New Jersey has created chaos with its new $1.5 million liability insurance requirement. Because of the language of the New Jersey law and states’ rights to set their own minimum coverages, the insurance companies are each addressing the issue differently. In case you were not aware, states set their own minimum coverage amounts for auto insurance coverages. This is the first effort I know of for commercial auto coverage where a state requires more than the federal minimum. In some ways, this is similar to the California Air Resources Board (CARB) raising its emissions standards in California beyond the Environmental Protection Agency (EPA) national standards. These aspects weigh heavily toward understanding why this has caused such a horrible problem.
The new law raises the minimum amount of liability coverage for commercial motor vehicles in New Jersey to $1,500,000. This new law requires every owner or registered owner of a motor vehicle registered or principally garaged in the state to maintain motor vehicle liability insurance coverage, under provisions approved by the Commissioner of Banking and Insurance, insuring against loss resulting from liability imposed by law for bodily injury, death, and property damage sustained by any person arising out of the ownership, operation, maintenance, or use of a motor vehicle.
The new law states that coverages shall be: (1) an amount or limit of $15,000 exclusive of interest and costs, on account of injury to, or death of, one person, in any one accident; (2) an amount or limit, subject to such limit for any one person so injured or killed, of $30,000 exclusive of interest and costs, on account of injury to or death of, more than one person, in any one accident; (3) an amount or limit of $5,000 exclusive of interest and costs, for damage to property in any one accident; and (4) for a commercial motor vehicle, an amount or limit of $1,500,000 exclusive of interest and costs, on account of injury to or death of, one or more persons in any one accident or for damage to property in any one accident.
The literal interpretation of this language makes it crystal clear that if a vehicle is registered to operate within New Jersey it is subject to this law. All IRP (International Registration Plan) registered vehicles are in fact registered in the state of New Jersey. This language does not differentiate between intrastate or interstate vehicles. To put it another way, it doesn’t exempt IRP apportioned registrations from the law.
To the best of my knowledge, New Jersey has not made any public statement as to how the law will be enforced. Therein lies one hurdle that is causing different approaches by the insurance companies. Some insurance companies expect that New Jersey will enforce the law as it is literally written. That is to say, as I have described above. Other insurance companies hope/anticipate that New Jersey will announce that this is only for New Jersey-domiciled owners and/or registered vehicles. Still other insurance companies expect that the courts will decide how this law is enforced. Some of those insurance companies are sitting on the sidelines, waiting to see who hits this landmine first, and hoping it’s not one of their insureds.
Why does all this matter? Because it leaves the door wide open for an insurance stalker (aka a lawyer) to argue that an IRP apportioned carrier is in fact, while in New Jersey, required to have the New Jersey minimum coverage and attempt to force an insurance carrier to provide a settlement to an injured third party of $1.5 million instead of the FMCSA required minimum of $750,000.
As an example, let’s say for the moment that New Jersey announces this new minimum liability coverage requirement is only being enforced for New Jersey-domiciled owners and registered vehicles. Then, say, six months later, a Pennsylvania IRP-registered trucking company is at fault for an accident in New Jersey that causes bodily injury and property damage to an injured third party. As for my example, is there any doubt that even a reasonably competent insurance stalker (lawyer) could successfully argue that the injured third party, according to the literal reading of the law, was legally due the $1.5 million of minimum liability coverage from the insured (trucking company from PA) and their insurance company?
Many in the insurance industry believe that this is likely to be enforced for everyone with a commercial vehicle registered in the state no matter if it’s intrastate or interstate. Even if not immediately, it is expected that eventually it will be required for all who cross into New Jersey. As for me, I will treat New Jersey just like I did California when CARB implemented such outrageous emissions regulations for California. New Jersey is another page I’ve torn out of my atlas, because it’s about time the trucking industry starts charging a surcharge for entering either of these two blue states!
Moving on to a different topic, the operator of a trucking company who was accused of lying about his business’ safety rating has been convicted of making false statements to the Federal Motor Carrier Safety Administration of the U.S. Department of Transportation. Convicted by a federal jury, 42-year-old Tony Kirik – aka Anatoliy Kirik – could face up to five years in prison and a $250,000 fine.
Kirik, who operated a multiple million-dollar business called Dallas Logistics, submitted false statements about its safety rating when applying to the FMCSA for authority to operate as an interstate carrier, according to the U.S. Attorney’s Office. He also provided false statements and information regarding the company’s safety violations when undergoing compliance reviews and safety audits by the FMSCA, the U.S. Attorney’s Office reported.
Assistant U.S. Attorneys Richard Resnick and Melissa Marangola, who handled the prosecution, said Kirik also started new companies using various family members’ names and an employee’s name to make it look like those companies were independent and not affiliated with the business that incurred the negative safety ratings. Kirik is to be sentenced on October 28, 2024, before U.S. District Judge Charles Siragusa. The lesson here: if you break the law, expect to be prosecuted.
