New Jersey insurance agents praised Gov. Jon Corzine for signing into law a bill that bans so-called step-down provisions in businesses’ motor vehicle liability insurance policies and frees agents from a having to advise something that their insurers will not allow.
The Professional Insurance Agents of New Jersey Inc. supported the bill, S-1666/A-3038, which reverses an effect of the New Jersey Supreme Court’s decision in Pinto v. New Jersey Manufacturers Insurance Co.
In the Pinto case, the court decided that step-down provisions in business auto policies, which allow insurance companies to reduce the coverage available to employees not individually named on their employer’s business auto policy, are enforceable. 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.
The decision placed agents in an impossible situation, according to PIANJ President Jack Lynn. The ruling held that insurance producers have a duty to tell employers that if they want to avoid imposition of the step-down provision, they have to name their employees on their auto policy. However, most insurance companies will not allow employers to include employees as named insureds on a business auto policy.
“The impractical duty created by the Pinto decision had substantially increased the risk of litigation against insurance producers and placed them in an untenable position with their customers,” said Lynn.
The new law eliminates the need to name employees on a business auto policy in order prevent the step-down provision. It also protects employees who are injured in work-related accidents by offering the full protections afforded under their employer’s insurance policy.
PIANJ commended the governor and the bill’s sponsors, Sens. Nicholas Scutari, D-22, and Nia Gill, D-34, and Assemblyman Neil M. Cohen, D-20, for protecting the interests of consumers and eliminating the impossible duty imposed upon insurance producers by the Pinto decision.
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