NJ insurers: Umbrella policies key to meeting new truck coverage minimums

For the Insurance Council of New Jersey (ICNJ), a key word in the new law requiring minimum insurance coverage of $1.5 million for larger trucks is “umbrella.”

Gary La Spisa, vice president at the ICNJ, which represents insurance providers, worked with legislators to craft the bill that makes the New Jersey requirement the highest in the country.

In an interview with FreightWaves, La Spisa said his group sees it as a major victory that the law allows a fleet’s umbrella insurance coverage to provide for the $1.5 million in coverage, rather than requiring that figure for every individual truck. The insurance requirement bill was passed by the New Jersey Legislature last month and signed by Gov. Phil Murphy.

Umbrella policies cover insurance costs that might go beyond liability limits in other policies, such as personal or commercial automobile coverage.

“The number one request from the ICNJ and a number of our business association colleagues was addressing the fleet-level policies as opposed to vehicle-level policies, because anybody with multiple trucks is probably buying more than just a commercial auto policy,” La Spisa said. “They’re buying other types of insurance that provide liability protection. So we wanted to be sure that if the bill was enacted, it accounted for the way trucks are actually insured, as opposed to on a per-vehicle basis.”

La Spisa declined to put a number on the difference in cost for a fleet between a per-vehicle mandate and allowing umbrella coverage. But he said the group told legislators working on the bill that the higher insurance premiums to insure a fleet on a per-vehicle basis would be “exponential.”

Laying it out like that, La Spisa said, “is why I think they accepted that. I think they recognized that it was crucial that the bill actually reflected the way the fleets are insured.”

One aspect of the bill that La Spisa conceded he was not able to clarify was the impact of the new higher minimum on out-of-state vehicles that transit New Jersey.

The new truck minimums, for vehicles 26,001 pounds and up, were written into the state’s existing insurance law. That law says it applies to “every owner or registered owner of a motor vehicle registered or principally garaged in this State.” That would seem not to impact a company with trucks just driving through (and theoretically could incentivize a company to move across state lines to Pennsylvania or New York).

La Spisa suggested an ultimate ruling from the state’s motor vehicle department on that question of the law’s reach might be necessary.

Still to be determined

But other aspects of federal and state law might complicate that question.

New Jersey has a law known as the “deemer law.” In an online commentary, the law firm of Schwartz & Blackman said the deemer law “basically turns a non-New Jersey resident driver’s car insurance policy into a New Jersey policy, while the car is driven in New Jersey. A Pennsylvania or New York driver who is driving through New Jersey and gets into an accident in New Jersey will be subject to the deemer statute.”

But La Spisa said the deemer law has always been seen as applying solely to passenger vehicles. And in its commentary, Schwartz & Blackman said the deemer law “is very complex, and whether the deemer applies to your case depends on the facts and circumstances of the case.”

Another uncertainty comes in federal law 49 CFR 392.2, the motor carrier governance law that says all vehicles “must be operated in accordance with the laws, ordinances, and regulations of the jurisdiction in which it is being operated.” As one observer noted to FreightWaves, that raises the question of whether a regulator or a plaintiff’s attorney in a lawsuit over a New Jersey accident could use the new New Jersey law in a regulatory or civil action against an out-of-state carrier that had a lower limit.

For the Insurance Council of New Jersey (ICNJ), a key word in the new law requiring minimum insurance coverage of $1.5 million for larger trucks is “umbrella.”

Gary La Spisa, vice president at the ICNJ, which represents insurance providers, worked with legislators to craft the bill that makes the New Jersey requirement the highest in the country.

In an interview with FreightWaves, La Spisa said his group sees it as a major victory that the law allows a fleet’s umbrella insurance coverage to provide for the $1.5 million in coverage, rather than requiring that figure for every individual truck. The insurance requirement bill was passed by the New Jersey Legislature last month and signed by Gov. Phil Murphy.

Umbrella policies cover insurance costs that might go beyond liability limits in other policies, such as personal or commercial automobile coverage.

“The number one request from the ICNJ and a number of our business association colleagues was addressing the fleet-level policies as opposed to vehicle-level policies, because anybody with multiple trucks is probably buying more than just a commercial auto policy,” La Spisa said. “They’re buying other types of insurance that provide liability protection. So we wanted to be sure that if the bill was enacted, it accounted for the way trucks are actually insured, as opposed to on a per-vehicle basis.”

La Spisa declined to put a number on the difference in cost for a fleet between a per-vehicle mandate and allowing umbrella coverage. But he said the group told legislators working on the bill that the higher insurance premiums to insure a fleet on a per-vehicle basis would be “exponential.”

Laying it out like that, La Spisa said, “is why I think they accepted that. I think they recognized that it was crucial that the bill actually reflected the way the fleets are insured.”

One aspect of the bill that La Spisa conceded he was not able to clarify was the impact of the new higher minimum on out-of-state vehicles that transit New Jersey.

The new truck minimums, for vehicles 26,001 pounds and up, were written into the state’s existing insurance law. That law says it applies to “every owner or registered owner of a motor vehicle registered or principally garaged in this State.” That would seem not to impact a company with trucks just driving through (and theoretically could incentivize a company to move across state lines to Pennsylvania or New York).

La Spisa suggested an ultimate ruling from the state’s motor vehicle department on that question of the law’s reach might be necessary.

Still to be determined

But other aspects of federal and state law might complicate that question.

New Jersey has a law known as the “deemer law.” In an online commentary, the law firm of Schwartz & Blackman said the deemer law “basically turns a non-New Jersey resident driver’s car insurance policy into a New Jersey policy, while the car is driven in New Jersey. A Pennsylvania or New York driver who is driving through New Jersey and gets into an accident in New Jersey will be subject to the deemer statute.”

But La Spisa said the deemer law has always been seen as applying solely to passenger vehicles. And in its commentary, Schwartz & Blackman said the deemer law “is very complex, and whether the deemer applies to your case depends on the facts and circumstances of the case.”

Another uncertainty comes in federal law 49 CFR 392.2, the motor carrier governance law that says all vehicles “must be operated in accordance with the laws, ordinances, and regulations of the jurisdiction in which it is being operated.” As one observer noted to FreightWaves, that raises the question of whether a regulator or a plaintiff’s attorney in a lawsuit over a New Jersey accident could use the new New Jersey law in a regulatory or civil action against an out-of-state carrier that had a lower limit.