Confusing New Jersey Law, Effective July 1, Raises Minimum Commercial Insurance Limits

Confusing New Jersey Law, Effective July 1, Raises Minimum Commercial Insurance Limits

The legislation does not specify that this applies only to intrastate New Jersey operations or interstate carriers conducting business in the state… and more.

While the federal government requires Auto Liability, also known as Bodily Injury Physical Damage (BIPD), a minimum coverage of $750,000 to obtain your MC authority, states are allowed to require stricter limits.

And guess what, New Jersey just decided to increase these minimum requirements!

Starting July 1, New Jersey will require commercial motor vehicles (CMVs) over 26,000 lbs., certain passenger carriers, and those transporting hazardous materials to maintain proof of financial responsibility of $1.5 million.

Additionally, CMVs weighing between 10,001 and 26,001 lbs. must maintain limits of $300,000.

The coverage required by the statute may be satisfied by:

  • a commercial auto policy,
  • fleet insurance,
  • a commercial umbrella policy,
  • commercial excess coverage,
  • a similar insurance policy, or
  • any combination of these types of coverage

But this law has many unclear implications.

What we don’t know

The legislation does not specify that this applies only to intrastate New Jersey operations or interstate carriers conducting business in the state.

New Jersey Motor Truck Association interim executive director, Jennifer Blazovic, said members have not yet determined how the bill will impact motor carriers in the state.

The association, which has opposed the new law from the beginning, is still trying to get firm answers as to who must carry the higher requirement.

But, according to ATA General Counsel Richard Pianka, “it appears to be meant for vehicles registered or principally garaged in New Jersey.”

Registered is the worrying word.

According to Greg Feary, partner at Scopelitis, a trucking-focused law firm, “What does it mean when they say this law applies to trucks registered in our state? A strict reading of the law could be interpreted to mean that an Indiana-based truck, with part of its registration fee given to New Jersey under the IRP program, could be seen as registered in New Jersey and coming under the new insurance requirement.

Relate Article: Who would be hurt by increasing truck insurance rates?

Lastly, there is the New Jersey “deemer law.” The law firm of Schwartz & Blackman said this law “basically turns a non-New Jersey resident driver’s car insurance policy into a New Jersey policy, while the car is driven in New Jersey. A Pennsylvania or New York driver who is driving through New Jersey and gets into an accident in New Jersey will be subject to the deemer statute.”

With all of these potential legal issues, it will be interesting to see what legal fights come or clarifications are given.

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