SENATE, No. 1365

 

STATE OF NEW JERSEY

 

INTRODUCED JUNE 24, 1996

 

 

By Senators CARINALE, MARTIN and Kyrillos

 

 

An Act concerning automobile insurance and revising parts of the statutory law.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. (New section) a. This act shall be known and may be cited as the “Automobile Insurance Rate Reduction Act of 1996.”

    b. This act eliminates lawsuits for noneconomic loss and economic loss for bodily injury or death resulting from automobile accidents; requires the offering of coverage for the automatic and immediate payment of benefits for noneconomic loss and economic loss for bodily injury and death; and reduces automobile insurance rates by 30%.

 

    2. (New section) The Legislature finds and declares:

    a. The cost of automobile insurance in this State has escalated since the institution of a modified no-fault system more than two decades ago; and

    b. Under the tort system, recovery of a claim may take several years, and is diminished by the fact that attorneys’ fees and court costs reduce the award by as much as one-third. At the same time, the legal defense and administrative costs of insurers also adds to the cost of automobile insurance. The rationale for the establishment of a traditional no-fault system is that it provides payment of benefits for medical expenses and wage loss to injured persons in a timely manner, without regard to fault and without the high transaction costs which characterize the tort system; and

    c. Under a no-fault system, the cost of providing the first party benefits are intended to be offset by a limitation on the right to sue for noneconomic loss, or pain and suffering; nevertheless, in New Jersey, the cost-effectiveness of the payment of first party benefits under personal injury protection coverage is diminished by the relatively high volume of suits for noneconomic loss which remains in the system, making insurers’ defense costs high and having an adverse impact upon premiums; and

    d. This legislation seeks, therefore, to reduce the cost of providing benefits for noneconomic loss and the cost of economic loss for bodily injury or death by eliminating the expensive attorney fees and court costs now paid by both the insurer and the injured person by establishing first-party benefits for noneconomic loss and economic loss for bodily injury or death, payable in the same manner as personal injury protection medical expense and wage loss benefits are now paid, by the insurer to its own insured, in a timely manner and in accordance with a schedule selected by the insured and similar to that employed in workers' compensation coverage; and

    e. The advantages to this method of paying claims for noneconomic loss and economic loss for bodily injury and death is that the insured not only receives the benefits for noneconomic loss and economic loss for bodily injury and death due to him without a long wait, but is also assured that the amount available to him is adequate for the nature of his injuries, unlike the present system, in which an injured person must be dependent upon coverage purchased by another party, which may not be adequate; and

    f. Therefore, the purpose of this legislation is to establish a true no-fault system, in which every person collects full benefits from his own insurer in a timely manner and without regard to fault, and to provide a 30% premium reduction, reflecting the savings which will accrue to the system and to all policyholders in the State, which will make automobile insurance more affordable to all.

 

    3. Section 8 of P.L. 1972, c. 70 (C. 39:6A-8) is amended to read as follows:

    8. Tort exemption; limitation on the right to economic loss and noneconomic loss.

    [One of the following two tort options shall be elected, in accordance with section 14.1 of P.L.1983, c.362 (C.39:6A-8.1), by any named insured required to maintain personal injury protection coverage pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4):

    a.] Every owner, registrant, operator or occupant of an automobile to which section 4 of P.L.1972, c.70 (C.39:6A-4), personal injury protection coverage, regardless of fault, applies, and every person or organization legally responsible for his acts or omissions, is hereby exempted from tort liability for economic loss for bodily injury or death and noneconomic loss to a person [who is subject to this subsection and] who is either a person who is required to maintain the coverage mandated by this act, or is a person who has a right to receive benefits under section 4 of P.L.1972, c.70 (C.39:6A-4), as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile in this State [, unless that person has sustained a personal injury which results in death; dismemberment; significant disfigurement; a fracture; loss of a fetus; permanent loss of use of a body organ, member, function or system; permanent consequential limitation of use of a body organ or member; significant limitation of use of a body function or system; or a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute that person's usual and customary daily activities for not less than 90 days during the 180 days immediately following the occurrence of the injury or impairment; or     b. As an alternative to the basic tort option specified in subsection a. of this section, every owner, registrant, operator, or occupant of an automobile to which section 4 of P.L.1972, c.70 (C.39:6A-4) applies, and every person or organization legally responsible for his acts or omissions, shall be liable for noneconomic loss to a person who is subject to this subsection and who is either a person who is required to maintain the coverage mandated by P.L.1972, c.70 (C.39:6A-1 et seq.) or is a person who has a right to receive benefits under section 4 of that act (C.39:6A-4), as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile in this State.

