TRENTON, N.J. – Republicans argued a bill to increase auto insurance coverage limits considered in the Assembly Financial Institutions and Insurance Committee on Thursday would result in a less affordable New Jersey and higher costs for consumers at a time of record-high inflation.
The bill (A4291) increases the minimum amount for uninsured and underinsured motorist coverage and liability coverage starting Jan. 1, 2023 and again on Jan. 1, 2026. Minimum coverage for an accident injuring or killing one person would increase from $15,000 to $25,000 in 2023 and $35,000 in 2026, and coverage for accidents killing or injuring more than one person would increase from $30,000 to $50,000 in 2023 and $70,000 in 2026. The minimum limit for property damage would increase once from $5,000 to $25,000 for policies issued after Jan. 1, 2023.
“Democrats reluctantly released the bill but could not reconcile their vote with their own public statements and expressed public consternation over being strong-armed to vote yes,” Assemblyman Robert Auth (R-Bergen) said. “There was overwhelming testimony speaking to how this bill will drive up premiums and make life more difficult for our most needy residents. Advancing this legislation is completely tone deaf to the calls for a more affordable New Jersey and hurts consumers facing record-high inflation.”
In May, inflation hit a 40-year national high of 8.6% and increased to 7.5% in New Jersey – the largest year-over-year increase since December 1981.
“If we all agree that the McGreevy-era insurance reforms made auto insurance more available, more affordable, and if the industry is functioning fairly well right now, then why are we looking to take a step backwards, increase costs on consumers and possibly chase out insurance carriers?” asked Assemblywoman Vicky Flynn (R-Monmouth). “We are just entering a recession and everyone is experiencing incredible inflation increases – why now? Why increase the burden on New Jersey residents now? Why at this particularly vulnerable financial situation? There is absolutely no logical answer that can be given to struggling residents across the state.”
The Insurance Council of New Jersey estimates drivers could see an increase of $300 a year under the measure.
“Increasing costs for drivers will simply lead to more uninsured motorists. People select the lowest coverage amounts, because they cannot afford to pay higher premiums,” Assemblywoman Kim Eulner (R-Monmouth) said. “New Jerseyans are already suffering from nation-high taxes and prices. I’m a hard no and I’m concerned how my colleagues on the other side of the aisle could move the bill in spite of the cost consequences.”
Consumer Reports noted auto insurance is currently unaffordable for 2.3 million motorists in the state. More than 40 percent of Americans living in areas with unaffordable insurance reside in New York, New Jersey and Connecticut, according to a study by the U.S. Treasury Department.
“The second increase is a deal breaker for me. That is going to price people out and do damage. No,” Assemblyman Rob Clifton (R-Monmouth) said.