Legislation to Combat Unfair Auto Insurance Rates Passes the Senate

Trenton – In response to inflated automobile insurance assessments, the Senate today passed legislation sponsored by Senators Nia Gill, M. Teresa Ruiz, Nilsa Cruz-Perez, and Nellie Pou, which would prohibit the use of education, occupation, or credit score in certain automobile insurance determinations.

“The use of factors such as employment status and credit score in calculating insurance premiums carries a severe economic consequence for working-class families. A person’s income or education has no bearing on driver safety or risk and only serves to reinforce existing inequalities,” said Senator Gill (D-Essex/Passaic). “The pandemic has given new importance to how we determine eligibility. Millions of New Jerseyans are experiencing economic hardship; this will inevitably impact their credit scores, occupation, and employment status. This bill is critical to ensure people are not subject to increased premiums based on metrics that have nothing to do with driving, and it will ensure drivers are not subject to increased premiums based on unforeseeable consequences of the pandemic.”

The bill, S-111, would prohibit automobile insurers from assigning an insured or prospective insured person to a rating tier based on homeownership, marital status, educational level, credit score, employment status or employment, trade, business, occupation, or profession.

“My district has some of the highest car insurance rates in the country, and under our current laws, car insurance companies are able to prey on New Jersey’s most vulnerable populations,” said Senator Ruiz (D-Essex). “Low-income customers are being charged significantly more regardless of their driving history and that is unacceptable. Every sponsor has done tremendous legwork to bring an end to this harmful practice. I am proud to have been a driving force in the final push to move this important legislation and to ensure it included prohibiting the use of credit scores.”

“We are currently living in the midst of a pandemic that has brought hardships over the course of the last year and the last thing individuals should have to worry about is affording their car insurance,” said Senator Cruz-Perez (D-Camden/Gloucester). “The COVID-19 pandemic has affected millions of New Jerseyan’s employment status, credit scores, and occupation and they will continue to receive these unfair rates until this bill is enacted. We cannot allow insurers to continue basing rates on credit history or socioeconomic status rather than someone’s driving record.”

“It is absurd to even think that there are individuals out there paying more for car insurance just because they have a low credit score,” said Senator Pou (D-Bergen/Passaic). “Those that have a lower income pay more for insurance, meaning they are being penalized just for being poor. This legislation will hold insurance companies accountable and help to ensure that our most vulnerable citizens are given fair pricing for policies that are a requirement to drive.”

The bill would take effect 90 days after enactment.

The bill was released from the Senate by a vote of 22-9.