The Star-Ledger

N.J. Auto Insurance Costs Ease, But Still Top List Of States

The Star-Ledger — Tuesday, December 1, 2009

By Lisa Fleisher / Statehouse Bureau

New Jersey drivers saw their auto insurance bills go down slightly in 2007, though the state was still second only to Washington, D.C., for the highest rates in the nation, according to a report out today from the National Association of Insurance Commissioners.

Auto insurance premiums have declined for three straight years, dropping 5.6 percent nationwide and 9.6 percent in New Jersey from highs in 2004, the report said. New Jersey drivers paid an average of $1,103.53 per vehicle, making it one of six states with average bills above $1,000.

Though the market is clearly healthier than it was before reforms were passed in 2003, New Jersey has inherent costs that can't be avoided, said Chuck Leitgeb, vice president of the Insurance Council of New Jersey.

"There are certain costs built into New Jersey's system that are always going to be there," he said, including the generous medical reimbursement rates, the high cost of repairing vehicles here and the urban nature of the state — the most densely populated in the nation. "You have to be careful when you say the rates are high; well, there are reasons."

Leitgeb, lawmakers and state officials said the report showed continuing progress after reforms passed in 2003 opened the market to more competition. The changes included allowing insurers to keep more of their profits and giving them faster answers on requests for rates adjustments.

"We no longer were one of the oddfellows in auto insurance regulation around the country," said Marshall McKnight, a spokesman for the state Department of Banking and Insurance.

Previously, companies had thought it wasn't worth doing business in New Jersey. With limited choice, drivers had to pay high prices — while some couldn't get insurance at all.

Now, eight of the top 10 insurance companies write policies here, with the two exceptions being Nationwide and American Family Mutual.

The state should take pride in the report, said Assemblyman Gary Schaer (D-Passaic), chairman of the Assembly Financial Institutions and Insurance committee.

"The right legislation can make a real difference," Schaer said. "We can anticipate and look forward to additional declines in rates as a result of the marketplace."

Eve Weissman, a spokeswoman for the advocacy group New Jersey Citizen Action, said the state should be looking to remove what she called unfair criteria when determining rates, such as a driver's credit score, education, job status and home ownership status.

"By and large whether or not somebody owns a home does not determine how good of a driver they are, nor does their education or occupation," she said. "Allowing companies to use these criteria, while there may be a correlation, it's not necessarily a causation."

The state recommends shopping around for the best rate and checking to see if insurers will give discounts for certain safety features, good grades, defensive driving courses or multi-car policies. The state provides an interactive guide to buying auto insurance.

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