How one state created chaos by requiring $1.5M in liability insurance minimum

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Recently, I sent this email to all of my insureds.


To my insureds (customers),



***IMPORTANT***


i class =””>If any of your trucks or you travel to or through New Jersey, please contact me immediately.


i class =””>New Jersey now requires a higher minimum BIPD coverage for all commercial vehicles traveling into or through New Jersey.


i class =””> Every insurance company approaches New Jersey’s new requirement for insurance differently. Some insurance companies will require you to change your policy in order to meet New Jersey’s new insurance requirement. Others will refuse insurance if any of your trucks or vehicles travel into or through New Jersey.


i class =””> If you have any trucks traveling to or through New Jersey, it is important that we review your policy to ensure you have the required coverage. Please contact me as soon a possible. Thank you!

Insurance companies have different approaches to the issue because of the New Jersey law’s language and the states’ right to set their minimum coverages. If you didn’t know, states set their own minimum coverage amounts when it comes to auto insurance. This is the first time I’ve heard of a state saying, “we need more than the federal minimum requirement” for commercial coverage. In some ways, it’s similar to California Air Resources Board raising their emissions standards in California above the Environmental Protection Agency standards. These factors are important in understanding why there is such a terrible problem.

Disclaimer: I’m not an attorney, and this isn’t legal advice. If you need legal advice or guidance on any of the below, please consult an attorney.

The new law provides that (highlighted elements directly address commercial vehicles):

SYNOPSIS

Increases the minimum liability coverage for commercial vehicles to $1,500,000.


CURRENT Version of Text


As introduced.


An Act Concerning Commercial Motor Vehicle Coverage and amending P.L.1972, C.197.


Be it Enacted by the Senate & General Assembly of the State of New Jersey :

1. Section 1 of P.L.1972, C.197 (C.39.6B-1) has been amended as follows:

1. a. Owners or registered owners of motor vehicles registered in this state or garaged there must maintain motor vehicle liability coverage under provisions approved by Commissioner of Banking and Insurance. This coverage shall include at least: (1) an amount of or limit of $15,000.00, exclusive interest and cost, for injury or death to one person in one accident, and (2) an additional amount of or limit, up to $30,000.00 exclusive interest and cost, for injury or death to more than one individual in one accident.

This law is clearly defined by the literal interpretation of these words. All IRP (International Registration Plan registered) vehicles are actually registered in New Jersey. This language does NOT differentiate between intrastate and interstate vehicles. It does not exempt IRP apportioned Registrations from the law.

[ Related to Questions surrounding liability insurance hikes in New Jersey]

New Jersey, to my knowledge, has not made a public statement about how the law will enforced. This is the hurdle that has caused different approaches from insurance companies. Some insurance companies believe that New Jersey will enforce its law exactly as written. As I have described it above. Other insurance companies expect/hope that New Jersey will announce this is only for New Jersey registered vehicles and/or New Jersey domiciled owners. Other insurance companies believe that the courts will determine how this law will be enforced. Some insurance companies are waiting to see if their insureds will be the first to hit this landmine.

Why is this important? It leaves the door open for a insurance stalker to argue that a IRP apportioned insurance carrier is, in fact, required to have New Jersey minimum coverage, while in New Jersey. They can then attempt to force a insurance carrier to pay $1.5 million to an injured third-party instead of the FMCSA’s minimum $750,000.

Let’s say, for example, that New Jersey announces this new minimum coverage requirement will only be enforced on New Jersey-domiciled vehicles and owners. Six months later, an IRP-registered Pennsylvania trucking company is responsible for an accident in New Jersey on I-95 that has similar liability damages (bodily injuries and property damage to third parties injured) as one of these accidents reported Overdrive.

**A truck driver who was involved in an accident that killed five people used TikTok when the crash occurred

** A truck driver lost control of his rig on I-70 near Colorado, causing 28 vehicles to collide and four people to die

** Trucker charged in vehicular homicide on I-70 near Denver

**Three people died and at least 15 were injured in a fiery accident involving a truck, a charter bus and high school students

[ Related: When your insurance policy does not provide the coverage you need]

Is there any doubt, in my example, that even an insurance stalker who is reasonably competent (aka lawyer), could successfully argue that, according to a literal reading of the law the injured third party was legally entitled to $1.5 million minimum liability coverage by the insured (trucking firm from PA) and their insurer?

Many in the insurance business (including myself), believe that this will be enforced on all commercial vehicles registered in the state, whether they are intrastate or interstate. It is expected that, even if it’s not required immediately, it will eventually be required of all who enter New Jersey.

Joel Baker, truck driver, and I will treat New Jersey the same way I treated California when CARB implemented such outrageous emission regulations for California. New Jersey is yet another page that I’ve removed from my atlas because I won’t be going back.

It is important that you review your policy as soon as possible with your insurance agent.

[ Related : Poll: Have you seen changes in liability insurance as a result New Jersey’s state only hike?]

Need help with your insurance? W. Joel Baker is the author of this article. If you have any questions about insurance, you can contact him via his website or by leaving a comment below this story.


Find more information on the ins and out of trucking insurance in-depth in Chapter 16 of the updated

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