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Continuing his landmark efforts to reform auto insurance in New Jersey, Governor James McGreevey announced this week that the “Dollar-a-Day” auto insurance policy, designed to help uninsured drivers with limited means get affordable insurance, is now available.
“If you’re on the road in New Jersey without auto insurance, you’re breaking the law,” said McGreevey. “We knew that we had to do more to help those with limited means drive legally. The Dollar a Day policy does that. As we work to repair the auto insurance market, we are making sure that drivers who obey the law are not bearing the burden of those who do not.”
The Department of Banking and Insurance approved forms for the “Dollar-a-Day” policy Oct. 1. The policy, sold through the Personal Auto Insurance Plan (PAIP), was made available on a test basis for several weeks. This allowed agents enough time to become familiar with the Medicaid cards that will identify who is eligible. To date, about a dozen have reportedly been sold.
“We recognized that a variety of policy choices were needed to meet the needs of all New Jersey drivers,” said Commissioner Holly Bakke. We have worked with agents and companies to make sure consumers are aware of the auto policy options available to them.”
McGreevey’s auto insurance reform plan reportedly calls for reducing the ranks of uninsured motorists in several ways:
·Creation of the Special Auto Insurance Policy. The “Dollar-a-Day” policy makes $15,000 worth of emergency room coverage available for $360 a year, or $365 if purchased in two six-month installments. This policy is available only to those drivers eligible for Medicaid.
·Broader Availability of the Basic Policy, a limited-liability coverage plan created by the Legislature in 1998. The Basic Policy has become more available in the past year, due to publicity and enforcement actions by the Department of Banking and Insurance.
·Impoundment of Uninsured Vehicles. Governor McGreevey’s auto reform plan calls for more aggressive efforts to impound uninsured vehicles after June 9, 2004. The reform legislation allowed time for the market to recover and for the “Dollar-a-Day” policy to be implemented, so that uninsured motorists have the opportunity to get legal.
In addition, approximately 31,000 vehicles were insured last year through the “Last Chance” program, which waived certain underwriting surcharges to encourage uninsured drivers to get legal. The Motor Vehicle Services Commission is currently offering its own amnesty program that waives separate surcharges that can make it more difficult for drivers to get insured after a lapse in coverage.
“Dollar-a-Day” policies address the chief cost an uninsured driver places on the system: the cost of emergency room care after an accident. The policy provides $15,000 worth of emergency care and $250,000 worth of medical coverage if the driver suffers a catastrophic injury. The driver’s Medicaid benefits provide any non-emergency medical care. “Dollar-a-Day” provides a higher and more certain level of reimbursement for trauma centers, which helps reduce the cost of Personal Injury Protection (PIP) for other drivers.
A portion of each “Dollar-a-Day” policy will go toward a fund that compensates drivers who are injured by uninsured motorists. The policy also provides a $10,000 death benefit.
“Until now, drivers who are uninsured because they are poor have not had a way to contribute to the cost of New Jersey’s trauma system. Through Dollar-a-Day, we will change that,” said Bakke. “Our outstanding system means that no driver is ever more than 30 minutes from a trauma center, giving New Jersey one of the lowest fatal accident rates in the nation.”
Bakke said low-income drivers who do not have Medicaid should consider the Basic Policy, mandated by legislation in 1998. It offers minimum limits of liability and PIP coverage, as well as coverage for damage to another driver’s car in the event of an accident. Basic Policies can be sold with or without comp and collision coverage. “The cost is often hundreds of dollars less than a Standard Policy,” added Bakke.
“By expanding the ways in which drivers can be on the road legally, we are making auto insurance fair for every New Jersey driver,” said McGreevey. “Anything we do to help uninsured drivers pay their fair share helps hold the line on costs for all of us.”
“The high cost of auto insurance is a burden on all New Jersey drivers, but the greatest impact is in our poorer communities, where residents sometimes have to meet the high costs associated with operating a car because it is a necessity for continued employment,” said Senator Rice, D-Essex. “Many poorer drivers in our State either go without auto insurance completely, making them a liability on the road, or have to go without in other areas of basic need, such as health care or rent. The new dollar-a-day policies will grant qualified poorer drivers a break.”
“Offering ‘dollar-a-day’ auto insurance will increase the number of legal New Jersey drivers on our state’s highways,” added Assemblyman Neil Cohen. “This inexpensive coverage also will save uninsured residents from the inconvenience and embarrassment of having their vehicles impounded and the expenses associated with this action.”
Tuesday’s announcement is reportedly yet another step in the Governor’s efforts to reform auto insurance in New Jersey.
Five months ago, the Governor signed into law an auto insurance reform package that is working to promote more choices and more competition. Already, the Governor has announced the arrival of Mercury Insurance, the first new auto insurance company in seven years. He has also announced Allstate’s plans to add 15 to 20 new agents, serving an estimated 20,000 more drivers. Further, he announced State Farm’s voluntary rate reduction, which will save 500,000 drivers an average of $70, and most recently State Farm’s decision to suspend its practice of dropping coverage for 4,000 New Jersey drivers. United Services Automobile Association (USAA) also agreed to reduce its rates by five percent.