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New Jersey Increases the Amount of Liability Insurance Required for Commercial Vehicles
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On January 16, 2024, Governor Murphy signed into law a bipartisan bill, NJ S2841 2R, raising the minimum amount of liability coverage required for commercial motor vehicles. The bill requires every commercial motor vehicle either registered or principally garaged in New Jersey to maintain motor vehicle liability insurance at different minimum levels depending on the weight of the vehicle. Commercial trucks weighing between 10,000 pounds and 26,001 pounds, which include most medium duty trucks, will be required to maintain liability insurance coverage of at least $300,000. Commercial trucks at or over 26,001 pounds, which include most long-haul heavy-duty vehicles, will be required to maintain coverage of at least $1,500,000, double the prior level and the federal minimum set at $750,000.
The type of liability coverage remains unchanged, with commercial vehicles required to insure against loss resulting from liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of a motor vehicle. One of the sponsors of the bill, New Jersey Senate President Nick Scutari, stated that the changes to the minimum limits are “common-sense reforms to protect consumers from the insurance companies”, reasoning that lower premiums have kept lower quality, more dangerous trucking companies in business.
The Federal Motor Carrier Safety Administration (FMCSA) carries its own minimum insurance requirements. Besides vehicles carrying hazardous materials other than oil, trucks over 10,000 pounds must maintain trucking liability insurance of at least $750,000, while those under 10,001 pounds are required to maintain at least $300,000 in coverage. New Jersey’s new law differs in that it has a lower minimum requirement for trucks between 10,000 pounds and 26,000 pounds, but a larger requirement for trucks over 26,000 pounds.
The new law takes effect on July 16, 2024, and will apply to new and renewal policies issued on or after that date. While the effect on premiums remains unknown, Reliance Partners, an insurance agency specializing in insurance for the logistics industry, has estimated that every $1 million increase in the minimum requirement would increase premiums by 40% to 60%. Thus, owners of large commercial vehicles registered or principally garaged in New Jersey will likely see increases in premiums and may opt to change registrations or move to other states such as Pennsylvania or Delaware which have minimum limits mirroring the federal minimum of $750,000.
