N.J. Providing Dollar-A-Day Auto Insurance

By Mark E. Ruquet

NU Online News Service, Nov. 11, 1:52 p.m.EST?New Jersey's governor announced a plan yesterday toallow motorists with limited means, who qualify for Medicaid, topurchase automobile insurance for what comes out to a dollar-a-dayunder a limited personal liability plan.

The arrangement, the latest in the state's drive to reform itsautomobile insurance environment, should make insurance availableto those who have not been able to afford more expensive policies,making them "legal" drivers, said Gov. Jim McGreevey.

Magdalena Padilla, vice president for the Insurance Council ofNew Jersey, based in Ewing, N.J., a carrier association, said thegeneral consensus among insurers is that anything that helps toeliminate uninsured drivers is a "step in the right direction."Because of the very limited amount of coverage, however, she saiddrivers would be faced with a challenging decision over whether thepolicy suited their needs.

"The dollar-a-day policy is very, very basic, very minimal,"observed Ms. Padilla. "Whether its right for everybody [whoqualifies] is something only the individual driver can decide, butit is certainly better than driving around uninsured."

Under the plan, only drivers who receive Medicaid would beeligible to purchase a policy to cover $15,000 worth of emergencyroom services and $250,000 of medical coverage if the driversuffers a catastrophic injury. Medicaid covers nonemergencyservices. The policies cost $360 a year, if paid in one lump sum,or $365 if purchased in two six-month installments. The policy alsoprovides a $10,000 death benefit.

The insurance is sold through the Personal Auto Insurance Plan,the state's residual market for automobile insurance.

The N.J. Department of Banking and Insurance said the forms wereapproved on Oct. 1, and about a dozen plans were sold during a testperiod.

The department said a portion of each dollar-a-day premium wouldgo to a fund to compensate drivers injured by uninsuredmotorists.

On another front that would affect insurers and motorists alike,the state is looking at approving regulations dealing withcounterfeit insurance cards.

Under the proposed rules, the state would allow companies toemploy anti-counterfeiting methods and produce cards that would beunique to each company. The changes would extend to both permanentand temporary insurance identification cards.

To meet the coming demand, Pearl River, N.Y.?based ACORD said ithas developed a new temporary ID card, ACORD 50NJ. An existingcard, ACORD 50WM, is currently accepted by the state as a permanentcard and would remain acceptable under the proposed regulations,ACORD said.

Both cards have a watermark that disappears when copied, meetingthe anti-fraud requirement, ACORD noted.

William Heine, a spokesman for the insurance department, said noregulations have been approved, but are expected to be in placebefore the end of the year.

Joel Volker, staff counsel for ACORD, said in response toquestions by e-mail that the new card meets the requirements of theregulation, and similar cards are used in other states that requireanti-counterfeiting measures.

"Over 315 U.S. companies use and accept ACORD ID cards, many ofwhom do business in New Jersey," he said.

Under the proposed regulations, card designs have to besubmitted to the state insurance department for approval beforeuse. ACORD said that the advantage for companies using its cardswould be that they would not have to seek approval from the stateto use the cards because the cards would already have the state'sapproval.