A bill Gov. Phil Murphy signed into law that raised the minimum liability insurance requirement in New Jersey would raise vehicle insurance rates for 1.2 million New Jersey drivers in the new year.
Industry insiders say the controversial regulation will increase car insurance by $125 per year. It starts on New Year’s Day.
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The bill increased liability coverage from $15,000 to $25,000. The law raises minimum liability coverage to $35,000 in 2026, so drivers will pay extra in three years.
Industry officials predicted the plan would affect 1.1 million drivers during the discussion. The state’s Department of Banking and Insurance, which regulates insurers, projected 1.1 million to 1.2 million vehicles with minimum coverage.
DOBI reports 5,970,000 insured New Jersey private passenger automobiles.
Due to limited coverage, crash victims’ medical expenditures haven’t always been compensated, according to legislative supporters.
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At the time, Insurance Council of New Jersey vice president Gary LaSpisa estimated the average payout for incidents involving injuries was $18,000. Due to the inevitable increase in 2026, the group withdrew its support for the bill.
In June, Trenton considered the controversial measure.
State Senate President Nicholas Scutari offered six pieces of legislation that opponents said would cost 1.27 million drivers $350 extra a year.
His original proposals required drivers to choose PIP coverage with at least $250,000 in personal injury protection. Another bill would prevent drivers from utilizing private health insurance to pay for personal injury protection coverage in exchange for an auto insurance discount.
He abandoned his ambitious bill package in favor of the modest increase. He defended it when lawmakers were criticized for raising rates on so many drivers.
Scutari, D-Union, called the bill “crazy” during a June committee hearing. “We tell New Jerseyans what they need, and they get it.
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He claimed taxpayers pay to “subsidize unpaid medical bills” and “everything that the insurance company doesn’t cover” in the minimum policy.
Scutari’s own party members questioned the rate hike’s timing.
“My main worry is the timing,” said Assembly committee chairman John McKeon, who voted to send the bill to the full Assembly. McKeon and three other Democratic legislators said they might vote against it on the floor.
After two Republican members testified against it in the Assembly, it passed 44-29. It passed both Democratic-controlled chambers along party lines.
Assemblyman Robert Auth, R-Bergen, stated, “This is a really, really awful bill.” For crying out loud, let’s help New Jersey’s poor, middle-class, and working-class families. Stop it.”