FOR IMMEDIATE RELEASE – March 15, 2022
The Perfect Storm
TRENTON, NJ – March 15 , 2022. Having thought we had seen it all in our advocacy for fairness in the rates drivers pay for car insurance, we now face new challenge in the push to ban discriminatory practices in rate-setting.
The Senate bill (S470) recently proposed by Senator Nicholas Scutari, which would increase the minimum coverage drivers must purchase to cover themselves in the event of a car accident, is more than mind-boggling. It’s truly a slap in the face to New Jersey residents who are responsible drivers yet whose only crime is that they may not be among the top half of the income bracket.
Recent studies show the true disproportionate impact Bill S470 would have on minorities and the poor. Since these individuals have fewer assets, they more often than not buy the least amount of coverage permitted by the state under a standard policy. So those who currently choose the $15,000 limit will see their rates increase for liability coverage by 65%. On the contrary, the wealthy who already purchase higher levels of coverage in excess of $50,000 will see no change in premium. Yes, that’s right. Lower income drivers who can least afford it will carry the brunt of this rate increase.
If that isn’t bad enough, this comes at a time when New Jersey car insurance companies, such as GEICO, Progressive, Liberty Mutual and others, are allowed to charge drivers more on the basis of their education, occupation and credit score regardless of driving history – the same group that will be required to purchase more coverage. Talk about kicking someone when they are already down and looking to save money.
The sad irony is that a separate bill – one designed to create fairness by banning the discriminatory use of income proxies, one passed by the senate in January 2021, and one supported by countless minority and consumer advocate organizations – languished in the state house assembly where it eventually died. Even countless letters from everyday New Jersey residents to our legislators fell on deaf ears. It’s truly heartbreaking to see the impact of the lives of many low-income families.
It is worth considering the true purpose of insurance – to protect against a future unpredictable loss and share such risks among a group of other members so that one unfortunate event will not financially devastate any one individual. Instead, the pooling of these risks allow affordable protection to be spread across an entire group. Therefore, in essence, the best measurement of this centuries-old concept and a successful mandated insurance market is the ability for everyone to afford a required insurance policy.
More specifically, the purpose of liability insurance is to protect a driver if they are sued by someone in the event of a car accident. On the one hand, there is already a system in place for people who may be injured in an accident by a driver that doesn’t have a lot of insurance. Uninsured motorist insurance was created just for this reason and wealthier individuals can simply buy more coverage to compensate themselves if a bonafide injury occurs as a direct result of another driver that has inadequate insurance.
Yet, what about people who are not in the upper echelon and don’t have many assets? Studies have shown that in lower income households the largest asset is one’s car. So given that there is uninsured/underinsured motorist coverage which offers drivers the opportunity to be made “whole” if injured in a car accident, why would we force these individuals to buy more insurance? There is only one reason really… so plaintiff attorneys, who earn their keep based on how much they recover on behalf their client in a lawsuit, can make more money themselves.
So, at a time when the use of income proxies continues in New Jersey, the newest bill threatens the future affordability for those same drivers even more.
Are you equally as perplexed and downright appalled? This is an issue that impacts a great number of our residents and where every person can make a difference. We strongly urge you to learn more about these unfair practices at https://unjustcarinsurance.com and contact your state legislators today. Ask them to put the brakes on raising the minimum coverage drivers must purchase to cover themselves in the event of an accident and instead pass a law to ban the discriminatory use of income proxies.
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About The African American Chamber of Commerce of New Jersey
The AACCNJ performs an essential role in the economic viability of New Jersey. While providing a platform for New Jersey’s African American business leaders to speak with a collective voice, the AACCNJ advocates and promotes economic diversity fostering a climate of business growth through major initiatives centering on education and public policy. The Chamber serves as a proactive advocacy group with a 501©(3) tax exemption, which is shared by the National Black Chamber of Commerce.
About The NAACP
The National Association for the Advancement of Colored People (NAACP) is the nation's oldest, largest and most widely recognized civil rights organization. Our mission is to ensure the political, educational, social, and economic equality of rights for all persons and to eliminate racial hatred and ra
