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The New Jersey Legislature recently approved a significant increase in the minimum liability insurance for heavy trucks. This new regulation mandates that trucks weighing over 26,000 pounds must now carry a minimum of $1.5 million in liability insurance. This amount is notably twice the current federal minimum of $750,000, marking a substantial change for the trucking industry in the United States.
Set to be effective from July 1, the law stipulates that owners or registered owners of commercial motor vehicles with a weight exceeding 26,000 pounds must have at least $1.5 million in motor vehicle liability insurance. This insurance is essential for covering liabilities related to bodily injuries, deaths, and property damage. The bill, initially delayed in the Legislature for over a year, was finally signed by Gov. Phil Murphy on January 16, with Nicholas Scutari, a noted attorney and the state senate president, as its primary advocate.
The Federal Motor Carrier Safety Administration (FMCSA) has maintained a standard since 1985 that requires a minimum of $750,000 in liability insurance for carriers. Despite discussions about increasing this minimum, the FMCSA, in a 2022 report, stated that it lacked sufficient justification for such an increase. The report highlighted the need for more detailed data from the insurance industry, including anonymized claims information, to fully assess the adequacy of current financial responsibility requirements.
The new law has not been without its critics, facing opposition from several trade groups including the American Trucking Associations, New Jersey Motor Truck Association, and others. They argue that the law’s ambiguity regarding its application to either New Jersey-based carriers or interstate carriers doing business in the state could lead to legal challenges.
Jennifer Blazovic, the interim executive director of the state trucking association, expressed uncertainty about the law’s impact on motor carriers and is seeking clarity on who exactly needs to adhere to the higher insurance requirement.
There’s a general consensus among industry experts that the new law could lead to increased insurance premiums. Tracy Denora, from the New Jersey Warehouse and Movers Association, anticipates a significant financial impact, particularly on smaller motor carriers, with potential increases in insurance costs ranging from $20,000 to $40,000 annually.
Furthermore, Greg Feary, a managing partner at a transportation law firm, highlighted potential legal issues, especially if the law is enforced against out-of-state carriers, which could lead to conflicts with FMCSA regulations.
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