New Jersey regulators recently reminded personal auto insurers and producers that they must offer a $250,000 coverage limit as the default option for personal injury protection (“PIP”) benefits — unless the applicant or the policyholder affirmatively selects lower limits in writing.
Kenneth Kobylowski, the acting commissioner for New Jersey’s Department of Banking and Insurance, said in the bulletin No. 12-07 that regulators have been noticing some insurers violating this requirement. One way insurers and producers have been violating this rule is by setting defaults on their websites to the minimum PIP coverage limits, according to regulators.
“The Department of Banking and Insurance has become aware that some insurers have not been providing $250,000 as the default coverage limit for personal injury protection (“PIP”) benefits for a standard private passenger automobile insurance policy as required by N.J.S.A. 39:6A-4,” Kobylowski stated last month.The statute provides that PIP means and includes…“[payment] of medical expense benefits in accordance with a benefit plan provided in the policy and approved by the Commissioner for reasonable, necessary and appropriate treatment and provision of services to persons sustaining bodily injury, in an amount not to exceed $250,000 per person per accident.”
N.J.S.A. 39:6A-4.3e provides that a private passenger auto insurer shall provide as a coverage option, medical expense benefits in amounts of $150,000, $75,000, $50,000, or $15,000 per person per accident. If the insured does not affirmatively select lower limits in writing, the insurer must provide $250,000 PIP medical expense benefits coverage limits.
“As a result of market surveys, examinations and reviews, the department has become aware that some insurers are displaying lower PIP coverage levels as the first option in quotes and requests for coverage, such as by setting defaults on websites to the minimum PIP coverage limits rather than allowing the insured to affirmatively select such optional lower coverage limits,” the regulator said.
Insurers and producers were reminded the $250,000 limit is the default coverage level option that must be offered to all applicants and existing insureds with respect to PIP benefits for standard private passenger auto insurance policies. This includes default coverage level selections on websites.
The applicant or policyholder may affirmatively select lower limits; however the default coverage level option must be $250,000 and the PIP coverage amount cannot be pre-populated with a lower amount.
Acting Commissioner Kobylowski said his department will continue to monitor this situation and take further steps if necessary.