Effective July 2024, the state of New Jersey has raised its minimum liability insurance requirement to $1.5 million for large commercial vehicles weighing more than 26,000 pounds. This new requirement, now the highest across the country, doubles the current federal minimum of $750,000. The increased insurance minimum aims to address the rising costs associated with road accidents, including medical expenses, property damage and legal fees, and is designed to ensure adequate compensation for victims with better financial protection for truckers.
The new law has faced strong opposition from trade groups on the grounds of the inevitable increase in insurance premiums for trucking companies, costing “at least $20,000 to $40,000 or more each year, up to a 20% increase” according to Tracy Denora, the executive director of the New Jersey Warehouse and Movers Association. Additionally, it has been unclear whether the law applies only to New Jersey-based carriers or also to out-of-state carriers operating within the state. Justin Zimmerman, the acting commissioner of the New Jersey Department of Banking and Insurance, offered additional clarification in a bulletin stating, “the Act amended existing law to increase the minimum limits of liability insurance coverage that must be maintained by owners and/or operators of commercial motor vehicles registered or principally garaged (i.e., base-plated or at home) in New Jersey engaged in intrastate commerce.”
What this means for actuaries:
If they haven’t already, actuaries should be assessing the risk exposure and updating assumptions and models, as necessary. It’s also important to consider the broader implications of this law. The more immediate concern is its requirements on commercial vehicles that cross into New Jersey occasionally. A following concern is its ripple effect on other states who may follow suit in the future. These legal challenges have the potential to lead to higher defense and legal costs, which actuaries should consider.
Sources:
- https://www.freightwaves.com/news/new-jersey-hikes-truck-insurance-minimum-to-1-5m-higher-than-most-states.
- https://www.truckinsurancenitic.com/blog/new-jersey-minimum-truck-insurance.html
- https://www.ttnews.com/articles/new-jersey-raise-insurance.
- https://www.commerceexpressinc.com/regulation-new-jersey-law-raises-trucking-insurance-minimum-to-1-5-million/.
- https://landline.media/new-jersey-offers-clarification-on-minimum-insurance-law/.
