NJBIA testified Monday in opposition to insurance legislation that would require businesses to buy more expensive commercial vehicle policies with higher liability limits, saying it would drive up costs for businesses that use smaller commercial vehicles posing no more danger than a family minivan.
“We oppose S-2841, which would set a minimum liability limit of $1.5 million for all commercial vehicles,” NJBIA Vice President of Government Affairs Ray Cantor said in his testimony submitted to the Senate Commerce Committee in advance of its Monday meeting on a package of insurance bills.
“While this amount of coverage may be appropriate for some commercial vehicles, it is certainly not appropriate for all,” Cantor said. “Insurance rates should be set, as they are now, based on the risk of the commercial vehicle. One size fits all coverage at such high levels will certainly increase costs for companies with smaller commercial vehicles that pose less risk to the public.
“There is a difference in liability needs between commercial vehicles carrying 8 people vs. 40 people,” Cantor said. “Commercial vehicles that carry hazardous materials need higher insurance than those that do not. Commercial insurance rates should be based on risks, not set at artificially high levels that are out of step with the overall market.”
Cantor said NJBIA is concerned that a $1.5 million minimum liability coverage requirement could also have unintended consequences. Insurance companies may decide to leave the state rather than offer the expanded coverage, resulting in fewer, less competitive options for businesses.
Money businesses spend buying added insurance coverage will not grow the economy like other types of purchases or capital investments, Cantor noted. As businesses struggle to recover financially from the COVID-19 pandemic and face a looming recession, the state should instead focus on policies that grow the economy, rather than drain money from it.
“Our concerns about cost and affordability are especially relevant today, given the extremely high cost of gasoline and soaring inflation,” Cantor said. “Business consumers cannot absorb the added costs.”
The committee voted 3-1 with one abstention to release the bill.