AIA: N.J. Supreme Court Decision Will Roll Back Auto Insurance Progress

The American Insurance Association (AIA) said Tuesday’s decision by the New Jersey Supreme Court in DiProspero v. Penn jeopardizes many of the cost-savings that New Jersey consumers are enjoying and undermines the state’s most positive market for consumers and insurers in decades.

Additionally, the ruling goes against the legislative intent of the General Assembly which had decided on two separate occasions to leave the verbal threshold intact. AIA filed an amicus brief with the Court on this case in conjunction with the Property Casualty Insurers Association of America and the Insurance Council of New Jersey.

“The Court’s ruling flies in the face of clear legislative intent and effectively nullifies the choices New Jersey drivers made to achieve lower rates,” stated David Snyder, AIA vice president and assistant general counsel.

Before today, New Jersey drivers reportedly had a meaningful choice. They could opt to pay full premium in return for an unfettered ability to bring pain-and-suffering claims no matter how minor the injury or they could receive a substantial premium discount in exchange for a limitation on the ability to sue if injuries are not permanent and serious.

Even when the limitation lawsuit option was selected, in exchange for a discounted premium, a claimant maintained several other recovery rights. In fact, the ability to sue for pain-and-suffering damages in cases of serious and permanent injury remained in all instances. The limitation on lawsuit option only restricted the ability to recover pain-and-suffering damages in minor injury cases.

“The Supreme Court has effectively gutted the verbal threshold and potentially opened up the flood gates for litigation in non-serious injury cases,” explained Snyder. “This ruling wipes out many of the possible savings realized by the nine-out-of-ten drivers who chose to receive discounted premiums in return for limiting their ability to sue for pain and suffering in minor injury cases.”

“In 2003, Governor McGreevey and the Legislature took a bold step to implement urgent reform legislation which, along with critical cost savings that were enacted in 1998, has been successful in helping to stabilize New Jersey’s automobile insurance system,” explained Snyder. “Today’s ruling will turn back the clock in the state, encouraging more lawsuits and imposing higher premiums on New Jersey drivers.”

“The Court’s decision threatens the recent progress that has been made to replace one of the worst automobile insurance markets in the country with one that offers more choice and lower costs,” added Snyder.