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NJ DEFENSIVE DRIVING MANDATED RATE REDUCTION

When will I get my 5% reduction?

The Auto Insurance Cost Reduction Act requires insurance companies to reduce their rates for a variety of insurance policy coverages. Beginning March 22, 1999, insurance companies will begin collecting approximately $700 million less in auto insurance premiums. The actual rate reduction for individual policyholders will vary depending on a number of factors including policy changes, levels and types of coverage purchased and number of drivers on a policy.

When will the automobile insurance policy choices and lower rates be available?

There are three ways you can benefit from the implementation of the various reforms and the mandatory rate reduction:

1. Purchase a new automobile insurance policy after March 22, 1999. All policies sold after this date will contain the new policy options and reflect the mandatory rate reduction.


2. Automobile insurance policies that are processed for renewal by your insurance company on or after March 22, 1999 will contain the new policy options and reflect the mandatory rate reduction. This means that if your policy expires in the later part of April 1999, your renewal policy will likely contain the new policy options and reflect the mandatory rate reduction.
   
3. If you wish to change your policy before its scheduled renewal to take advantage of the new reforms, contact your insurance agent. Remember that there are thousands of auto insurance policies and there are likely to be a high number of customer inquiries and requests for policy changes

Why have some people’s rates increased even though they are supposed to get a decrease?

Some people will see an increase in their premium because of a number of factors. These include amounts and types of coverage, changes in the value of vehicles insured and/or the number of drivers on covered by the policy. Others may see an increase because of tier rating. The law mandates that implementation of tier rating be "revenue neutral." This means that an insurer cannot collect more in total premium from their policyholders because of tier rating. However, the distribution of the premiums charged will change. According to the Department of Banking & Insurance, the rates charged for approximately 53 percent of all vehicles insured will remain the same or decrease.

Tier rating should not be confused with the mandatory premium rate reduction that will begin on March 22, 1999. The rate reduction is part of a reform law (Automobile Insurance Cost Reduction Act or AICRA) that became law in May 1998 and will reduce premiums by approximately $700 million.

MEDICAL TREATMENT PROTOCOLS AND DIAGNOSTIC TESTS
Will my medical care for auto accident injuries be handled differently?

In an effort to combat tens of millions of dollars of fraud and abuse in the state’s auto insurance system, the reform law required the New Jersey Department of Banking & Insurance to establish guidelines for the standard treatment of injuries sustained in automobile accidents.

After months of research and dialogue with state boards that license various medical professionals, the Department approved a set of medical treatment guidelines and a list of valid diagnostic tests. The new rules ensure that injured auto accident victims receive prompt medical treatment from responsible medical professionals while adding reasonable controls to prevent widespread fraud and abuse.

Emergency medical treatment is not affected by the guidelines and it remains the policyholder’s right to choose his or her own physician.

Will my physician lose the ability to exercise independent judgement?

No, your physician and other health care professionals will determine the medical necessity of treatment. An independent medical review board physician, not insurance company employees, can resolve disputes that arise.

What if my physician or I disagree with the treatment authorized by my insurer?

Disputes regarding medical treatment provided under PIP may be submitted for dispute resolution. A professional arbitrator will review your dispute. You or IFA has the option of requesting a review by an independent medical review board. Guidelines established by the Department of Banking & Insurance assure swift action on medical treatment disputes.

NAMED EXCLUDED DRIVER
What does it mean to exclude a driver from my policy?

If there is a vehicle on your policy that certain driver(s) do not drive, you can exclude those driver(s) from being covered by certain insurance coverages on that vehicle. The excluded driver(s) will not have collision or comprehensive coverage if they drive that vehicle.

What happens if excluded driver uses a vehicle for which they have been excluded?

If the "named excluded driver" operates a vehicle that he/she has been excluded from, and is involved in an accident there are no physical damage coverage benefits (collision or comprehensive). The vehicle would continue to be covered under the liability and personal injury protection coverages regardless of who drives the car.

Does the excluded driver provision apply to the rest of my policy too?

Only physical damage coverage benefits (collision or comprehensive) would not be available for the "excluded driver" on the specific vehicle designated by you. The vehicle would continue to be covered under the liability and personal injury protection coverages regardless of who drives the car.

Why would I want to exclude a driver from my policy?

By doing so, your comprehensive and collision premiums on that car would not reflect this person’s claim experience, driving, record and rating classification. You may be able to reduce your premiums by excluding certain drivers from driving specific vehicles.

OPTIONAL LOWER PIP LIMITS
What happens if I choose lower PIP limits and I am involved in an accident that incurs medical bills in excess of my coverage?

Your policy will only cover you up to the limit you select and you would be responsible for paying the rest of the cost of medical treatment except in cases of certain catastrophic injuries in which case your policy would provide up to $250,000 of medical coverage.

What if I don’t choose any of these lower limit options?

If you do not choose any of the lower limit coverage options, you will automatically be given the standard $250,000 of personal injury protection or "no-fault" medical benefits coverage.

BASIC POLICY
What coverages does the basic policy provide?

A basic policy offers $15,000 in personal injury protection coverage and includes up to $250,000 of medical benefits coverage for catastrophic-type injuries, $5,000 property damage liability and an option to purchase $10,000 of bodily injury liability coverage. If you purchase a basic policy, you cannot purchase uninsured/underinsured motorist coverage. Companies can, at their option, also offer to sell collision and comprehensive coverages with this type of policy.

NEW THRESHOLD TO LIMIT LAWSUITS
What are the changes regarding my right to sue for pain and suffering?

Since 1989, New Jersey policyholders have been able to choose between Bodily Injury Liability coverage with a Lawsuit (or Verbal) Threshold and a No Threshold option. Your selection of one of these thresholds determines your ability to sue for "pain and suffering" for injuries you sustain in an auto accident.

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