New Jersey Assembly Bill A1104

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Prohibits use of gap in automobile insurance coverage as rating factor in automobile insurance underwriting under certain circumstances.

Impact

By enacting A1104, the legislative body seeks to amend existing state laws governed under P.L. 1997, c.151. This amendment would ensure that insurance companies must not use a lapse in coverage as a reason for a risk classification that adversely affects an applicant's insurance rates. The bill also mandates that insurers adhere to consistent underwriting rules and provides penalties for those that fail to comply. Overall, this change is set to create a more equitable landscape in the automobile insurance market, potentially leading to lower costs for consumers who have had policy gaps for legitimate reasons.

Summary

Assembly Bill A1104 proposes changes to the private passenger automobile insurance rating plans by prohibiting the consideration of any gap in automobile insurance coverage as a factor in determining the premium rates during underwriting. This measure aims to prevent insurers from penalizing applicants for lapses in their insurance history, specifically under certain circumstances where an applicant may have been unable to maintain continuous coverage. The bill intends to protect consumers, particularly those who may face financial hardships or other legitimate reasons that could lead to a temporary lapse in insurance coverage.

Contention

The bill's support and opposition may stem from broader discussions about consumer rights in the insurance market and the fairness of underwriting standards. Proponents argue that discontinuous insurance coverage should not result in higher premiums, emphasizing the need for a compassionate approach towards those who may have unavoidable lapses due to life events. Critics may contend that such regulations could reduce insurers' flexibility in assessing risk and might lead to unforeseen pricing adjustments that could affect overall market dynamics.