A4570

An Act concerning automobile insurance and automobile insurance rates, amending P.L.1997, c.151 and amending and supplementing P.L.1990, c.8 (C.17:33B-1 et al.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 15 of P.L.1997, c.151 (C.17:29A-46.2) is amended to read as follows:

15. a. Insurers shall put in writing all underwriting rules applicable to each rate level utilized pursuant to section 14 of P.L.1997, c.151 (C.17:29A-46.1). An insurer may take into account factors, including, but not limited to, driving record characteristics appropriate for underwriting and classification in formulating its underwriting rules; provided that no underwriting rule based on motor vehicle violations shall be formulated in such a manner as to assign any named insured to a rating tier other than the standard rating tier applicable to the insured's territory solely on the basis of accumulating four motor vehicle points or less. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of the territory in which the insured resides or any other factor which the commissioner finds is a surrogate for territory. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of an insured holding a standard motorcycle license or standard basic driver's license issued pursuant to R.S.39:3-10, or standard probationary license issued pursuant to section 4 of P.L.1950, c.127 (C.39:3-13.4). No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of a named insured’s involvement in a motor vehicle accident in which the named insured is deemed not at fault by the insurer providing coverage to the named insured at the time of the accident. An insurer which knowingly fails to transact automobile insurance consistently with its underwriting rules shall be subject to a fine of not less than $1,000 for each violation.

b. All underwriting rules applicable to each rate level as provided for in section 14 of P.L.1997, c.151 (C.17:29A-46.1) shall be filed with the commissioner and shall be subject to the commissioner's prior approval. All underwriting rules shall be subject to public inspection. Except as provided in subsection d. of section 27 of P.L.1990, c.8 (C.17:33B-15), insurers shall apply their underwriting rules uniformly and without exception throughout the State, so that every applicant or insured conforming with the underwriting rules will be insured or renewed, and so that every applicant not conforming with the underwriting rules will be refused insurance.

c. An insurer with more than one rating plan for private passenger automobile insurance policies providing identical coverages shall not adopt underwriting rules which would permit a person to be insured for private passenger automobile insurance under more than one of the rating plans.

d. An insurer that revises its underwriting rules with respect to the assignment of insureds to rating tiers based on the number of accumulated motor vehicle points, as provided by subsection a. of this section, as amended by P.L.2003, c.89, shall certify to the commissioner that the revised rule will produce rates that are revenue neutral based upon the insurer's current coverages and book of business.

(cf: P.L.2019, c.271, s.19)

2. Section 26 of P.L.1990, c.8 (C.17:33B-14) is amended to read as follows:

26. a. The commissioner shall, within 90 days of the effective date of this act, promulgate a schedule of automobile insurance eligibility points by rule or regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The schedule shall assess a point valuation to driving experience related violations and shall include assessments for violations of lawful speed limits within such increments as determined by the commissioner, other moving violations, and at-fault accidents.

b. For the purposes of this section, an "at-fault accident," occurring before the effective date of P.L.2003, c.89 (C.17:30A-2.1 et al.), means an at-fault accident which results in payment by the insurer of at least a $500 claim and for accidents occurring on or after the effective date of P.L.2003, c.89 (C.17:30A-2.1 et al.), means an at-fault accident which results in payment by the insurer of at least a $1,000 claim, which amount may be adjusted in $100 or $250 increments periodically by order of the commissioner no more frequently than every 36 months, as the commissioner deems appropriate, to reflect the cumulative increases or decreases in the components of the Consumer Price Index, All Urban Consumers (CPI-U) for the Northeast Region, and the adjusted amount shall apply to automobile accidents occurring at least 120 days after the effective date of the adjustment; except that an at-fault accident shall not mean an accident occurring as a result of operation of any motor vehicle in response to a medical emergency if the operator at the time of the accident was a physician responding to the medical emergency. The commissioner shall also establish, by rule or regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), standards for determining which accidents, where the insurer pays at least $1,000 for a claim, are “at-fault accidents” for the purposes of this section. The standards established by the commissioner pursuant to this subsection shall include exclusions for automobile accidents where the automobile of an eligible person is struck:

(1) from the rear;

(2) by a driver determined to be at-fault under the standards established pursuant to this subsection; or

(3) under other circumstances as determined by the commissioner.

c. Nothing in this subsection b. of this section shall be construed to limit an insurer’s ability to adjust automobile insurance premiums for factors unrelated to at-fault accidents, except that such adjustments shall not be used to circumvent section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.2003, c.89, s.64)

3. (New section) a. An insurer shall not increase an automobile insurance policy premium, impose a surcharge or differential on a policy based on scheduled automobile insurance eligibility points pursuant to section 26 of P.L.1990, c.8 (C.17:33B-14), or adversely rerate a policy based on an accident unless the insurer determines that:

(1) the named insured or covered person under named insured’s policy was at-fault under the standards established by the commissioner pursuant to section 26 of P.L.1990, c.8 (C.17:33B-14); and

(2) the determination is supported by a review of available information, including:

(a) police reports, if applicable;

(b) statements; and

b. Any adverse rerating of an automobile insurance policy pursuant to subsection a. of this section shall be disclosed in writing to the named insured and shall include:

(1) the basis for the insurer’s at-fault determination made pursuant to paragraph (1) of subsection a. of this section that resulted in the rerating;

(2) the specific impact an adverse rerating has on the policy, including surcharges, rating tier changes, or premium effects; and

(3) the right to dispute the insurer’s at-fault determination through an insurer review and, if necessary, an administrative review by the commissioner.

c. The commissioner shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as is necessary to implement the provisions of this section.

4. This act shall take effect on the first day of the seventh month next following enactment and shall apply to automobile insurance policies issued, executed, delivered, or renewed on or after that date.

STATEMENT

This bill prohibits automobile insurers from increasing automobile insurance rates on persons deemed not at-fault in automobile accidents.

Under the bill, an automobile insurer will be prohibited from taking adverse actions against a named insured involved in an automobile accident unless the named insured is deemed at-fault in an automobile accident. Specifically, the bill:

(1) prohibits automobile insurers from using underwriting rules to assign a risk to a rating plan on the basis of the named insured’s involvement in a motor vehicle accident in which the named insured is deemed not at fault by the insurer;

(2) requires the Commissioner of Banking and Insurance to establish standards for determining which accidents are “at-fault accidents” when creating a schedule of automobile insurance eligibility points; and

(3) prohibits automobile insurers from increasing premiums, imposing surcharges or differentials on a policy based on scheduled automobile insurance eligibility points, or adversely rerating a policy based on an accident unless the insurer determines that the named insured is at-fault in the accident and the determination is supported by a review of available information. The bill also requires automobile insurers to disclose any adverse rerating of an automobile insurance policy and include certain information.