Rutherford's auto insurance rates soar above neighbors'( Part 1 )

Residents may soon see an increase in their automobile insurance due to changes in rate territory maps used to determine the cost of an individual's policy.

The factors that give a certain town a rate change are determined on the loss potential to the company and must be approved by the state. Factors include everything from crime and population to the number of filed claims, accidents and litigation. Some local drivers are finding that companies are starting to see the area as more of a liability for loss and the company needs more compensation when insuring area drivers.

One Rutherford resident said she actually had her AAA Mid-Atlantic insurance premium rise by $220 on a recent renewal on two people and two cars. She didn't move, however, from a different part of the state in that time. Instead, she was told Rutherford moved to another territory bracket that assessed a higher rate when she questioned the increase to AAA Mid-Atlantic. The company gave her little explanation.

"The best thing for her to do is she ought to shop around if she doesn't like her current rate; if she shopped around, she would almost certainly find a better rate," said Marshall McKnight, a spokesman for the New Jersey Division of Banking and Insurance, who highlighted the discontinuity in how insurance companies use territories to value how they assess drivers that live in them.

More than 60 insurance companies statewide use insurance territory rate maps, which they can either formulate themselves and the state then approves them or abide by a state-mandated one. If the company does use its own, it must be approved initially and changes must be approved by the New Jersey Division of Banking and Insurance, who a little over a year ago updated its own map for the first time in over 50 years, which clusters together all of the South Bergenite coverage area towns into one of its 27 geographic territories. A prior map, developed in 1947, had the South Bergenite towns grouped with less dense middle-Bergen County towns such as Saddle Brook and Rochelle Park, but the new map, which was part of an extensive auto insurance reform act in 1998, has separated those towns and grouped the southern portion of the county with towns like Nutley and Secaucus in bordering Essex and Hudson counties.

"Maps hadn't caught up to those demographic changes, but each case is different and each company may justify their loss figures for approval," said McKnight.

The problem however, according to McKnight, is the map. Although it was relied on heavily years ago, the map has merely become one of several factors, and sometimes for some insurance companies, it is not the most important factor in gauging an individual's car insurance rates. So, if one company deems the South Bergen territory needs a rate hike due to loss or demographic and crime shifts, it doesn't mean another will follow suit. The state's map gives formulas on numbers to use on writing insurance for each territory; the more urbanized the territory, usually, the higher the numbers, but even of those companies that use the state map, only 11 out of the state's 64 can ask for a rate increase in a specific territory if they can prove a loss.

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