Up to 1.2 million New Jersey drivers will start paying more for their auto insurance in the new year under a bill Governor Phil Murphy signed into law that increased the minimum amount of liability insurance drivers they must have in the state.
Drivers affected by the controversial law can expect to pay about $125 more a year per car for insurance, according to industry officials. It goes into effect on New Year’s Day.
The new law raised the minimum amount of liability coverage previously allowed from $15,000 to $25,000. The legislation includes another increase in minimum liability coverage to $35,000 in 2026, so drivers can expect to pay even more in three years.
Industry officials said at the time the bill was debated that it would affect 1.1 million drivers. But the state Department of Banking and Insurance, which oversees insurers, said there are an estimated 1.1 million to 1.2 million vehicles with the current minimum coverage.
Overall, there are 5,970,000 insured private passenger vehicles in New Jersey, according to DOBI.
Advocates for the law argued that accident victims have not always been able to cover their medical bills in full due to the low coverage option.
Gary LaSpisa, vice president of the New Jersey Insurance Council, said at the time that the average settlement for injury accidents is $18,000. The group supported increasing the minimum coverage based on the gap in what’s allowed and the average settlement rate in the state, but ultimately withdrew support for the bill due to the automatic increase in 2026.
The measure was highly controversial when it was debated in Trenton in June.
New Jersey’s most powerful state legislator, State Senate President Nicholas Scutari, has introduced more than half a dozen bills that opponents have warned would force 1.27 million drivers to pay up to $350 more a year.
Its original measures would have required drivers to select plans with a minimum of $250,000 in personal injury protection, commonly called PIP. Another bill would prohibit motorists from using private health insurance coverage as a primary payer for personal injury protection coverage in exchange for an auto insurance discount.
He ultimately abandoned his most ambitious package of bills in support of the more modest increase. But he came to his defense when lawmakers faced pushback from people who argued the time was not right to raise rates for so many drivers.
“This is crazy,” Scutari, the D-Union, said during a committee hearing on the bill in June. “The people of New Jersey need this Legislature to protect them from themselves because we tell them what they need to get, and that’s what they get.”
He argued that taxpayers are the ones stuck with the costs to “subsidize unpaid medical bills” and “everything the insurance industry doesn’t cover” in the minimum policy.
But even some members of Scutari’s own party expressed skepticism about the timing of the rate hike when it was discussed.
“My only concern is timing,” said Assemblyman John McKeon, chairman of the Assembly committee that voted to send the bill to the full Assembly for a vote. But McKeon, along with three other Democratic lawmakers, said at the time that they could vote against it when it reaches the floor.
It passed in the state Senate by a vote of 25-13 without any discussion and 44-29 in the Assembly after it hit a minor bump when two Republican lawmakers spoke out against it. He cleared both Democratic-controlled chambers largely along partisan lines.
“This is a really bad bill,” Assemblyman Robert Auth, R-Bergen, said at the time. “Let’s give poor, middle-class, and working-class families in New Jersey breathing room to scream out loud. Give them a fucking break.
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