    The tort option provisions of subsection b. of this section shall also apply to the right to recover for noneconomic loss of any person eligible for benefits pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4) but who is not required to maintain personal injury protection coverage and is not an immediate family member, as defined in section 14.1 of P.L.1983, c.362 (C.39:6A-8.1), under an automobile insurance policy.

    The tort option provisions of subsection a. of this section shall also apply to any person subject to section 14 of P.L.1985, c.520 (C.39:6A-4.5).

 

    The tort option provisions of subsections a. and b. of this section as provided in this 1988 amendatory and supplementary act shall apply to automobile insurance policies issued or renewed on or after January 1, 1989 and as otherwise provided by law].

(cf: P.L.1990, c.8, s.9)

 

    4. Section 10 of P.L. 1972, c. 70 (C. 39:6A-10) is amended to read as follows:

    10. Additional personal injury protection coverage. Insurers shall make available to the named insured covered under section 4 of P.L.1972, c.70 (C.39:6A-4), and, at his option, to resident relatives in the household of the named insured, suitable additional first party coverage for income continuation benefits, essential services benefits, death benefits and funeral expense benefits, but the income continuation and essential services benefits shall cease upon the death of the claimant, and shall not operate to increase the amount of any death benefits payable under section 4 of P.L.1972, c.70 (C.39:6A-4) and such additional first party coverage shall be payable only to the extent that the claimant establishes that the amount of loss sustained exceeds the coverage specified in section 4 of P.L.1972, c.70 (C.39:6A-4). Insurers [may] shall also make available to named insureds covered under section 4 of P.L.1972, c.70 (C.39:6A-4), and, at their option, to resident relatives in the household of the named insured or to other persons provided medical expense coverage pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4), or both, additional first party medical expense benefit coverage of up to $1,000,000 per person per accident. The additional medical expense benefits coverage required to be offered by insurers pursuant to this section shall be offered in increments determined by the commissioner. The additional coverage shall be offered by the insurer at least annually as part of the coverage selection form required by section 17 of P.L.1983, c.362 (C.39:6A-23). Income continuation in excess of that provided for in section 4 of P.L.1972, c.70 (C. 39:6A-4) must be provided as an option by insurers for disabilities, as long as the disability persists, up to an income level of $35,000.00 per year, provided that a. the excess between $5,200.00 and the amount of coverage contracted for shall be written on the basis of 75% of said difference, and b. regardless of the duration of the disability, the benefits payable shall not exceed the total maximum amount of income continuation benefits contracted for. Death benefits provided pursuant to this section shall be payable without regard to the period of time elapsing between the date of the accident and the date of death, if death occurs within two years of the accident and results from bodily injury from that accident to which coverage under this section applies. The Commissioner of Insurance is hereby authorized and empowered to establish, by rule or regulation, the amounts and terms of income continuation insurance to be provided pursuant to this section.

