Lawmakers advance car insurance bill package despite affordability concerns

A New Jersey Senate panel advanced a legislative package intended to bolster insurance coverage for victims of vehicular accidents — but which critics warned would hike premiums so high, low-income drivers might dump insurance altogether and drive uninsured.

Most of those who testified during the nearly three-hour hearing cautioned that mandating more insurance coverage would hurt people already struggling with rising inflation, high gas prices, and other economic fallout from the pandemic.

The bill that sparked some of the liveliest debate would raise the minimum amount of personal injury protection drivers must carry on basic and standard car insurance policies to $250,000. That’s 16 times higher than the $15,000 minimum now required.

Gary LaSpisa, vice president of the Insurance Council of New Jersey, said that change would impact about 46% of all New Jersey drivers, who now opt for less coverage.

Another bill would bar drivers from relying on their health insurance coverage for personal injury protection. That would impact 1.27 million drivers, LaSpisa said.

Combined, the two bills would result in “excessive” premium increases and force drivers to get more insurance than they need or can afford, he said.

Chuck Bell of Consumer Reports estimated the two bills could spike rates by as much as 90%.

“People are not going to be able to handle such sharp increases, and as a consequence, many more people will drive without coverage,” Bell said. “Many of them will be drivers of color, who will then be subject to traffic stops by police. This is really going in the wrong direction, particularly with inflation.”

Rory Whelan, regional vice president of the National Association of Mutual Insurance Companies, reminded legislators that New Jersey now has the fewest uninsured drivers in the nation. He warned them the bills would “turn back the clock” on progress the state has made in ensuring car insurance remains affordable for all drivers.

“Why would you want to increase premiums on average New Jersey drivers when inflation is at record highs, when even finding a car to purchase is more expensive? Fixing a car is more expensive. The supply chain issues are adding to the expense,” Whelan said. “This is the absolute wrong time to increase premiums on New Jersey drivers.”

Sen. Jon Bramnick (R-Union), a committee member, said crash victims too often get inadequate compensation for the injuries or property damage they suffer. Bramnick is a personal injury attorney.

“During this process, we haven’t really directed our attention to the injured party and the consequences of low rates,” Bramnick said. “I understand the impact of insurance rates. I understand the cost. But we also are talking about two issues — one, the victim and what the victim should be entitled to, and rates. And as long as we balance those two, we can have a discussion. But if that victim is no longer part of the discussion, then we’re not having a discussion.”

Senate President Nicholas Scutari, who sponsored eight of the nine bills, said New Jersey’s minimum coverage limits are the lowest in the country — and haven’t risen in 50 years.

“We are long overdue for reforms,” Scutari said in a statement. “We need stronger consumer safeguards so policyholders aren’t denied the rights and compensation they deserve.”

Advocates told the Senate panel that drivers who are low-income and come from communities of color already pay more than they should for car insurance.

Instead of basing car insurance rates on a motorist’s driving history and safety record, many insurers use education, occupation, and consumer credit scores to determine rates. That means they often charge higher premiums for those least likely to afford them: poor and non-white drivers.

Several lawmakers have introduced bills in the past two legislative sessions to remedy that problem, but they have not passed. It was introduced again in the Assembly in January but remains stalled there.

Maura Collinsgru, director of policy and advocacy at New Jersey Citizen Action, urged committee members to act on that bill instead.

Most of the committee’s five members voted to advance all nine bills. Sen. Robert Singer (R-Ocean) opposed every measure, citing affordability concerns.

Of a bill legislators advanced that would raise the minimum liability coverage for commercial vehicles to $1.5 million, Singer said: “This will destroy small business owners. I guess we don’t care about small businesses.”