Beau Scott, of Brigantine, at first felt some relief when he learned the driver who had crashed into his parked Ford Explorer had insurance.
His relief turned to outrage when he learned the driver belonged to a special class of motorist whom New Jersey exempts from its own law requiring liability coverage.
Scott's damaged car has been sitting in his driveway since the mid-July accident. His insurance company gave him $2,700 toward repairs for a crumpled rear panel and bumper, but he can't come up with the rest of the $4,000 estimate to restore his car to mint condition.
Under the so-called "dollar-a-day" insurance program, thousands of qualifying low-income motorists are allowed to drive legally without carrying property-damage liability insurance.
Started under former Gov. James E. McGreevey in 2003, the Special Automobile Insurance Policy, or SAIP, program has put as many as 22,000 drivers on New Jersey's roads with policies that cover no more than hospitalization for their own injuries.
When a SAIP-insured motorist hits another car - Scott's prized Explorer was parked in a transmission repair service's parking lot - the accident victim and the victim's insurance company are stuck with the bill.
Even if the victim sues, the driver who caused the accident often has few assets.
Accidents caused by motorists with the special insurance, created at a time when insurance firms were fleeing the state, likely cost millions each year. If average accident rates and costs are applied to these drivers, the damage estimate reaches $4.7 million annually.
"It's a disgrace," said Scott, 63. "The whole thing is a crock."
He and his wife are "not your average Brigantine people with money," the handyman said. "We live month to month."
"We do the right thing. We live in a state where insurance is mandatory, and we have coverage on both our cars," he said. "But the state is circumventing its own laws. Insurance is mandatory for only some people, but not others. … And I'm paying for them."
Some want the program to expand. Proposed legislation would open the dollar-a-day program to participants in welfare, senior prescription, state health care, veterans and Section 8 housing programs. More than half a million people receive such benefits, although the same people may participate in multiple programs. The proposals appear not to have legislative support, although the state Assembly passed a version of the main bill in 2005.
Just permission to drive
Area insurance agents and an attorney specializing in car accident cases said the dollar-a-day program boils down to the state exempting certain people from the state requirement to carry car insurance.
"We have people with at least basic coverage, uninsured motorist coverage, liability, property damage. The dollar-a-day people have none of this," Atlantic City attorney Kenneth Zaid said. "In effect, all you have is an insurance card that allows you to drive legally."
The SAIP program was started by McGreevey as part of a 2003 reform package. Insurance companies fed up with red tape were leaving New Jersey. The companies fared better as officials cut state regulations. But the state wanted to reduce the number of uninsured motorists - then about 600,000 - and help poor people who couldn't afford New Jersey's high car insurance rates.
Officials created a plan that costs $365 per year, or $360 if paid all at once. Only qualified low-income residents who receive Medicaid benefits are eligible. The policy pays as much as $250,000 to treat only serious accident injuries, and includes a $10,000 death benefit. The policy, provided by insurance companies, provides no property-damage or bodily-injury liability coverage.
But it provides a valid New Jersey insurance identification card, allowing people who could otherwise not afford insurance to drive legally.
Helps poor get to work
"It was designed for people who need to get to work and are very poor," said Marshall McKnight, N.J. Department of Banking and Insurance spokesman. "The only way for them to improve their economic situation is to get a car and get to a job."
"With the mandatory insurance law, we didn't want people kept at home who want to work. It was intended to put them on the road," he said.
John D'Agostino Jr., a Hammonton insurance agent, was president of the state agents association when the program started. He said state officials downplayed concerns that dollar-a-day policies would create problems.
"In arguments, some said it would be a disaster, and others said there would be only 200 policies, that it would be so minimal that it wouldn't be an issue," D'Agostino recalled.
However, nearly 10,000 policies were issued in 2004, according to the state insurance department. That number grew by 52 percent the next year. Last year, more than 18,500 dollar-a-day policies were issued. D'Agostino and a spokeswoman for the N.J. Commercial Automobile Insurance Plan, which administers SAIP, estimated that as many as 22,000 policies are in force.
As more people opt for the dollar-a-day policies, fewer are buying stripped-down "basic" insurance policies that at least provide as much as $5,000 in property-damage liability coverage per accident. Basic policies declined from 25,000 issued in 2004 to 19,850 last year. If the trend continues, SAIP drivers will soon outnumber those with basic liability coverage.
According to D'Agostino and the state insurance department, some basic policies cost as little as $50 more than dollar-a-day policies, depending on a person's driving record and residence. D'Agostino said basic policies can be found for $400 to $500.
Extra burden for a few
State officials and SAIP administrators said they do not collect statistics on accidents involving dollar-a-day drivers. Professional associations also had no data. The Press of Atlantic City estimated that, based on federal and state data, one of every 19 New Jersey drivers is involved in an accident each year. That same rate applied to dollar-a-day drivers suggests they are involved in more than 1,100 accidents per year. If half of those accidents are the fault of SAIP policy holders, those drivers are responsible for as much as $4.7 million in property damage and minor injuries per year, not counting costs associated with accidents resulting in death and serious injury. (See chart.)
Spokeswoman Rachel Moore of the Insurance Council of New Jersey, which represents companies writing 93 percent of the state's automobile policies, said the council has not received complaints about the dollar-a-day program. She dismissed concerns about possible problems, saying "22,000 out of 5.8 million licensed drivers is such a small number."
But the significance looms large to the minority of New Jersey residents who are hit by one of those drivers.
Three people lost out when Beau Scott's car was hit. His Explorer was in a transmission shop lot when a motorist crashed into another car on the lot, pushing it into Scott's, and then pushing his car into a third.
Jason Wiegand, 35, of Galloway Township, said he was stopped at a light on Jimmie Leeds Road last month when another car rear-ended his Acura. The driver had a dollar-a-day policy, and Wiegand recovered nothing from her. His insurer totaled his meticulously maintained car - after subtracting a $500 deductible from the value.
Wiegand said he is angry that he lost $500 and a day's work, and that the money he received won't cover the cost of buying even a used car. He said he is engaged and is trying pay for a wedding.
"I never knew about this kind of insurance. It's ridiculous," he said. "If it covers anything, it should cover the car."
D'Agostino agreed. He said since SAIP participants must be on Medicaid to qualify, they already have medical coverage.
Not good for poor, either
Several professionals said dollar-a-day plans are bad for poor people as well as other motorists. Agent Ernie Johnson of Pleasantville, a 32-year insurance industry veteran, said he strongly discourages customers from buying the dollar-a-day plan.
"I thought it was a joke when they first came out," he said. "They don't provide any coverage."
He said while a poor person may not have assets to lose now, lawsuits can go on for years. Policy holders may be mortgaging future earning power if they cause an accident. But some people don't think anything bad will happen to them, and insist on buying a dollar-a-day policy, he said.
"The last thing I tell them as they walk out is, 'If you have an accident, don't call here,'" Johnson said.
But those people shape their own potential consequences. If they cause accidents, the other parties have consequences thrust upon them.
Scott said he is forced to live with a damaged car or spend money he can't afford to fix it. Recently, he said the situation got even worse.
"I was on the phone with my insurance company," Scott said. "I was told my rates will go up a few hundred dollars because I put in a claim."
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