(cf: P.L.1990, c.8, s.11)

 

    5. (New section) a. Insurers shall offer to named insureds combined coverage for economic loss for bodily injury and death and noneconomic loss in a range of limits from $15,000 to at least $1,000,000. The combined coverage for economic loss for bodily injury and death and noneconomic loss shall provide protection, without regard to negligence, liability or fault of any kind, to the named insured and members of his family residing in his household who sustain bodily injury as the result of an accident while occupying, entering into, alighting from or using an automobile or as a pedestrian, caused by an automobile or by an object propelled by or from an automobile, to other persons sustaining bodily injury while occupying, entering into, alighting from or using the automobile of the named insured, with the permission of the named insured, and to pedestrians, sustaining bodily injury caused by the named insured's automobile or struck by an object propelled by or from such automobile. Insurers shall offer this combined coverage for economic loss for bodily injury and death and noneconomic loss to the named insured in accordance with a schedule established by the commissioner pursuant to subsection b. of this section.

    b. (1) The commissioner shall, no later than 90 days after the enactment date of this act, designate an insurer or insurers to conduct a closed claim study of claims for economic loss for bodily injury and death and noneconomic loss in automobile accidents for the twelve preceding months. Claims used in the study shall reasonably reflect geographic, demographic, and economic conditions throughout the State. From the study, the commissioner shall determine the types of bodily injury most commonly incurred in automobile accidents to which this combined coverage applies and shall establish: (a) an average claims payment for each type of injury for noneconomic loss and (b) an average claims payment for each type of injury for economic loss associated with that injury. The sum of the average noneconomic and economic loss costs for each type of injury shall constitute the basic award.

    (2) The commissioner shall, by regulation, establish a schedule of injuries most commonly sustained in automobile accidents to which this combined coverage applies. The scheduled amount, less one third, shall constitute the basic benefit available pursuant to the combined coverage. Multiple injuries shall be reimbursed in accordance with a formula established by the commissioner by regulation, which formula may provide for less than the full scheduled reimbursement for any secondary injury.

    (3) At the option of the named insured, and upon payment of the appropriate premium, the schedule established pursuant to paragraph (2) of this subsection b. may be subject to enhanced reimbursement levels. Every insurer shall file with the commissioner rating factors which, when applied to the scheduled amount, shall provide for an enhanced reimbursement level for each scheduled injury in increments up to at least three times the scheduled amount.

    (4) The scheduled amounts shall, at least annually, be subject to a percentage increase established by the commissioner by regulation, which shall be established taking into consideration any increase in the consumer price index for all urban consumers in the New York City and Philadelphia areas as reported by the United States Department of Labor, awards to plaintiffs in other types of tort actions in this State, and other factors as the commissioner deems relevant.

    c. Combined coverage provided pursuant to this section shall not be increased by stacking the limits of coverage of multiple automobiles covered under the same policy of insurance and those coverages shall not be increased by stacking the limits of coverage of multiple policies available to the insured. If the insured has coverage available under more than one policy, then recovery shall be under only the coverage of one policy of the insured's choosing which is applicable to the insured, unless the automobile occupied by the insured is a vehicle owned by the insured, spouse or resident relative of the insured's household, in which case only the coverages and limits on the policy insuring that vehicle shall apply.

    d. The coverage provided pursuant to this section shall be subject to the policy terms, limitations, conditions and exclusions approved by the commissioner.

 

    6. (New section) a. An insurer may require written notice to be given as soon as practicable after an accident involving an automobile with respect to which the policy affords combined coverage pursuant to 5 of P.L. , c. (C. )(pending before the Legislature as this bill).

    b. Benefits for the combined coverage shall be overdue if not paid within 60 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of same. The payment shall not be deemed overdue if, within 60 days of receipt of notice of the claim, the insurer notifies the claimant or his representative in writing of the denial of the claim or the need for additional time, not to exceed 45 days, to investigate the claim, and states the reasons therefor. The written notice stating the need for additional time to investigate the claim shall set forth the number of the insurance policy against which the claim is made, the claim number, the address of the office handling the claim and a telephone number, which is toll free or can be called collect, or is within the claimant's area code. For the purpose of determining interest charges in the event the injured party prevails in a subsequent proceeding where an insurer has elected a 45-day extension pursuant to this subsection, payment shall be considered overdue at the expiration of the 45-day period or, if the injured person was required to provide additional information to the insurer, within 10 business days following receipt by the insurer of all the information requested by it, whichever is later.

