My Personal Finance Blog

It is well known that everyone who owns a car should have car insurance. Having accidents is a daily occurrence in this country which can result in death or life long injuries. The person responsible for the accident is then liable for all the expenses. For anyone without insurance this can be tragic and take all of their assets or have them be obligated to make payments for life. All policies, including NJ car insurance should cover this possibility.

Although the type of car insurance can vary in New Jersey, it is mandatory under the law. Not having insurance can have dire consequences. It is breaking the law and can result in jail time, suspension of driver’s license, loss of the car, community service or fines.

There are three types of mandatory insurance in this state. Liability covers damages to anyone the insured hits, not including medical expenses. Personal injury protection is for medical expenses of the insured and includes No Fault coverage which pays insured medical expenses regardless of who caused the accident. The uninsured motorist provides if the other person involved in an accident does not have insurance.

There is a basic policy, which is available to all drivers that is less expensive than a standard policy but provides only minimum coverage. In case of a very serious accident this policy would only cover a very small amount of the costs. This policy is very limited and does not cover liability from other people such as people in the car the insured hits.

The basic policy is not recommended for anyone who has any real assets. However, it is possible to increase various parts of a policy if desired. The standard policy in much more expensive but covers a wide range of expenses in an accident caused by the insured.

This state, as with others, has a large number of automobile accidents. In 2009 there were 772 fatal crashes in which one or more people were killed. This is a tragedy for all the people involved, both the person who caused the accident and the innocent one who was just out driving. With this number it is prudent for everyone to have insurance if they do not want to lose all their assets and spend the rest of their life at a price that is many times over what the policy would have cost.

People moving to New Jersey have 60 days or before their current driving license expires, to transfer to a New Jersey license. Upon surrendering their license they are issued a new one which is good for four years. Those under 18 must participate in a Graduated Driver License program. When receiving the new license they must present proof of coverage.

If you are a resident of the state and are traveling to another, having an accident has the same consequences. It is essential that all drivers be covered with sufficient coverage. Lives may be lost, livelihoods destroyed, families split apart and life time disabilities are all possibilities. There has to be money to pay for these things and the only way to have any sense of security is to have the right NJ car insurance.

Well, for better or worse, the healthcare bill has been signed into law. There is no immediate benefit in being angry. There are a number of legal actions started by various Attorneys General alleging that the reforms are unconstitutional. Even if some of these cases succeed on the issue of mandatory insurance for private individuals, this will not necessarily strike down the whole bill. The likelihood is we will be left with all the provisions dealing with small businesses. Keeping it real, we have to start planning for the future on the law as it is. The good news is that the main raft of provisions will not become active until 2014. This gives the lawmakers plenty of time to have second thoughts. Just as important, there are sets of regulations to be written clarifying the detail of how some of the new features are to work at state level. However, this is an outline of what we can expect.

The states are to establish SHOP exchanges where small businesses can group together and buy insurance. For these purposes, until 2016, a business is considered small when it has no more than 50 employees, with states having the option of increasing the limit to 100 employees. To calculate numbers, you pro-rate the full- and part-time employees. Independent analysts predict group premiums will drop no more than 4%, while the value of the cover will rise by up to 3%. To bridge until the exchanges are operating, a tax credit system will come into force. If your business has less than ten employees with an average annual pay of less than $25,000, the credit is 35% of the health plan cost. There are partial credits where the number of employees is less than 25 and their average annual pay is less than $50,000. When the exchanges start, the credit increases to 50% for the first two years.

With immediate effect, there are a ban on terms designed to cap the value of claims, and limits on the right of insurers to cancel policies except in cases where actual fraud can be proved. As from 2014, the insurers must accept all employees without regard to pre-existing conditions. Their calculation of premium rates can only be based on location, age and whether an individual smokes. As from 2014, small businesses with more than 50 employees will be required to provide a health plan or pay an annual penalty of $750 for every full-time employee denied cover. This can rise to $2,000 if coverage is still denied.

So, tomorrow, you will be going out into the same market as before the reform bill became law. Finding cost-effective small business insurance will continue to be a struggle. Indeed, many insurers may increase premiums now so that, when the SHOP exchanges do come into force, they have a margin to play with to deal with the competition. However, when you buy, check that the new terms on the total value claimable and restrictions on the right to cancel have been introduced. If you buy your small business insurance through an agent, ask direct questions. It saves time fighting over whether wording is unlawful later on.

It’s easy to say what the law is – legislatures must write it down and publish it for all to read – but harder to live with its consequences. Looking across the US, all but three states have laws setting mandatory insurance levels for all vehicles on the road. Almost without exception, all these states also have laws making it a crime to drive a vehicle on a public road without a valid policy in force. This gives all drivers a simple choice. Either carry the minimum insurance or risk fines and, in some states, the confiscation of the vehicle. All these laws are a compromise between the interests of drivers and the interests of people who may be injured in traffic accidents. The more Libertarian view is personal responsibility. If you do something, you should be prepared for the consequences. That would mean every driver having enough cash in the bank to pay out every time their driving injures someone else or damages their property. But not everyone can afford to pay the medical costs for treating those they injure. This would be seriously unfair. Suppose you were walking along the sidewalk and a car knocks you down. Surely you should not have to pay your own medical costs? The answer is mandatory insurance so there is always some money to pay out to the innocent victims.

Most people agree this is a good idea but there’s a problem. Almost all these states set the mandatory amount forty or fifty years ago. What was an adequate amount then is a drop in the ocean today. So this February, Wisconsin bit the bullet and increased the mandatory rates both for liability insurance and for insurance against uninsured or underinsured drivers. The governor signed the bill into law and everyone sat back and awaited the results. The mail boxes have recently experienced a flood of renewal notices showing significantly higher premiums for the mandatory minimum cover. Needless to say, the Republicans are now promoting a bill to repeal the law making liability insurance mandatory. As it stands, about 14% of all drivers are uninsured. These premium increases during a recession are likely to increase this percentage significantly.

This review of the minimum amounts after forty years was perfectly reasonable. Most other states will have to follow Wisconsin’s example sooner or later. It’s just not acceptable to have such low minimums when medical and repair costs have risen so sharply. But the timing is unfortunate. Insurers had invested their funds in the stock and bond markets. When the recession hit, they lost a hefty slice of their capital reserves. There’s another law requiring insurers to have enough capital in hand to pay out all the expected claims. To build their capital back up to the required levels, all insurers are therefore raising their premium rates. Each state’s insurance department is insisting on putting more money into the reserves. This means you must shop around. Get auto insurance quotes from as many companies as possible to find the best prices. Not all companies lost heavily. Equally, the smaller companies will have to raise the cash from smaller groups of policy holders, i.e. more from each individual. So get the maximum possible number of auto insurance quotes to survey the market before buying.