Number of Dollar-a-Day policies tops 1,500

NEWARK - Banking and Insurance Commissioner Holly C. Bakke announced today that the number of drivers enrolled in the Dollar-a-Day auto insurance program has surpassed 1,500 - just six months after it was launched to help uninsured drivers with limited means get affordable auto insurance.

"If you have federal Medicaid with hospitalization you qualify for this policy," Commissioner Bakke told members of the St. James AME Church at a service here today. "It is the most affordable way for you to drive legally and avoid the risk of losing your car."

The McGreevey Administration recognized that there are drivers who are uninsured not by choice but by circumstance. Without auto insurance they are a liability on the road, or they go without in other areas of basic need, such as health care, rent or food. The new Dollar-a-Day policies grant qualified poorer drivers a break.

"Integral to fixing New Jersey's auto insurance system was recognizing the fact that a variety of policy choices are necessary to meet the needs of New Jersey drivers," Commissioner Bakke said. "Dollar-a-Day gives drivers the opportunity to get insurance - which ultimately benefits all New Jersey policyholders."

The Department of Banking and Insurance approved forms for the Dollar-a-Day policy Oct. 1, 2003. The policy, sold through the Personal Auto Insurance Plan (PAIP), was made available on a test basis for several weeks, allowing agents enough time to become familiar with the Medicaid cards that identify who is eligible. To date, 1,535 policies have been sold.

The Dollar-a-Day policy makes $15,000 worth of emergency room care available for $360 a year, or $365 if purchased in two, six-month installments. This policy is available only to those drivers who are eligible for federal Medicaid with hospitalization.

Governor McGreevey's consumer-directed auto insurance reform plan calls for reducing the ranks of uninsured motorists in several ways:

• Broader Availability of the Basic Policy, a limited-liability coverage plan created by the Legislature in 1998. The Basic Policy has become more available in the past year, due to publicity and enforcement actions by the Department of Banking and Insurance. To date, more than 21,000 Basic Policies have been sold.
• Impoundment of Uninsured Vehicles. Governor McGreevey's auto reforms call for more aggressive efforts to impound uninsured vehicles after June 9, 2004.
• The reform legislation allowed time for the market to recover and for the Dollar-a-Day policy to be implemented, so uninsured motorists have the opportunity to get legal.

In addition, 37,000 vehicles were insured last year through the "Last Chance" program, which waived certain underwriting surcharges to encourage uninsured drivers to get legal.

"New Jersey's drivers suffered for too long under an auto insurance system that only offered fewer choices and higher rates. Now, finally, we have an auto insurance reform program that's working," Governor James E. McGreevey said. "Over the last nine months, we've seen the first auto insurance company come to New Jersey in nearly a decade. We've seen USAA cut rates for 139,000 drivers, State Farm cut rates twice for more than 500,000 drivers - and just this week I announced that New Jersey Manufacturers will cut rates for 595,000 drivers. Well over $100 million is being returned to the state's drivers as a result of the competitive marketplace we're building."

Dollar-a-Day policies address the biggest cost an uninsured driver places on the system: emergency room care after an accident. The policy provides $15,000 of emergency care and $250,000 of medical coverage if the driver suffers a catastrophic injury. The driver's Medicaid benefits provide any non-emergency medical care. Dollar-a-Day provides a higher and more certain level of reimbursement for trauma centers, which helps reduce the cost of Personal Injury Protection (PIP) for other drivers.

A portion of each Dollar-a-Day policy goes toward a fund that compensates drivers who are injured by uninsured motorists. The policy also provides a $10,000 death benefit.

"Until recently, drivers who are uninsured because they cannot afford insurance have not contributed to the cost of New Jersey's trauma system," Commissioner Bakke said. "Dollar-a-Day is changing that, giving uninsured drivers an opportunity to drive legally with a policy they can afford."

Low-income drivers who do not have Medicaid should consider the Basic Policy. It offers minimum limits of liability and PIP coverage, as well as coverage for damage to another driver's car in the event of an accident. Basic policies can be sold with or without comprehensive and collision coverage.

"The cost of the Basic Policy is often hundreds of dollars less than a Standard Policy," Commissioner Bakke said. "By expanding the ways in which people can drive legally, we are making auto insurance fair for every New Jersey driver."

Today's announcement is yet more proof that the Governor's efforts to reform auto insurance in New Jersey is working to promote more choices and more competition. Accomplishments include:

• Mercury Insurance has entered the marketplace, the first new auto insurer in eight years;
• Allstate has added new agents and is actively trying to enroll good drivers;
• State Farm decided to suspend its practice of dropping coverage for 4,000 New Jersey drivers per month;
• USAA and State Farm voluntarily reduced rates; · Appointment of more than 1,000 new auto insurance agents;
• 37,000 previously uninsured drivers now contributing more than $54 million through the Governor's "Last Chance" program;
• Introduction of an online program to provide New Jersey motorists with information they need to determine the auto coverage they want and how much theywant to pay for that coverage; and,
• Consumer protection regulations were adopted to provide consumers with three price quotes when shopping for insurance, a Consumer Bill of Rights and a more user-friendly Buyer's Guide to explain coverage choices.

St. James AME Church is located at 588 Dr. Martin Luther King Jr. Blvd., Newark, NJ 07102.