    For the purpose of calculating the extent to which any benefits are overdue, payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery.

    c. All overdue payments shall bear interest at the percentage of interest prescribed in the Rules Governing the Courts of the State of New Jersey for judgments, awards and orders for the payment of money. All automobile insurers shall provide any claimant with the option of submitting a dispute under this section to binding arbitration. Arbitration proceedings shall be administered and subject to procedures established by the American Arbitration Association. If the claimant prevails in the arbitration proceedings, the insurer shall pay all the costs of the proceedings, including reasonable attorney's fees, to be determined in accordance with a schedule of hourly rates for services performed, to be prescribed by the Supreme Court of New Jersey.

 

    7. (New section) The Commissioner of Insurance shall have the authority to dissolve the New Jersey Automobile Insurance Risk Exchange established by section 15 of P.L.1983, c.362 (C.39:6A-21), when he believes that its continuing operation is no longer necessary. The commissioner shall notify the Legislature when he believes that its continuing operation is no longer necessary. The commissioner may promulgate rules and regulations to facilitate the termination of its activities.

 

    8. Section 10 of P.L.1952, c.174 (C.39:6-70) is amended to read as follows:

    10. Hearing on application for payment of judgment. The court shall proceed upon such application, in a summary manner, and, upon the hearing thereof, the applicant shall be required to show:

    (a) He is not a person covered with respect to such injury or death by any workers' compensation law, or the personal representative of such a person,

    (b) He is not a spouse, parent or child of the judgment debtor, or the personal representative of such spouse, parent or child,

    (c) He was not at the time of the accident a person (1) operating or riding in a motor vehicle which he had stolen or participated in stealing or (2) operating or riding in a motor vehicle without the permission of the owner, and is not the personal representative of such a person,

    (d) He was not at the time of the accident, the owner or registrant of an uninsured motor vehicle, or was not operating a motor vehicle in violation of an order of suspension or revocation,

    (e) He has complied with all of the requirements of section 5,

    (f) The judgment debtor at the time of the accident was not insured under a policy of automobile liability insurance under the terms of which the insurer is liable to pay in whole or in part the amount of the judgment,

    (g) He has obtained a judgment as set out in section 9 of this act, stating the amount thereof and the amount owing thereon at the date of the application,

    (h) He has caused to be issued a writ of execution upon said judgment and the sheriff or officer executing the same has made a return showing that no personal or real property of the judgment debtor, liable to be levied upon in satisfaction of the judgment, could be found or that the amount realized on the sale of them or of such of them as were found, under said execution, was insufficient to satisfy the judgment, stating the amount so realized and the balance remaining due on the judgment after application thereon of the amount realized,

    (i) He has caused the judgment debtor to make discovery under oath, pursuant to law, concerning his personal property and as to whether such judgment debtor was at the time of the accident insured under any policy or policies of insurance described in subsection (f) of this section,

    (j) He has made all reasonable searches and inquiries to ascertain whether the judgment debtor is possessed of personal or real property or other assets, liable to be sold or applied in satisfaction of the judgment,

    (k) By such search he has discovered no personal or real property or other assets, liable to be sold or applied or that he has discovered certain of them, describing them, owned by the judgment debtor and liable to be so sold and applied and that he has taken all necessary action and proceedings for the realization thereof and that the amount thereby realized was insufficient to satisfy the judgment, stating the amount so realized and the balance remaining due on the judgment after application of the amount realized,

    (l) The application is not made by or on behalf of any insurer by reason of the existence of a policy of insurance, whereby the insurer is liable to pay, in whole or in part, the amount of the judgment and that no part of the amount to be paid out of the fund is sought in lieu of making a claim or receiving a payment which is payable by reason of the existence of such a policy of insurance and that no part of the amount so sought will be paid to an insurer to reimburse or otherwise indemnify the insurer in respect of any amount paid or payable by the insurer by reason of the existence of such a policy of insurance,

