N.J. Dollar-a-Day Policy Sales Top 1,500

April 8, 2004

The number of drivers enrolled in the Dollar-a-Day auto insurance program in Nw jersey has surpassed 1,500, just six months after it was launched to help uninsured drivers with limited means get affordable auto insurance, according to Banking and Insurance Commissioner Holly C. Bakke.

“If you have federal Medicaid with hospitalization you qualify for this policy,” Bakke told members of the St. James AME Church at a service. “It is the most affordable way for you to drive legally and avoid the risk of losing your car.”

In setting this public policy, Governor James E. McGreevey’s administration maintained that there are drivers who are uninsured not by choice but by circumstance. Without auto insurance they are a liability on the road, or they go without in other areas of basic need, such as health care, rent or food, according to policymakers. The new Dollar-a-Day policies grant qualified poorer drivers a break.

“Integral to fixing New Jersey’s auto insurance system was recognizing the fact that a variety of policy choices are necessary to meet the needs of New Jersey drivers,” Bakke said. “Dollar-a-Day gives drivers the opportunity to get insurance — which ultimately benefits all New Jersey policyholders.”

The Department of Banking and Insurance approved forms for the Dollar-a-Day policy Oct. 1, 2003. The policy, sold through the Personal Auto Insurance Plan (PAIP), was made available on a test basis for several weeks, allowing agents enough time to become familiar with the Medicaid cards that identify who is eligible. To date, 1,535 policies have been sold.

The Dollar-a-Day policy makes $15,000 worth of emergency room care available for $360 a year, or $365 if purchased in two, six-month installments. This policy is available only to those drivers who are eligible for federal Medicaid with hospitalization.

McGreevey’s auto insurance reform plan calls for reducing the ranks of uninsured motorists in several ways:

• Broader Availability of the Basic Policy. A limited-liability coverage plan created by the legislature in 1998 has become more available in the past year, due to publicity and enforcement actions by the Department of Banking and Insurance. To date, more than 21,000 basic policies have been sold.

• Impoundment of Uninsured Vehicles. Governor McGreevey’s auto reforms call for more aggressive efforts to impound uninsured vehicles after June 9, 2004. The reform legislation allowed time for the market to recover and for the Dollar-a-Day policy to be implemented, so uninsured motorists have the opportunity to get legal.

In addition, 37,000 vehicles were insured last year through the “Last Chance” program, which waived certain underwriting surcharges to encourage uninsured drivers to get legal.

Dollar-a-Day policies address the biggest cost an uninsured driver places on the system: emergency room care after an accident. The policy provides $15,000 of emergency care and $250,000 of medical coverage if the driver suffers a catastrophic injury. The driver’s Medicaid benefits provide any non-emergency medical care. Dollar-a-Day provides a higher and more certain level of reimbursement for trauma centers, which helps reduce the cost of Personal Injury Protection (PIP) for other drivers.

A portion of each Dollar-a-Day policy goes toward a fund that compensates drivers who are injured by uninsured motorists. The policy also provides a $10,000 death benefit.

“Until recently, drivers who are uninsured because they cannot afford insurance have not contributed to the cost of New Jersey’s trauma system,” Bakke said. “Dollar-a-Day is changing that, giving uninsured drivers an opportunity to drive legally with a policy they can afford.”

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