A guide to Buying Auto Insurance in New Jersey
Many of our clients have asked if Greenberg Minasian, LLC could provide a simple explanation of the coverages in a typical automobile insurance policy together with a guide to purchasing auto coverage in New Jersey. The following descriptions are only general and are not intended as substitutes for the descriptions in your own policy. Coverage requirements vary depending on whether you own, lease or finance your vehicle, so always read your policy carefully and call an attorney with all of your coverage questions. This guide is intended to help you make an informed choice when purchasing automobile insurance. However, it is not to be considered comprehensive legal advice.
EXPLANATIONS OF THE COVERAGES IN YOUR POLICY
- Bodily Injury and Property Coverages These are the liability coverages that protect you (and the leasing of finance company if applicable) from liability if you cause injury to someone else or damage someone else's property while operating your automobile. Bodily Injury limits are usually stated in "split limits". For example, until recently the minimum coverage available in New Jersey is $15,000/$30,000. Thus your insurance company will pay a maximum of $15,000 for bodily injury suffered by one person in any one covered accident, and up to a total of $30,000 for all persons injured in that accident. * You are responsible for damages that exceed your coverage limits. *Warning: New Jersey now permits insurance companies to offer "Basic" or "Dollar a Day" policies that provide little or no protection for you and your family. Greenberg Minasian strongly urges you to avoid these policies. A "15/30" policy should only be considered bare bones coverage. If you own property or a business, this policy leaves you dangerously exposed. You should consider the value of your home or business as a good indicator of the amount of insurance you should carry. Property Damage coverage is a separate amount of coverage for damages to property because of an accident. Again minimal coverage such as $5,000 P.D. limits can be easily exceeded in an accident and leave you responsible for the balance.
- Uninsured/Underinsured Motorist Coverage This coverage, commonly known as "UM/UIM" coverage may be the most important coverage in your policy. This coverage covers you, your spouse, your children and any other relative residing in your household against the possibility of being injured by a hit and run or stolen vehicle, an uninsured vehicle or a vehicle that does not carry enough liability coverage to compensate you for your injury and property damage. Other persons who may be covered under this section are occupants of your vehicle who do not have their own UM/UIM coverage. This coverage applies to you and your family whether you are in your car, someone else's car, a taxi, bus or even walking down the street if you are injured by a motor vehicle. For a relatively modest cost (as little as $60 a year in some cases) you can be covered for $250,000 per person and $500,000 per accident. * Warning. New Jersey only allows your to buy this coverage up to the amount of your own liability limits.
- Personal Injury Protection (PIP) or No-Fault Coverages This coverage is really several types of coverage all rolled into one as a result of the New Jersey No-Fault Insurance Act passed in 1972 by the legislature. Basic PIP coverage includes Medical Expenses, Essential Services, Income Continuation, Death Benefits, Funeral Expenses. No-Fault or PIP means that no matter who causes the accident, no matter who own the vehicle, your insurance or the insurance of your family member covers your medical, funeral and essential services. Medical Expenses: This portion of the PIP "package" is the only coverage that may be purchased separately. If you purchase the basic PIP all of the other four coverages are included. If you do not choose the PIP "package" you cannot purchase any of the other options. The standard policy in New Jersey covers you for up to $250,000 in medical expenses that are necessary, reasonable and related to an automobile accident. The standard deductible is $250 and the first $5,000 in medical expenses is subject to a 20% co-pay. This simply means that you must pay 20% of the first $5,000 after the initial $250, or, a total of $1,200 for any one covered accident. The rest of your medical bills up to $250,000 are covered. *Warning: There are less expensive options which leave you with more financial responsibility or the option to have your health insurance coverage pay these expenses. These options are complicated and should not be selected until you have a full understanding of what you will have to pay in the event of an accident. Income Continuation: If you purchase the basic PIP package, you may recover the payment of the loss of income. The New Jersey minimum is $100 per week to a maximum of $5,200. This is excess insurance and is only payable if you receive no money from any other source that exceed your Income Continuation limits. This coverage can also be greatly increased for a small increase in premium (a few dollars a year). Essential Services: This coverage provides for $12 per day up to a maximum of $4,380. This covers you and your family for the costs such as housekeeping, yard work or home health care aides if necessary. This coverage can be increased to a maximum of $20 per day up to $14,600. Death Benefits: Upon the death of an insured the maximum limits of the income continuation benefits and the essential services are payable in full if the deceased family member was an income earner and/or provided essential services around the home. This coverage can be increased to various levels depending on limits your insurance carrier offers. Funeral Expenses: The estate of a deceased, covered under a policy with basic PIP is entitled to a maximum benefit of $1,000 for actual funeral expenses. This coverage can also be increased. See your insurance agent for the maximum. Med. Pay: There is a small amount of coverage available for medical payments for injuries caused by a vehicle other than an auto, such as a motorcycle or truck. New Jersey Law provides that an insurance carrier must provide Med Pay of at least $1000 and up to $10,000. The cost of increasing your Med Pay to $10,000 and opting for basic PIP is minimal and should be a "must" when you purchase insurance.
- Your Right to Sue There are two options presently offered in New Jersey that effect your right to sue a person who causes injury to you or your family as the result of an automobile accident. It is important to know that this decision applies to all family members in a household whether or not they drive and whether or not they were aware of your choice.
- The Verbal or Limitation on Lawsuit Threshold Option The Verbal Threshold is the less expensive option that severely limits your right to sue the owner or operator of another automobile regardless of fault. This means that if you choose this cheaper option you may not be able to recover monies for injuries suffered by you and your family members even if the accident is entirely the other person's fault. *Warning: This option should be avoided if at all possible. You may sustain serious debilitating injuries for which you will not be able to recover. Note: Selection of the Verbal or Limitation on Lawsuit Threshold does not affect your PIP, collision or comprehensive benefits.
- The Zero or No Limitation on Lawsuit Threshold Option Do not be confused by the name. This is the only option that does not limit your rights in any way. This option does cost more, but provides complete protection for you and your family for all covered automobile accidents. *Warning: Many insurance agents will tell you that you have "full coverage." Full coverage does not mean that you have the Zero Threshold. It is a term that means you have collision and comprehensive coverage.
- Collision Coverage This coverage protects you against damage to your car resulting from a collision with or as the result of a maneuver of another motor vehicle regardless of who is at fault. If the collision is the other driver's fault, your insurance company is responsible for collecting that money and your deductible from the other driver. Deductibles can vary greatly under this coverage. *Warning: If you lease or finance your vehicle you must determine what coverage the leasing or finance company requires.
- Comprehensive Coverage This coverage protects you against fire, theft, vandalism or other natural harms such as hail or flood. Comprehensive coverage has many different deductibles and does not have to be the same as your collision deductible. Be sure to have your insurance agent or broker compare the cost of several different deductibles so that you can make an informed choice. Warning. Some companies cover an accident with an animal under this coverage, others under your collision coverage. If you live in an area where animals, such as deer, are a common hazard you should ask which deductible applies to you.