Automobile insurance is required by law in the State of New Jersey and operation of an automobile without insurance is a serious motor vehicle offense carrying penalties for first time offenders of fines of up to $1000, community service, and mandatory loss of driving privileges for one year. Despite these serious penalties, a sizeable minority of drivers in New Jersey remain uninsured. Responsible drivers face increasing costs for automobile insurance while receiving reduced benefits under the insurance policies.
The cost of automobile insurance in the State of New Jersey is an important consumer and political issue. Recent changes in the law present the consumer with the opportunity to save on insurance premiums while receiving reduced benefits. The following questions and answers explain some of the choices faced by consumers and provide a guide for selecting the best insurance for you and your family under the new laws.WHAT ARE THE CHOICES FOR AUTOMOBILE INSURANCE?There are two choices: the Standard Policy and the Basic Policy.
WHAT IS THE BASIC POLICY?
The basic policy provides very limited coverage to the consumer. Its main purpose is to provide the consumer an inexpensive way of complying with the insurance law. The benefits provided under this type of policy are so minimal that this type of policy cannot be recommended under any circumstances. The benefits are as follows:
- $5000 of property damage insurance;
- $15,000 of medical expense benefits.
The basic policy provides no coverage to you if you are sued for injuries arising out of an automobile accident by another person. Under that circumstance you would have to pay for your own attorney and pay for any damages that are awarded against you. The basic policy does provide an option of electing coverage to protect you if you are sued in the amount of $10,000. total for injury to one or more persons. This is an extremely low level of coverage.
The basic policy provides the consumer with little more than a certificate of compliance with the automobile insurance law. It can never be recommended even with the optional $10,000. personal injury option because of the minimal level of coverage that it provides to the consumer and family members who would be covered under the policy.
WHAT IS THE STANDARD POLICY?
The standard policy provides liability insurance coverage for the consumer who is sued for personal injuries in the amount of $15,000 per person up to $30,000 per accident. That means if someone claims that you injured them in an automobile accident and brings a claim against you, the insurance company will provide you with an attorney and pay up to $15,000 per person in damages to the person injured and up to $30,000 per accident in the event that two or more persons are injured in the accident.
These are the minimum policy limits and should be increased to provide you and your family with adequate coverage. Many people purchase coverage up to $100,000/300,000 or $250,000/$500,000. Higher limits are also available. You should discuss the amount of insurance you need to carry in detail with your insurance agent. A comparison of the cost of increased coverage should be made. In many cases the additional coverage only requires a small additional premium.
WHAT HAPPENS IF IAM INJURED BY AN UNINSURED DRIVER?
That depends on what type of automobile insurance you have purchased. If you have a basic policy, you have no coverage. If you have a standard policy, the policy will carry uninsured motorist coverage. That means that your insurance company will protect you by providing insurance for your claim for injuries. The amount of coverage depends on the coverage that you have selected. The minimum required by law is $15,000 per person and $30,000 per accident in the event that two or more persons are injured by the uninsured driver. However, you can and should obtain additional coverage, which should be the same as the liability coverage you have chosen.
WHAT IS UNDERINSURED MOTORIST COVERAGE?
This is the insurance that protects you and your family if serious injuries are sustained but the driver causing the injuries only has a minimal policy, for example,$15000/$30,000. Under the standard policy you can and should purchase underinsured coverage up to the amount of your liability coverage.
WHAT IS COLLISION COVERAGE?
This is the coverage that pays for the repair of you vehicle that is involved in an accident regardless of fault. For example, if you are in an accident that is your fault, your collision coverage will pay to repair you vehicle, minus the deductible. If the accident is the other party's fault, your collision coverage will also pay for the repair minus the deductible. However, when the accident is the other party's fault, your insurance company should make all reasonable efforts to recover the deductible on your behalf from the party at fault and pay that amount over to you. Also, when the other party is clearly at fault, you have the option of settling the matter directly with the other party's insurance company.
WHAT IS COMPREHENSIVE COVERAGE?
This is the coverage that pays for property damage to your vehicle caused by something other than another motor vehicle. For example, if your vehicle is vandalized, comprehensive coverage pays for the repairs. Again, there are a variety a deductibles offered by the insurance companies. The right deductible for you is based on the cost of the insurance, the age and condition of your vehicle and the amount of risk you are willing to accept.
IF I AM IN AN ACCIDENT WHO PAYS MY MEDICAL BILLS?
Under New Jersey NO-FAULT Law, your insurance company generally pays for the medical bills of you and your family. As a general rule the other driver does not pay for your medical bills. There are certain deductibles and co-payments which should be submitted to your health insurance carrier after your automobile insurance company has paid its share of the bill. Also, you have the option of making your health insurance carrier your primary insurer in automobile accident cases. This may save you a small amount on your premium, but should this option only be selected if you have cleared this with your health insurance carrier and you are satisfied with the coverage provided by your health insurance company.
SUMMARY
Do NOT select the basic policy under any circumstances. It is a poor alternative that provides very little coverage for the money and can have detrimental long term consequences if you are injured or if you are sued by an injured person. The basic policy provides inadequate protection for you and your family.
You should select the standard policy with liability limits in an amount of not less than $100,000/300,000 with the same limits for uninsured and underinsured coverage. In many casesthis may not be adequate coverage. You should consult with your insurance agent and/or financial adviser in order to determine the limits that are right for you. Greater coverage limits provide you and your family with greater protection and this is a circumstance where you should err on the side of caution and opt for the greater limits.