    (m) Whether or not he has recovered a judgment in an action against any other person against whom he has a cause of action in respect of his damages for bodily injury or death or damage to property arising out of the accident and what amounts, if any, he has received by way of payments upon the judgment, or by way of settlement of such cause of action, in whole or in part, from or on behalf of such other person,

    (n) [In order to recover for noneconomic loss, as defined in section 2 of P.L.1972, c.70 (C.39:6A-2) for] For accidents to which the benefits of sections 7 and 10 of P.L.1972, c.198 (C.39:6-86.1 and C.39:6-86.4) apply, the injured person shall not have [sustained an injury described in subsection a. of section 8 of P.L.1972, c.70 (C.39:6A-8)] the right to recover for noneconomic loss, as defined in section 2 of P.L.1972, c.70 (C.39:6A-2), or economic loss for bodily injury or death which exceeds the schedule established pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) and the limits established by P.L.1952, c.74 (C.39:6-61 et seq.).

    Whenever the applicant satisfies the court that it is not possible to comply with one or more of the requirements enumerated in subsections (h) and (i) of this section and that the applicant has taken all reasonable steps to collect the amount of the judgment or the unsatisfied part thereof and has been unable to collect the same, the court may dispense with the necessity for complying with such requirements.

    The board or any insurer to which the action has been assigned may appear and be heard on application and show cause why the order should not be made.

(cf: P.L.1988, c.119, s.19)

 

    9. Section 2 of P.L.1968, c.385 (C.17:28-1.1) is amended to read as follows:

    2. a. No motor vehicle liability policy or renewal of such policy of insurance, including a liability policy for an automobile as defined in section 2 of P.L.1972, c.70 (C.39:6A-2), insuring against loss resulting from liability imposed by law for bodily injury or death, sustained by any person arising out of the ownership, operation, maintenance or use of a motor vehicle, shall be issued in this State with respect to any motor vehicle registered or principally garaged in this State unless it includes coverage in limits for bodily injury or death as follows:

    (1) an amount or limit of $15,000.00, exclusive of interest and costs, on account of injury to, or death of, one person, in any one accident, and

    (2) an amount or limit, subject to such limit for any one person so injured or killed, of $30,000.00, exclusive of interest and costs, on account of injury to or death of more than one person, in any one accident,

under provisions approved by the Commissioner of Insurance, for payment of all or part of the sums which the insured or his legal representative shall be legally entitled to recover as damages from the operator or owner of an uninsured motor vehicle, or hit and run motor vehicle, as defined in section 18 of P.L.1952, c.174 (C.39:6-78), because of bodily injury, sickness or disease, including death resulting therefrom, sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured or hit and run motor vehicle anywhere within the United States or Canada [; except that uninsured motorist coverage shall provide that in order to recover for non-economic loss, as defined in section 2 of P.L.1972, c.70 (C.39:6A-2), for accidents to which the benefits of section 4 (C.39:6A-4) of that act apply, the tort option elected pursuant to section 8 (C.39:6A-8) of that act shall apply to that injured person].

    All motor vehicle liability policies shall also include coverage for the payment of all or part of the sums which persons insured thereunder shall be legally entitled to recover as damages from owners or operators of uninsured motor vehicles, other than hit and run motor vehicles, because of injury to or destruction to the personal property of such insured, with a limit in the aggregate for all insureds involved in any one accident of $5,000.00, and subject, for each insured, to an exclusion of the first $500.00 of such damages.

    b. Uninsured and underinsured motorist coverage shall be provided as an option by an insurer to the named insured up to at least the following limits: $250,000.00 each person and $500,000.00 each accident for bodily injury; $100,000.00 each accident for property damage or $500,000.00 single limit, subject to an exclusion of the first $500.00 of such damage to property for each accident, except that the limits for uninsured and underinsured motorist coverage shall not exceed the insured's motor vehicle liability policy limits for bodily injury and property damage, respectively.

