Auto insurance reform legislation that sponsors say is needed to help victims of crashes would force more than a million New Jersey drivers to pay hundreds of dollars more each year in premiums, opponents warn.
A bill that cleared a key state Senate committee Monday would require drivers in the Garden State to select plans with a minimum of $250,000 in personal injury protection, commonly called PIP — up from the current lowest rate of $15,000.
Another would prohibit motorists from using private health insurance coverage as the primary payer for personal injury protection coverage in exchange for an auto insurance discount.
Sponsors of the proposed reforms, including state Senate President Nicholas Scutari, a Democrat, and Sen. Jon Bramnick, a Republican, say they’re long overdue and needed for those hurt in crashes. But opponents say it will lead to skyrocketing costs and fewer insured drivers on New Jersey’s roads.
“If you’re currently enjoying that health primary discount and you have $15,000 PIP and you’re now moved from secondary $15,000, PIP to primary $250,000 PIP, you’re looking at a premium increase of about $650 a year,” Rory Whelan of the National Association of Mutual Insurance Companies, told lawmakers at a committee hearing on the bills Monday.
There are 1.27 million New Jersey drivers who take advantage of the health insurance discount and 46% of drivers opt for less than the $250,000 of personal injury protection, Whelan said.
Whelan estimates that motorists who currently buy $15,000 PIP who keep auto insurance as their primary coverage “could see increases of as much as $350 per year,” he said.
“It makes insurance even more unaffordable for many, many New Jersey residents,” Chuck Bell of Consumer Reports told lawmakers. “People are not going to be able to handle such sharp increases and as a consequence, many more people will drive without coverage.”
The two bills could make rates soar by as much as 90%, he said.
“I just think that this is really going in the wrong direction, particularly with inflation,” Bell said.
But advocates for the legislation say the current system is flawed and needs to be revamped.
“All we’re saying is increase the limits for people who get hurt and get some benefits for them because (insurance companies have) been taking them away for 25 years,” said Branmick, R-Union.
Bramnick, an attorney, says he regularly sees clients who are badly injured in car accidents and are shocked to find they’re only entitled to $15,000 — even less if the deductible is taken into account — and many times that doesn’t come close to covering the full cost of the injuries.
“Happens all the time. How often do I see it? All the time,” he said.
And while people can always sue the driver with the lower personal injury protection policy, it’s likely to go nowhere, Bramnick said. The driver probably doesn’t have enough assets.
“Most of the policies of the cars out there are only $15,000,” Bramnick said.
But opponents disagree.
“That person who’s unable to fully recover all of their costs from the other driver in an accident has recourse through the underinsured and uninsured motorist coverage that they buy as a mandated coverage for their own policy,” Gary LaSpisa, vice president of the Insurance Council of New Jersey, said.
“Auto insurance is a system designed to protect the assets of each policyholder. It’s not a system of compensation for accident victims,” added Christine O’Brien, president of the Insurance Council of New Jersey.
Another part of the package that cleared the Senate committee Monday, would loosen the lawsuit rules for accident victims injured by drunken drivers. In these cases it would eliminate the verbal threshold, which spells out which injuries are eligible for lawsuits.
Opponents of the package argue 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 the cases of death, dismemberment, significant disfiguration, restoring displaced fractures, loss of a fetus or permanent injury, and that’s directly out of the statute, I’m quoting, are already able to sue for pain and suffering above and beyond the verbal threshold,” LaSpisa said. “This legislation practically only impacts soft tissue and minor injuries.”
O’Brien added: “The one group that supported the package of bills is the New Jersey Association for Justice, which is the plaintiff’s attorney, so, (we’re talking) about personal injury attorneys.
But O’Brien agreed $15,000 personal injury protection is a low number and is willing to work with lawmakers to increase the minimum.
Like Bramnick, Scutari is an attorney.
“These are common-sense reforms to protect consumers from the insurance companies,” Scutari, D-Union, said. “New Jersey continues to have the lowest minimum coverage limits in the country and they haven’t been increased in 50 years. We are long overdue for reforms.”
Scutari didn’t return a message for comment over the backlash against the bills. But he was asked about the insurance package — and in particular, his day job as a personal injury lawyer — by reporters last Thursday.
“My day job is here now,” Scutari said. “That’s a consumer protection package. That package of bills attempts to protect consumers from the ills of society — protect them against insurance companies that don’t have their best interests at heart — but make sure that government protects people from bad decisions. Because people just do what we tell them to do.”
He added: “New Jersey has the lowest amount of liability coverage in the nation. We are dead last. We shouldn’t be dead last. We’re one of the richest states in the union. Should we not have more than the very basic, minimum coverage? What ends up happening is: Taxpayers are footing the bill for this. People are getting in devastating injured accidents, their cars are not fixed, and their medical bills are not paid — we’re all paying for it. We have to make sure we protect all of those people.”
When asked if the bills will have any impact on his job as an attorney, Scutari said: “I don’t think so. I hope they have an impact on the members of society who are involved in serious, horrific decisions.”
Bramnick conceded as a lawyer he could benefit because his clients would be eligible for more in medical costs if they’re in a crash. But he said that’s not the reason he sponsored the bill. He got behind it because he feels insurance companies have gone too far in scaling back benefits for victims of crashes.
“It’s not all about me,” Bramnick said. “I’m going to fight for the victim.”
Meanwhile, opponents of the bills say it will overwhelmingly affect non-white drivers who are already hurt by current practices.
“Our primary issue has been and remains the disproportionate impact that the discriminatory rating practices that are still being used by auto insurers in this state that allow the use of education, occupation, credit score, even marital status, to be used, are disproportionately impacting low-income residents, and disproportionately impacting communities of color,” Maura Collinsgru, the director of policy and advocacy for New Jersey Citizen Action, said.
Another bill in the reform package would raise the minimum amount of liability coverage for commercial vehicles to $1. 5 million.
The package passed the legislative committee with bi-partisan support with the exception of state Sen. Robert Singer, who said the bill on commercial vehicles “will destroy small business owners.”
“I guess we don’t care about small businesses,” Singer, R-Ocean, said.
The bills would need to pass both the full Senate and Assembly and be signed by Gov. Phil Murphy to become law.
NJ Advance Media staff writer Brent Johnson contributed to this report.
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Matt Arco may be reached at marco@njadvancemedia.com. Follow him on Twitter at @MatthewArco.
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