No law, however careless driving tickets usually issued in this fact pattern. Go to court and ask for a no point ticket, 97.2. The fine is high, but you will get no points and your rates may not go up.
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Representing yourself without adequate legal experience or knowledge can prove to be a challenge. It may not be possible to learn every law or detail. Often times the more complex a case is, the more legal knowledge a person needs in order to be successful. A lack of time, resources, and knowledge are difficult to overcome. It's better to hire a lawyer to handle this. There are a lot of excellent lawyers in your city.
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First, there is no law that an officer has to tell you why a ticket was issued. Second, he was referencing the $500 because there is a cost of damages trigger in the leaving the scene of an accident/failure to report an accident statute. I think he just mixed it up a bit. Third, he can't know the exact amount of the damage to a bumper, but that didn't stop NJ from enacting the statute, so the officer's stuck with making decisions on the side of the road. Fourth, depending on your driving record, you could be eligible for an Unsafe Driving (no point) downgrade. The fines are usually between $389 -$439 for the first time it's used. This isn't always better for everyone. If you have a long, unblemished driving history, and you've been a customer with your insurance company for a long time, it might be less expensive to plead to the 2 point ticket and take an on-line safe driver course to eliminate the poitns afterwards. Either way, go to court, talk to the prosecutor, and call your insurance company beforehand so you can make an informed decision.
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There is no requirement that the officer tell you the underlying basis for the ticket. It sounds like he felt bad giving you he ticket but felt due to the amount of damage he had to. The $500 comes from the law that requires you to report an accident if there is more than $500 of damage. The amount of damage is irrelevant to whether you are guilty of careless driving. There is a rebuttable presumption of guilt when you rear-end another car. Depending on your driving record, you may be eligible for downgrade to unsafe driving which is no points but has a $150 fine plus a $250 surcharge. An attorney may be able to plead the matter to a different no point ticket with a lesser fine. If you do not have any prior tickets, you may be better off pleading to the 2 point ticket and taking an on-line defensive driving course which will wipe out the points.