured by drunk drivers. In these cases, the verbal limit, which determines which injuries are eligible for lawsuits, will be eliminated.
Opponents of the package argue that this shows at least part of the intent of the reforms is to benefit personal injury attorneys.
“New Jersey drivers who are seriously injured in an accident regardless, frankly, of whether the driver was drunk or reckless, in cases of death, dismemberment, significant disfigurement, displaced fracture recovery, fetal loss or permanent injury, is straightforward,” LaSpissa said. : “Outlaws, as I quote, are already able to sue for pain and suffering beyond the verbal limit.” “This legislation practically affects only soft tissues and minor injuries.”
O’Brien added, “The only group that has supported the billing package is the New Jersey Society of Justice, which is the plaintiff’s attorney, so (we’re talking) about personal injury attorneys.
But O’Brien agreed that $15,000 for personal injury protection is a low number and is willing to work with lawmakers to increase the bottom line.
Scutari is a lawyer like Bramnik.
“These are logical reforms to protect consumers from insurance companies,” said Scutari, D-Union. New Jersey still has the lowest coverage limits in the state and it hasn’t been increased in 50 years. We are far behind in the reforms.”
Scutari did not send a letter to comment on the backlash against the bills. But he was asked about the insurance package — and in particular, his day job as a personal injury attorney — by reporters last Thursday.
“My day job is here now,” Scutari said. “This is a consumer protection package. This billing package is trying to protect consumers from society’s problems – protecting them from insurance companies that don’t consider their interests – but making sure that the government protects people from bad decisions. Because people only do what we ask them to do.”
He added, “New Jersey has the least amount of state liability coverage. We’re dead last. We shouldn’t be dead last. We’re one of the richest states in the union. Shouldn’t we have more than a basic minimum of coverage? What happens in the end is: The taxpayers pay the bill for that. People have devastating injury accidents, their cars aren’t fixed, their medical bills aren’t paid – we all pay for it. We have to make sure we protect all of these people.”
When asked if the bills would have any impact on his job as a lawyer, Scutari said: “I don’t think so. I hope it will have an impact on members of society who are involved in serious and horrific decisions.”
Bramnik admitted as a lawyer that he could benefit because his clients would be eligible for more medical costs if they were in an accident. But he said that was not why he was sponsoring the bill. He stood behind it because he feels insurance companies have gone too far in cutting benefits for accident victims.
“It’s not all about me,” Bramnick said. “I will fight for the victim.”
In the meantime, opponents of the bills say they will greatly affect non-white drivers who have already been hit by current practices.
“Our primary problem has been and continues to be the disproportionate impact of the discriminatory rating practices still employed by auto insurers in this case that allow the use of education, occupation, credit score and even marital status, which disproportionately impact Action, The Low Income Population, The Disproportionate Impact On Communities Of Color.
Another bill in the reform package would raise the minimum liability coverage for commercial vehicles to $1. 5 million.
The package passed the legislative committee with bipartisan support except for Senator Robert Singer, who said the commercial vehicle bill would “destroy small business owners.”
“I think we don’t care about small businesses,” said Singer, R-Ocean.
Bills would need to be passed both by the Senate and the full assembly and signed by Governor Phil Murphy to become law.
NJ Advance Media Staff Writer Brent Johnson Contribute to this report.
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