Every New Jersey driver understands that they are required by law to get insurance. In particular, they need liability car insurance, which covers them if they harm someone else in an accident. It is a fairly standard law, which protects people around the state from financial strife caused by damages from a motor collision.
However, an auto insurance reform bill has been on the table for a while that would increase the amount drivers have to pay for car insurance. And, while lawmakers have pulled back from a costly early version of the bill, they appear ready to sign a pared-down version into law.
If signed into law, this auto insurance reform will raise the cost of insurance for over a million New Jersey drivers. Here’s what you need to know.
Why Costs Will Rise
This bill will lead to many drivers having to pay around $120 more per year for liability insurance. This is because the bill raises the minimum amount of liability cover required. At present, drivers are only required by law to have $15,000 of third-party liability cover. If the bill passes, that amount will rise to $25,000 in 2023, and to $35,000 in 2026.
While no one wants to pay more for insurance, the need for an increase is understandable. $15,000 is not a lot of money even if only one person is badly injured in a collision. If passengers are injured, the amount often falls woefully short. The cost of healthcare has been rising steadily, and the changes required by the bill reflect that.
In fact, with inflation as high as it is, we may see the cost of healthcare rise even further, and this increase may not even be enough in a year’s time. That being said, the bill is still facing pushback from some lawmakers.
Why is this bill facing pushback when it is clear that a minimum of $15,000 is not enough? No one is arguing that there is a need for higher coverage across the board. However, some lawmakers argue that, rather than increase coverage in New Jersey, a price hike will cause many drivers to stop paying for their insurance altogether.
Yes, insurance is mandated at a state level in New Jersey, as is the case throughout most of the US. But many people still don’t have insurance. It is not something that is easy to police, especially since many attempts to do so face opposition. Furthermore, most drivers never have to face the consequences of not having insurance.
In other words, if a million more people drop their liability insurance coverage, only a handful will ever be affected, but the impact on a statewide level will be significant.
You could make the argument that paying an extra $120 a year is no big deal. It’s just $10 a month, the likes of which many people spend on online memberships they’ve forgotten existed. But in 2022, it is difficult to make that argument in good faith.
The problem is that costs are going up across the board. Job security is perceived to be low, considering that we may well be in a recession, and the cost of living is getting too high even for those earning good salaries. Any additional expenses, especially if they are mandated by law, are going to be seen as an extra burden.
It is hard to argue about what people can and can’t afford. For some people, $10 a month means nothing, but for someone who already can’t make ends meet, it creates just another unpaid bill. Plus, even those who can afford to pay a lot more do not appreciate being ordered to do so.
Will this legislation go into effect? At present, it looks likely. A previous version of this reform would have made insurance significantly more expensive for far more people. This version reduces that amount, but will still hit the pockets of over a million people. Whether this will indeed cause people to stop paying for insurance altogether remains to be seen.