    Rates for uninsured and underinsured motorist coverage for the same limits shall, for each filer, be uniform on a Statewide basis without regard to classification or territory.

    c. Uninsured and underinsured motorist coverage provided for in this section shall not be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance nor shall these coverages be increased by stacking the limits of coverage of multiple policies available to the insured. If the insured had uninsured motorist coverage available under more than one policy, any recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits.

    d. Uninsured and underinsured motorist coverage shall be subject to the policy terms, conditions and exclusions approved by the Commissioner of Insurance, including, but not limited to, unauthorized settlements, nonduplication of coverage, subrogation and arbitration.

    e. For the purpose of this section, (1) "underinsured motorist coverage" means insurance for damages because of bodily injury and property damage resulting from an accident arising out of the ownership, maintenance or use of an underinsured motor vehicle. Underinsured motorist coverage shall not apply to an uninsured motor vehicle. A motor vehicle is underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available to a person against whom recovery is sought for bodily injury or property damage is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery. A motor vehicle shall not be considered an underinsured motor vehicle under this section unless the limits of all bodily injury liability insurance or bonds applicable at the time of the accident have been exhausted by payment of settlements or judgments. The limits of underinsured motorist coverage available to an injured person shall be reduced by the amount he has recovered under all bodily injury liability insurance or bonds;

    (2) "uninsured motor vehicle" means:

    (a) a motor vehicle with respect to the ownership, operation, maintenance, or use of which there is no bodily injury liability insurance or bond applicable at the time of the accident;

    (b) a motor vehicle with respect to the ownership, operation, maintenance, or use of which there is bodily injury liability insurance in existence but the liability insurer denies coverage or is unable to make payment with respect to the legal liability of its insured because the insurer has become insolvent or bankrupt, or the Commissioner of Insurance has undertaken control of the insurer for the purpose of liquidation; or

    (c) a hit and run motor vehicle as described in section 18 of P.L.1952, c.174 (C.39:6-78).

    "Uninsured motor vehicle" shall not include an underinsured motor vehicle; a motor vehicle owned by or furnished for the regular use of the named insured or any resident of the same household; a self-insurer within the meaning of any financial responsibility or similar law of the state in which the motor vehicle is registered or principally garaged; a motor vehicle which is owned by the United States or Canada, or a state, political subdivision or agency of those governments or any of the foregoing; a land motor vehicle or trailer operated on rails or crawler treads; a motor vehicle used as a residence or stationary structure and not as a vehicle; or equipment or vehicles designed for use principally off public roads, except while actually upon public roads.

(cf: P.L.1988, c.119, s.11)

 

    10. Section 18 of P.L.1985, c.520 (C.17:28-1.4) is amended to read as follows:

    18. Any insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State, or controlling or controlled by, or under common control by, or with, an insurer authorized to transact or transacting insurance business in this State, which sells a policy providing automobile or motor vehicle liability insurance coverage, or any similar coverage, in any other state or in any province of Canada, shall include in each policy coverage to satisfy at least the scheduled coverage for noneconomic loss and economic loss for bodily injury or death pursuant to section 5 of P.L.     , c. (C. ) (pending before the Legislature as this bill) in the amount or limit of $15,000 per person per accident, the liability insurance requirements of section 1 of P.L.1972, c.197 (C.39:6B-1) or section 3 of P.L.1972, c.70 (C.39:6A-3), the uninsured motorist insurance requirements of subsection a. of section 2 of P.L.1968, c.385 (C.17:28-1.1), and personal injury protection benefits coverage pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4) or of section 19 of P.L.1983, c.362 (C.17:28-1.3), whenever the automobile or motor vehicle insured under the policy is used or operated in this State.

    Any liability insurance policy subject to this section shall be construed as providing the coverage required herein [, and any named insured, and any immediate family member as defined in section 14.1 of P.L.1983, c.362 (C.39:6A-8.1), under that policy, shall be subject to the tort option specified in subsection a. of section 8 of P.L.1972, c.70 (C.39:6A-8)].

    Each insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State and subject to the provisions of this section shall, within 30 days of the effective date of P.L. 1985, c. 520, file and maintain with the Department of Insurance written certification of compliance with the provisions of this section.

