N.J. High Court Limits Uninsured Driver Suits
NU Online News Service, Feb. 20, 3:26 p.m. EST?The New Jersey Supreme Court yesterday upheld state legislation limiting injury suits by uninsured drivers- an action that was hailed by an insurer group.[@@]
According to the Insurance Council of New Jersey, the unanimous decision reversing an Appellate Division ruling that the "no pay, no play" provision of the Automobile Insurance Cost Reduction Act was unconstitutional "protects the integrity of recent automobile insurance reforms.."
In Caviglia v. Royal Tours of America, the uninsured plaintiff challenged the constitutionality of part of the AICRA reforms precluding uninsured motorists from suing for non-economic damages, such as pain and suffering.
As part of the 1997 AICRA, the legislature revised the law to bar three classes of people from suing for personal injuries in automobile accident cases: those who operate automobiles without insurance, those who drive under the influence of alcohol or drugs, and those who act with the intent to injure others while driving.
The AICRA legislation and its changes "advances a policy of cost containment by ensuring that an injured, uninsured driver does not draw on the pool of accident-victim insurance funds to which he did not contribute," the Supreme Court found.
Magdalena Padilla, president of the Ewing, N.J.-based ICNJ said the decision "ensures that the right to sue is a benefit only for those who pay into the system" and affirms that it is the legislature's "prerogative to find solutions to help find ways to lower the cost of insurance, reduce the state's uninsured motorist population, and protect law abiding insurance consumers."
Last year the New Jersey Legislature passed the New Jersey Automobile Insurance Competition and Choice Act designed to correct existing regulations, which insurers said had crippled their ability to function profitably. Following passage of the measure, the state attracted its first new auto insurer, reversing a trend that had seen 20 carriers leave over the past 10 years.
Ms. Padilla said the high court ruling will have far-reaching effects for the state's auto insurance system, protecting cost containment efforts and making New Jersey more attractive as a market for new insurance companies.
ICNJ had filed "friend of the court" briefs in the case, in cooperation with the American Insurance Association, the then-Alliance of American Insurers, and the National Association of Independent Insurers (the latter two groups have since merged). ICNJ's 31 property-casualty companies collectively underwrite 95 percent of the auto insurance policies in New Jersey.
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