Auto Insurance Reform by ps94506


									NAMED EXCLUDED                                       BASIC POLICY
DRIVER                                               What coverages does the basic policy provide?
                                                     A basic policy offers $15,000 in personal injury protec-
What does it mean to exclude a driver from           tion coverage and includes up to $250,000 of medical
my policy?                                           benefits coverage for catastrophic-type injuries,
If there is a vehicle on your policy that certain    $5,000 property damage liability and an option to
driver(s) do not drive, you can exclude those        purchase $10,000 of bodily injury liability coverage.
driver(s) from being covered for certain insurance   If you purchase a basic policy, you cannot purchase
coverages on that vehicle. The excluded driver(s)
will not have collision or comprehensive cover-
                                                     uninsured/underinsured motorist coverage. Companies
                                                     can, at their option, also offer to sell collision and
                                                                                                                  The Most
age if they drive that vehicle.
                                                                                                                  Frequently Asked
What happens if an excluded driver uses a
vehicle from 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 comprehen-
sive). 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
                                                     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.
                                                     To reduce the number of non-serious and frivolous
                                                                                                                  Questions About
to be covered under the liability and personal       lawsuits, a new “Limitation on Lawsuit” Threshold will
injury protection coverages regardless of who        replace the present Lawsuit Threshold. The new
drives the car.                                      threshold allows you to sue for “pain and suffering”
                                                     should someone else injure you in an accident and
Why would I want to exclude a driver from            the injuries are: serious injuries which your physi-
my policy?                                           cian certifies are permanent in nature or result in
By doing so, your comprehensive and collision        death, dismemberment, loss of a fetus, displaced
premiums on that car would not reflect this          fracture, or significant disfigurement or scarring.
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.

                                                                    Insurance Council of New Jersey &
                                                               New Jersey Insurance Education Foundation
                                                       820 Bear Tavern Road, Suite 303, Ewing, New Jersey 08628
                                                              Learn more about auto insurance reform
                                                                     at the following web sites:
When will I get my 15% reduction?                        or after March 22, 1999 will contain the new policy    vehicles insured and/or the number of drivers
The Automobile Insurance Cost Reduction Act              options and reflect the mandatory rate reduction.      covered by the policy. Others may see an increase
requires insurance companies to reduce their             This means that if your policy expires in the later    because of tier rating. The law mandates that
rates for a variety of insurance policy coverages.       part of April 1999, your renewal policy will likely    implementation of tier rating be “revenue neutral.”
Beginning March 22, 1999, insurance companies            contain the new policy options and reflect the         This means that an insurer cannot collect more
will begin collecting approximately $700 million         mandatory rate reduction.                              in total premium from their policyholders
less in auto insurance premiums. The actual rate                                                                because of tier rating. However, the distribution
                                                       3. If you wish to change your policy before its          of the premiums charged will change. According
reduction for individual policyholders will vary          scheduled renewal to take advantage of the
depending on a number of factors including policy                                                               to the Department of Banking & Insurance, the
                                                          new reforms, you can do so after April 21, 1999.      rates charged for approximately 53 percent of all
changes, levels and types of coverage purchased           Simply contact your insurance agent or insurance
and number of drivers on a policy.                                                                              vehicles insured will remain the same or decrease.
                                                          company. They will advise you on how to request
When will the automobile insurance policy                 for this type of change. Some companies have          Tier rating should not be confused with the
choices and lower rates be available?                     special forms that you will need to read and fill     mandatory premium rate reduction that will
                                                          out. Remember that there are millions of auto         begin on March 22, 1999. The rate reduction
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

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
                                                          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 chosen, changes in the value of

                                                       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.
                                                       Disputes that arise can be resolved by an indepen-
                                                                                                                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.

                                                                                                                For more information on tier rating, call the
                                                                                                                Insurance Council of New Jersey at 609/882-4400
                                                                                                                or visit
                                                                                                                on the Interent.

                                                                                                                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 where
guidelines for the standard treatment of injuries      dent medical review board physician, not insurance
sustained in automobile accidents.                     company employees.                                       your policy would provide up to $250,000 of
                                                                                                                medical coverage.
After months of research and dialogue with state       What if my physician or I disagree with the
boards that license various medical professionals,     treatment authorized by my insurer?                      What if I don’t choose any of these lower
the Department approved a set of medical treatment     Disputes regarding medical treatment provided            limit options?
guidelines and a list of valid diagnostic tests. The   under PIP may be submitted for dispute resolution.       If you do not choose any of the lower limit coverage
new rules ensure that injured auto accident victims    A professional arbitrator will review your dispute.      options, you will automatically be given the
receive prompt medical treatment from responsible      You or your insurance company have the option of         standard $250,000 of personal injury protection
medical professionals while adding reasonable          requesting a review by an independent medical            or “no-fault” medical benefits coverage.
controls to prevent widespread fraud and abuse.        review board. Guidelines established by the
Emergency medical treatment is not affected by         Department of Banking & Insurance assure swift
the guidelines and it remains the policyholder’s       action on medical treatment disputes.

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