New Jersey insurance agents said they support legislation that would revise existing law, mandating that commercial auto policies provide the full listed coverage for employees.
The bill, which has been passed by the Senate and won unanimous approval last week by the Assembly Financial Institutions and Insurance Committee, would eliminate what are known as step-down provisions.
Under step-down provisions, in an accident that involves a worker driving a company vehicle, the insurer must pay only to the top limit of the employee's personal auto coverage, not the commercial policy limit.
"Instead of receiving the uninsured and underinsured motorist limits stated on their employer's policy, an employee who is injured while occupying a business vehicle receives the lesser coverage limits of his own personal auto policy or that of a family member if he does not have his own policy," explained Professional Insurance Agents of New Jersey Inc. President Andrew Anderson.
The step-down provision has been upheld by the New Jersey Supreme Court in the case of Pinto v. New Jersey Manufacturers Insurance Co.
Jill Muratori, government affairs counsel for the PIANJ, said that under the Pinto decision, the only way to avoid the step-down provision would be for companies to put the name of every individual employee on the policy.
Ms. Muratori said such a listing would be almost impossible for agents to deal with, demonstrating that in a company of 500 employees, the total work force composition could change frequently and the listed names "could change every day."
The bills, S-1666/A-3038, now pending in the assembly, would prohibit the use of step-down provisions in businesses' motor vehicle liability insurance policies and would reverse the Supreme Court decision.
"New Jersey is the only state that uses these types of provisions to limit coverage," said Mr. Anderson in a statement.
He noted that most insurance companies will not allow employers to include employees as named insureds on a business auto policy.
"The Pinto decision was particularly troublesome for insurance producers because the court also imposed upon insurance agents and brokers in our state a new duty that is impossible to achieve," said Mr. Anderson. "This impractical duty has substantially increased the risk of litigation against insurance producers and placed them in an untenable position with their customers."
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