Bill Text: NJ S3244 | 2022-2023 | Regular Session | Introduced
Bill Title: Revises law concerning physical damage inspection of vehicle by automobile insurer.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-10-27 - Introduced in the Senate, Referred to Senate Commerce Committee [S3244 Detail]
Download: New_Jersey-2022-S3244-Introduced.html
Sponsored by:
Senator GORDON M. JOHNSON
District 37 (Bergen)
SYNOPSIS
Revises law concerning physical damage inspection of vehicle by automobile insurer.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning automobile insurance and amending and supplementing P.L.1990, c.8.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 43 of P.L.1990, c.8 (C.17:33B-35) is amended to read as follows:
43. a. If an automobile is acquired by the insured as a replacement for or in addition to an automobile insured for physical damage coverage, and the insured requests physical damage coverage for the replacement or additional automobile, the coverage for physical damage shall not be effective before an inspection is made. If, at the time of the request for the coverage, the automobile is unavailable for inspection because of conditions of purchase or other circumstances and is thereafter made available for inspection, the [insurer] insurer's authorized representative shall promptly inspect the automobile, and physical damage coverage shall not become effective before the inspection has been made.
b. The Department of Banking and Insurance may permit insurers to waive inspection pursuant to section 43 of P.L.1990, c.8 (C.17:33B-35) and section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) when:
(1) a new automobile is purchased from a franchised automobile dealership and the insurer is provided:
(a) a copy of the bill of sale which contains a full description of the automobile, including all options and accessories;
(b) a copy of the window sticker or advanced dealer shipping notice showing the itemized options and equipment, the total retail price of the automobile, and any dealer installed option purchased by the customer; or
(c) a vehicle buyer's order or the dealership invoice to the buyer, including all options and accessories;
(2) the automobile is more than seven model years old. For example: in 2022 an insurer shall inspect 2015 and newer model year vehicles and in 2023 an insurer shall inspect 2016 and newer model year vehicles;
(3) a policy is being renewed or issued by a different individual insurance company within a group of affiliated companies;
(4) the insured automobile is insured under a commercially rated policy that insures five or more automobiles;
(5) an insurance producer or insurer is transferring a book of business from one insurer to another insurer;
(6) the automobile is a temporary substitute automobile;
(7) the automobile is leased for less than six months;
(8) the named insured has been continuously insured for automobile insurance with the same insurer, or an affiliate of the insurer, for four or more policy years; or
(9) an individual insured's coverage is being transferred by an independent insurance agent to a new insurer and the previous insurer provides the new insurer with a copy of the inspection report.
c. An insurer shall waive an inspection based solely on the uniformly applied waivers established pursuant to this section and not based on the age, race, sex or marital status of the insured, the principal place of garaging or the residual market in which the automobile is insured.
The department shall:
(1) create a standard waiver application and establish procedures for the evaluation of submitted applications seeking new waivers to be added to the waivers established pursuant to this section;
(2) establish guidelines and procedures for the completion of inspections by insurers;
(3) publish information related to inspection, the waiver of inspection, and compliance with the provisions of P.L.1990, c.8 (C.17:33B-1 et seq.) on its website; and
(4) complete market conduct examinations regularly and on a timely basis.
d. As used in this section, "authorized representative" means any individual; legal entity, such as an insurer's employee, and an inspection service, designated by the insurer, that is properly qualified to perform the automobile inspection services as required in sections 42, 43, and 44 of P.L.1990, c.8 (C.17:33B-35).
