By Bradfor J. Lachut, Esq.
2015 was the second year of New Jersey’s 2014-15 legislative cycle; the conclusion of this year’s legislative activity is the perfect opportunity to reflect on PIANJ’s legislative accomplishments. A number of issues were tracked by PIANJ and multiple items of legislation were acted on. PIANJ worked to support the passage of some bills and also worked to amend some problematic legislation.
Certificates of insurance
Certificates of insurance has been one of PIANJ’s signature issues for the past few years. 2015 proved to be the year that PIANJ was able to push the certificates boulder up and over the mountain. In January 2014, two bills were introduced addressing certificates of insurance. A-1072 was introduced in the Assembly by Assemblyman Gary Schaer, D-36, and referred to the Assembly Financial Institutions and Insurance Committee. In the Senate, S-533 was introduced by Sen. Nia Gill, D-34, and referred to the Senate Commerce Committee. Both bills would have prohibited a person from preparing, issuing, requesting or requiring the issuance of a certificate of insurance on property, operations or risks located in New Jersey unless that form has been filed with the Department of Banking and Insurance and makes it a crime to alter or modify a filed form or to prepare, issue, request or require the issuance of a certificate that contains any false or misleading information concerning the referenced policy or insurance.
Shortly after the introduction of A-1072 and S-533 and as part of PIANJ’s ongoing legislative efforts to clarify limitations on the use of certificates of insurance, representatives met with Assemblyman Craig J. Coughlin, D-19, chairperson of the Assembly Committee on Financial Institutions and Insurance. PIANJ representatives discussed the need for the passage of certificates of insurance legislation to protect insurance agents from the unreasonable demands of third-party contractors or certificate holders asking agents to create certificates that purport to amend, expand or alter the underlying policies.
While A-1072 and S-533 remained in committee, PIANJ continued to work behind the scenes with other stakeholders to reach consensus on certificates of insurance. This hard work resulted in the introduction of new certificates of insurance legislation (A-4705/S-3270). PIANJ strongly supported the new legislation recognizing it as a vital piece of consumer protection legislation in regulating the use of certificates and clarifying their purpose and use.
In addition to regulating the use of certificates, the bills provided an important provision that provided the Department of Banking and Insurance with enforcement authority to prevent fraud. Under the legislation, it would be against the law to request the issuance of certificates that contain any false or misleading information, a request that is often made of many insurance agents by insureds or other third parties.
The bills’ provisions apply to all certificates of insurance issued in connection with property, operations or risks in New Jersey, making any false or misleading information in a certificate a violation of the state’s Insurance Fraud Act.
The bills would ensure that certificates would be used for their intended purpose and help prevent their misuse in the marketplace. These clarifications benefit everyone who utilizes proof of insurance documents, including consumers, insurance producers, commercial lenders and insurance companies.
PIA testified in favor of the legislation at committee hearings and both A-4705 and S-3270 were successfully voted out of the Assembly Financial Institutions and Insurance Committee and the Senate Commerce Committee, respectively. Shortly thereafter, the certificates of insurance legislation passed both the Assembly and Senate on the same day. Gov. Chris Christie then signed the legislation into law in January of 2016. The law will take effect on April 10, 2016.
In February 2014, a bill (A-2281) that would include reverse-rate evasion as a form of insurance fraud, was introduced in the Assembly. Reverse-rate evasion is a practice whereby New Jersey residents obtain automobile insurance in another state, even though their principal residence is in New Jersey or they principally garage their vehicle in New Jersey. Under the bill an individual who maintains a principal residence in New Jersey or has a motor vehicle principally garaged in New Jersey and who drives on the public highways of New Jersey, but has the motor vehicle insured by a policy issued under the laws of another state is committing insurance fraud if that person obtained the insurance by knowingly preparing or making any written or oral statement to an insurance company in that other state falsely indicating that the person to be insured: 1) maintains a principal residence in the other state when, in fact, that person’s principal residence is New Jersey; or 2) has the motor vehicle principally garaged in the other state when, in fact, that person has his motor vehicle principally garaged in New Jersey. A similar bill (S-1727) was introduced in the Senate in March 2014. In September 2014, A-2281 passed the Assembly (72-0-0) and was sent to the Senate for their consideration. The Senate took up the bill in March 2015 and based the measure by a 39-0 vote. Subsequently, Gov. Christie signed the bill into law in May 2015.
Insurance requirements for home-elevation contractors
Following the devastating events of Superstorm Sandy, numerous bills were introduced designed to protect and inform consumers interested in mitigating the risks of another flood. One such bill was the PIANJ-supported S-942, which would require all home-elevation contractors to register with the state and certify that they have the requisite amount of experience in the elevation of homes. Under the bill, home-elevation contractors must carry a general liability policy in the minimum amount of $500,000 per occurrence. Home-elevation contractors also must maintain insurance in the amount of $1 million to cover damages or losses to the homeowner resulting from the home elevation. In addition, the bill gives authority to the director of the Division of Consumer Affairs, in consultation with the DOBI, to promulgate regulations requiring additional insurance. The measure passed both the Assembly (72-3-1) and Senate (36-0). The governor signed the bill into law in August 2014.
Digital proof of auto insurance
Entering 2015, 37 states allowed proof of auto insurance coverage to be displayed on electronic devices. In 2015, New Jersey became the 38th state to do so. A-3905 amended New Jersey law to allow motorists to display digital proof of insurance on electronic devices. The bill was passed both the Assembly (70-0-a) and the Senate (40-0) in the January and March, respectively, without opposition. The measure was then signed by Gov. Christie in May 2015.
Ride hailing has been a dominate issue for the insurance industry the past few years. With much controversy swirling around when coverage is present and how much coverage is available when engaging in ride hailing, it was inevitable that the Legislature would get involved. Multiple bills were introduced on the issue that would have regulated background checks on drivers, vehicle inspections and, of course, insurance requirements. While no legislation on ride hailing was passed during the 2014-15 session one bill emerged as a likely candidate to get passed during the 2016-17 session. The bill, A-4475, was based on the model ride-hailing bill developed by the National Conference of Insurance Legislators earlier this year. Unlike other ride-hailing legislation introduced in the state, this bill addressed only the insurance issues surrounding the topic. Under the bill, whenever a Transportation Network Co. driver is logged on to receive hails, but not yet engaged in a prearranged ride, insurance must be in place to provide at least $50,000 for death and bodily injury per person; $100,000 for death and bodily injury per incident; and $25,000 for property damage. Once a TNC driver is engaged in a ride, the coverage requirements increase to at least $1 million for death, bodily injury and property damage. In both scenarios, insurance coverage may be satisfied either by the TNC driver, the TNC or some combination of both. The bill is sponsored by Assemblyman John Wisniewski, D-19, chairperson of the Assembly Transportation Committee and Assemblyman Craig Coughlin, D-19, chairperson of the Financial Institutions and Insurance Committee. 3/16