As many as 1.2 million New Jersey drivers will begin paying more for their auto insurance in the new year under a bill Gov. Phil Murphy signed into law that increased the minimum amount of liability insurance drivers need to have in the state.
Drivers affected by the controversial law can expect to pay around $125 more a year per car for insurance, according to industry officials. It goes into effect on New Year’s Day.
The new law hiked the minimum amount of liability coverage previously allowed from $15,000 to $25,000. Baked into the legislation is another increase in minimum liability coverage to $35,000 in 2026, so drivers can expect to pay even more in three years.
Industry officials said at the time the bill was debated it would affect 1.1 million drivers. But the state’s Department of Banking and Insurance, which has oversight over insurers, said there’s an estimated 1.1 million to 1.2 million vehicles with the current minimum coverage.
Overall, there are 5,970,000 private passenger vehicles insured in New Jersey, according to DOBI.
Proponents of the law argued victims of crashes haven’t always been able to have their medical bills covered in full because of the low coverage option.
Gary LaSpisa, the vice president of the Insurance Council of New Jersey, said at the time the average settlement for accidents with injuries is $18,000. The group supported the hike on the minimum coverage based on the gap in what’s allowed and the average settlement rate in the state, but it ultimately withdrew support for the bill because of the automatic increase in 2026.
The measure was highly controversial when it was debated in Trenton in June.
New Jersey’s most powerful state lawmaker, state Senate President Nicholas Scutari, introduced more than a half-dozen bills that opponents warned would force 1.27 million drivers to pay as much as $350 more a year.
His original measures would have required drivers to select plans with a minimum of $250,000 in personal injury protection, commonly called PIP. Another bill would prohibit motorists from using private health insurance coverage as the primary payer for personal injury protection coverage in exchange for an auto insurance discount.
He ultimately dropped his more ambitious package of bills in support of the more modest increase. But he came out swinging in defense of it when lawmakers faced pushback from people who argued it wasn’t the right time to raise rates on so many drivers.
“This is insane,” Scutari, D-Union, said during a committee hearing on the bill in June. “The people of New Jersey need this Legislature to protect them from themselves because we tell them what they need to get, and that’s what they get.”
He argued taxpayers are the ones who are stuck with the costs to “subsidize unpaid medical bills” and “everything that the insurance industry doesn’t cover” in the minimum policy.
But even some members of Scutari’s own party expressed skepticism about the timing of the rate hike when it was debated.
“My sole concern is the timing,” said Assemblyman John McKeon, the chairman of the Assembly committee that voted to send the bill to the full Assembly for a vote. But McKeon, along with three other Democratic lawmakers, said at the time they may vote against it when it hit the floor.
But that never happened.
It passed the state Senate by a 25-13 vote without any discussion and by 44-29 in the Assembly after it hit a minor speed bump when two Republican lawmakers spoke against it. It cleared both Democratic-controlled chambers largely along party lines.
“This is a really, really bad bill,” Assemblyman Robert Auth, R-Bergen, said at the time. “Let’s give the poor, middle-class, and working-class families in New Jersey a break for crying out loud. Give them a damn break.”
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