SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE COMMITTEE SUBSTITUTE FOR

SENATE, Nos. 63 and 374

STATE OF NEW JERSEY

DATED: JANUARY 18, 1996

      The Senate Commerce Committee reports favorably Senate Committee Substitute for Senate, Nos. 63 and 374.

      This bill, a Senate Committee Substitute for Senate, Nos. 63 and 374, revises the criteria under which an insurer may assess an accident surcharge for an at-fault accident under an insured's automobile insurance policy.

      Currently, there are two definitions of "at-fault accident" under which an insurer may impose an accident surcharge. Under the merit rating accident surcharge system pursuant to the provisions of section 6 of P.L.1983, c.65 (C.17:29A-35), a surcharge may be imposed if the insurer has made payment on a claim of at least $300. More recently, under the "Fair Automobile Insurance Reform Act of 1990," or FAIR Act, an insurer may impose an accident surcharge in accordance with the schedule of automobile insurance eligibility points promulgated by the commissioner pursuant to the provisions of section 26 of P.L.1990, c.8 (C.17:33B-14) if the insured is involved in an at-fault accident resulting in payment by the insurer of at least a $500 claim. In practice, however, only the higher amount of $500 may used by insurers.

      The bill amends the definition of "at-fault accident" in both statutes to mean an accident which results in payment by the insurer of at least a $1,000 claim, which amount shall be adjusted by order of the Commissioner of Insurance on July 1 every three years to reflect the cumulative increases or decreases in components of the national Consumer Price Index, U.S. City Average, deemed appropriate by the commissioner.