(cf: P.L.1990, c.8, s.43)
2. (New section) a. An insurer may authorize the insured to conduct a self-inspection using the insurer's authorized representative's self-inspection mobile application pursuant to this section. An insured may conduct the self-inspection at any time and place of the insured's choosing.
b. The self-inspection report and all applicable photographs shall be processed and maintained by the insurer's authorized representative.
c. The self-inspection information shall be rendered into an electronic image of the self-inspection report and maintained in a durable medium by the insurer's authorized representative. The electronic image of the self-inspection report shall capture and show the electronic signatures of the named insured or the person who conducts the self-inspection if other than the named insured.
d. The self-inspection report and all applicable photographs shall:
(1) confirm the existence and physical condition of the insured automobile with a minimum of two color photographs, clearly showing the front, back, left, and right sides of the automobile at the time of inspection;
(2) record odometer mileage and all major factory and dealer installed options, accessories, and equipment permanently installed on or within the insured automobile;
(3) contain a color photograph showing a close-up (using a special camera attachment if necessary) of the Environmental Protection Agency (EPA) sticker and the VIN number, which shall be of sufficient clarity that the information contained on the EPA sticker and the VIN number are legible. If the EPA sticker is missing, obscured or otherwise illegible, then the insured shall document on the inspection report that the EPA sticker is missing, obscured or otherwise illegible;
(4) document any previous damage to the interior and exterior of the insured automobile;
(5) be made part of the named insured's policy record; and
(6) be utilized by the insurer in the settlement of a private passenger automobile physical damage insurance claim.
e. The insurer's authorized representative shall:
(1) verify, in writing, the accuracy, completeness, and signature of the inspector for each inspection report;
(2) number inspection reports sequentially; and
(3) maintain a secure system of internal control over the storage, retrieval, and data integrity of inspection reports and all applicable photographs.
f. If the insured fails to perform, prior to the expiration of the deferral period pursuant to chapter 3 of Title 11 of the New Jersey Administrative Code, the automobile inspection services provided pursuant to this section, the physical damage inspection requirement the insurer shall notify the named insured that the mandatory physical damage inspection requirement can only be satisfied by the insurer's authorized representative inspecting the automobile.
g. Inspections conducted pursuant to this section shall be limited to any vehicle:
(1) that is an additional or replacement vehicle for an existing customer with at least one year of coverage with the insurer, except that a self-inspection shall not be permitted for a vehicle with less than one year of coverage;
(2) for which a property/casualty policy is required to be in force for two years if the insurer writes another line of business for the applicant;
(3) already insured by an insurer for which a new policy by the same insurer is to be issued to the child of the insured, provided coverage is continuous, except that a self-inspection shall not be permitted for a vehicle with less than one year of coverage;
(4) owned by employees of the insurer, if coverage is provided by the insurer;
(5) owned by an agency principal or employee, if the coverage is provided by the insurance company for which the agency underwrites coverage;
(6) that was insured by another insurer and that has not lost coverage except that a self-inspection shall not be permitted for a vehicle with less than one year of coverage; or
(7) for which the insurance policy is written on the basis of agreed value.
3. This act shall take effect on the first day of the seventh month next following the date of enactment, but the Commissioner of Banking and Insurance shall take such anticipatory administrative action in advance as shall be necessary for the implementation of this act.
STATEMENT
This bill revises the anti-fraud provisions established by the "Fair Automobile Insurance Reform Act" concerning pre-insurance vehicle inspection. The bill establishes standard waivers applicable to all insurers providing physical damage coverage. The bill also requires the Department of Banking and Insurance to develop a standard waiver application and establish procedures for the evaluation of new waiver submission requests beyond the standardized list created in the bill. The standardized waivers seek to prevent insurance fraud through the exploitation of waiver inconsistency. The bill also seeks to reduce the high volume of fraud prosecutions stemming from pre-existing physical damage insurance fraud, which constitutes a significant portion of Department of Banking and Insurance fraud prosecutions. In addition, the department is also required to conduct market conduct examinations regularly.
Under the bill, an insurer may authorize the insured to conduct a self-inspection required or permitted pursuant to the bill. An insured may conduct the self-inspection at any time and place reasonably convenient to the named insured. The insured is to conduct a self-inspection using the insurer's authorized representative's self-inspection mobile application.
If the insured fails to perform, prior to expiration of the deferral period authorized pursuant to N.J.A.C.11:3-36.5, the automobile inspection services provided pursuant to this section, the physical damage inspection requirement is to be conducted by the insurer's authorized representative and the insurer is required to so notify the named insured.
