On September 10, 2007, N.J.S.A.17:28-1.1(f) was enacted and made ineffective a “step-down” clause contained in the UM/UIM portion of a commercial automobile policy issued in New Jersey. A step-down clause is a limitation regarding UM/UIM benefits that often arises when a person is subject to multiple insurance policies, including a personal policy. A step-down clause acts to reduce available coverage limits to the typically lower amount of coverage contained within the personal policy.
Since the statute was enacted there had been a controversy as to whether N.J.S.A. 17:28-1.1(f) was to be applied prospectively or retroactively. On February 3, 2014, the Supreme Court of New Jersey ruled on the issue in James v. New Manufacturers Insurance Company. In James, the court held that the statute is to be applied prospectively. As a result, if the commercial policy contains a step- down clause and the subject accident occurred before September 10, 2007, the clause will still be effective.