Gov. Phil Murphy recently signed a bill into law that will force more than one million New Jersey drivers to pay more each year in auto insurance.

The bill’s advocates say the measure is long overdue because victims of crashes haven’t always been able to have their medical bills covered with a low coverage option that’s been on the books. Opponents, henceforth, have argued the increase will come at the wrong time and disproportionately affect low-income residents.

Here’s what you need to know:

What did the new law do?

It requires the minimum amount of liability insurance in the Garden State from its current $15,000 coverage to $25,000 beginning in 2023, and a minimum of $35,000 starting in 2026. The $25,000 minimum coverage also mandates $50,000 coverage for accidents when more than one person is hurt and the $35,000 minimum in 2026 will require $70,000 minimum coverage when multiple people are hurt.

Will drivers pay more in 2023?

Yes.

“I see it as very simple math,” Christine O’Brien, the president of the Insurance Council of New Jersey, said. Drivers who currently have the lowest coverage of $15,000 can expect to pay between $120 and $130 more each year until 2026, insurers have said.

The reason they know how much more drivers will pay is that carriers already offer the $25,000/$50,000 minimums, so they know the difference between the two plans and don’t have to petition the state’s Department of Banking and Insurance for a rate increase.

How many drivers will it affect?

Estimates from insurers and the Insurance Council of New Jersey have ranged from 1.1 million to 1.36 million drivers. If you currently have coverage that is less than $25,000/$50,000 minimums, you will pay more next year.

Why was this needed?

Lawmakers who pushed the legislation say it’s long overdue and carriers actually agreed to a $25,000/$50,000 increase as the bill was debated in the Statehouse. Why? Because the average settlement for crashes that involve injuries is $18,000 — $3,000 more than the current lowest minimum coverage option of $15,000.

“We’ve always thought this was a good policy discussion to have,” O’Brien said.

How much will drivers pay in 2026?

It’s still an open question. Insurers don’t carry $35,000/$70,000 plan options anywhere in the country so there’s nothing to compare it to, according to O’Brien. “We can’t really tell you right now what impact that will have,” she said.

It’s then likely at that point they would have to get permission from the Department of Banking and Insurance if carriers decide they need to hike rates.

Under state law, “property and casualty insurers, which include auto insurers, are permitted to file requests with the department to amend their rates or rating systems. Any rate change must be reasonable, adequate, and not unfairly discriminatory. If the department finds that a rate request by a carrier is unreasonable, inadequate, or unfairly discriminatory, the request will be disapproved, as per state law.”

Although the Insurance Council of New Jersey supports the initial increase in coverage next year, it is opposed to the new law because of this 2026 increase.

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Matt Arco may be reached at [email protected]. Follow him on Twitter at @MatthewArco.