New Jersey Lawmakers Raise Minimum Insurance
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The New Jersey Legislature has passed a law requiring heavy trucks to carry a minimum $1.5 million in liability insurance — double the current federal minimum insurance requirement of $750,000.
Under the new law, the owner or a registered owner of a commercial motor vehicle weighing more than 26,000 pounds will be required to maintain motor vehicle liability insurance coverage of at least $1.5 million to insure against loss resulting from liability imposed by law for bodily injury, death and property damage.
Earlier attempts to pass the law, which goes into effect July 1, were hung up in the Legislature for more than a year before the bill was signed into law by Democratic Gov. Phil Murphy on Jan. 16. Its primary sponsor was Nicholas Scutari, president of the state’s senate, who also is an attorney.
The current Federal Motor Carrier Safety Administration standard requiring carriers to maintain a minimum of $750,000 in liability insurance has been in place since 1985. Although the agency has kicked around the notion of raising the insurance minimum requirement, in a 2022 report it concluded it could not find the justification to do so.
“In order for FMCSA to adequately assess the sufficiency of the financial responsibility requirements, the agency would need access to more detailed information from the insurance industry, including anonymized claims data,” the report said.
Although there are clear indications that litigation jury verdicts and settlements are on the rise, “catastrophic motor carrier crashes are relatively rare,” according to a 2013 study by the John A. Volpe National Transportation Systems Center cited in the FMCSA report.
The law has faced strong opposition from such trade groups as American Trucking Associations, the New Jersey Motor Truck Association, the Truck Renting and Leasing Association, the New Jersey Warehouse and Movers Association, and others.
It does not specifically say whether the law is intended to just cover New Jersey-based carriers, or interstate carriers conducting business in the state.
ATA has called the new law, at a minimum “bad policy,” and has cautioned if interstate truckers passing through or doing business in the state were subject to the law it could result in a legal challenge.
Jennifer Blazovic, interim executive director of the state trucking association, said members have not yet determined how the bill will impact motor carriers in the state. “We’re still working on it.”
The group has from the beginning opposed the new law.
Blazovic said her association is still trying to get firm answers as to who must carry the higher requirement — New Jersey-based carriers or any carriers traveling through the state.
“As far as the impact goes, the majority of our members have $2 million or more in insurance,” Blazovic said. “So the impact on our members might not be as great as with others.”
“There’s just no precedent on this,” said ATA General Counsel Richard Pianka. “There’s nothing very clear in statute. We don’t really know what the scope of the law is even meant to be. But it appears to be meant for vehicles registered or principally garaged in New Jersey.”
Pianka added, “We’re not in favor of arbitrary increases. If the data shows that they should go up, then that’s one thing. But it’s another thing if the plaintiff’s bar wants to make sure everybody’s pockets are bigger when they want to bring a claim. That’s certainly what drives a lot of the discussion around this issue.”
Denora
Tracy Denora, executive director of the New Jersey Warehouse and Movers Association, said it’s very likely the new law will cause insurance premiums to rise.
“It’s going to cost at least $20,000 to $40,000 or more each year, up to a 20% increase,” Denora said. “What’s going to happen now is that when motor carriers are sued, plaintiff attorneys will be going for higher verdicts and settlements. It’s going to especially hurt small mover motor carriers.”
“If the new law applies to out-of-state carriers doing business in the state it could be open to court actions since it would be in violation of FMCSA’s requirement,” said Greg Feary, managing partner of the Indianapolis-based transportation law firm of Scopelitis, Garvin, Light, Hanson & Feary. “So if they enforce it by stopping and impounding vehicles or fining carriers, I think that’s a problem.”
“Any increase in these minimum insurance levels will lead to a dramatic increase in insurance premiums for all trucking companies,” the Truck Rental and Leasing Association wrote in a letter last month to Scutari, a Democrat. “FMCSA has set the national standards of interstate commerce based on a series of studies and statistics that find that over 99% of all accidents are covered by the $750,000 limit.”
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