    "Automobile" means an automobile as defined in section 2 of P.L.1972, c.70 (C.39:6A-2).

(cf: P.L.1988, c.119, s.1)

 

    11. Section 18 of P.L.1983, c.362 (C.17:29A-15.1) is amended to read as follows:

    18. Premium credits shall be provided for each deductible and exclusion on personal injury protection coverage offered in accordance with section 13 of P.L.1983, c.362 (C.39:6A-4.3)[, and for the tort limitation options on bodily injury liability coverage offered in accordance with section 8 of P.L.1972, c.70 (C.39:6A-8)]. All premium credits to which this section applies shall be calculated and represented to the insured as a percentage of the applicable premium for each coverage option, and the percentage for each coverage option shall be uniform by filer on a Statewide basis.

    The premium charged for each coverage shall be clearly set forth in any policy or endorsement provided the insured.

    The percentage rate of commission or rate of other compensation payable by an automobile insurer to a producer shall not vary by reason of the selection or nonselection of any option provided in section 13 of P.L.1983, c.362 (C.39:6A-4.3) [and section 8 of P.L.1972, c.70 (C.39:6A-8)].

(cf: P.L.1988, c.119, s.24)

 

    12. (New section) a. For automobile insurance policies in force on January 1, 1998, the policyholders shall be credited with a pro rata reduction reflecting any reduction in claim exposure due to the exemption from tort recoveries for economic loss for bodily injury or death and noneconomic loss pursuant to section 8 of P.L.1972, c.70 (C.39:6A-8).

    b. Insurers shall deliver or send a coverage selection form which includes the new options and coverages provided by P.L. , c. (C. ) (now before the Legislature as this bill) to their policyholders on or before November 1, 1997 and to new applicants for automobile insurance.

    c. Automobile insurance rates shall be reduced by 30 percent effective on January 1, 1998. Automobile insurers shall file their automobile insurance rates in compliance with this subsection on or before November 1, 1997 to be effective January 1, 1998.

 

    13. Section 14 of P.L.1988, c.156 (C.17:29A-15.2), section 14 of P.L.1985, c.520 (C.39:6A-4.5), section 14.1 of P.L.1983, c.362 (C.39:6A-8.1) and section 12 of P.L.1972, c.70 (C.39:6A-12) are repealed.

 

    14. This act shall take effect on January 1, 1998, except that subsection b. of section 5 and section 12 shall take effect immediately and the Commissioner of Insurance may promulgate regulations to implement the provisions of this act at any time.

 

 

STATEMENT

 

    This bill establishes true no-fault insurance in this State for the first time. The bill eliminates lawsuits for noneconomic loss ("pain and suffering") and economic loss for bodily injury and death in regard to automobile accidents. When a person who is covered by personal injury protection coverage is injured by a person with that same coverage, the injured person is prohibited from suing for noneconomic loss or economic loss for bodily injury or death. The bill requires insurers to offer a first-party combined coverage for noneconomic loss and economic loss for bodily injury or death in a range of limits from $15,000 to $1,000,000. After conducting a closed claim study, the Commissioner of Insurance shall establish a schedule of injuries for combined coverage containing the basic benefit for each injury. This schedule shall be available at enhanced reimbursement levels up to three times the scheduled amount and the schedule shall be adjusted for inflation.

    The bill requires insurers to offer at least $1,000,000 personal injury protection medical expense benefits coverage in increments determined by the Commissioner of Insurance; mandates a 30 percent rate reduction; makes modifications in other sections of law to correspond to the major modifications provided by the bill; and phases out the New Jersey Automobile Insurance Risk Exchange and repeals certain sections of the law because the exchange and the sections are no longer applicable after the elimination of the dual tort thresholds for automobile insurance.

    The provisions of the bill take effect on January 1, 1998.

 

 

                             

Eliminates suits for noneconomic loss and economic loss for bodily injury and death in auto accidents; requires insurers to offer scheduled first-party coverage for those losses; reduces rates 30%.