Auto Insurance 20
The State of New Jersey adopted the Automobile
Insurance Cost Reduction Act in 1998 to reduce the cost of automobile
insurance by reducing the benefits available to persons who are injured
in automobile accidents. This means less coverage to pay for medical
treatment and less rights to recover monetary damages from careless
drivers who cause accidents. Protect yourself. Please read this Question
and Answer page
- What choices do I have when I purchase or renew
my auto insurance policy?
- You are required to choose either the Standard
Policy or Basic Policy.
Q. What is the Basic Policy?
A. The Basic Policy provides minimal
coverage and leaves you unprotected in several important areas:
- A Basic Policy provides you with only $5,000 of
property damage liability coverage if someone makes a claim
- A Basic Policy gives you only $15,000 of medical
expense benefits (up to $250,000 for brain or spinal cord injury)
if you or a resident family member is injured.
- The Basic Policy does not cover you if you injure
someone else. However, you may choose coverage in the amount of
$10,000 for injury to one or more persons in the same accident if
someone makes a claim against you.
- The Basic Policy does not provide any uninsured
motorist coverage to protect you and your family if the careless
driver who causes the accident is uninsured or is insured under a
Basic Policy with no bodily injury liability coverage.
Choice - NEVER BUY BASIC.
Q. What if an injured party sues
me for damages? If I choose the Basic Policy, will my insurance
company hire an attorney to defend me?
A. If you choose a Basic Policy with
no bodily injury liability coverage, your insurance company will not
provide an attorney to defend you against a personal injury suit
even if you are not at fault for the accident. You will have to hire
your own lawyer to defend you at great expense. If you donï¿½t hire
your own lawyer, you risk having a monetary judgment entered against
you and the loss of your driverï¿½s license and vehicle
Q. Should I purchase the Basic
A. NO. The Basic Policy does not
provide adequate protection for your assets if you are sued. Nor
does it give you adequate coverage for you or your family if you are
injured by a careless driver. DO NOT ELECT THE BASIC POLICY.
Q. What is the Standard Policy?
A. The Standard Policy provides
liability coverage if someone makes a claim against you with minimum
limits for bodily injury of $15,000 per person/$30,000 per accident
and property damage of $5,000.
In addition, the Standard Policy
provides uninsured motorist coverage with minimum limits of $15,000
per person/$30,000 per accident if you or a resident member of your
family is injured by a person who is uninsured or has no bodily
injury liability coverage.
Safe Choice --- CHOOSE THE
A Standard Policy provides the best
insurance coverage to protect your assets if you are sued and to provide
compensation to you and your family if you are injured.
Q. Does the Standard Policy
provide coverage for medical expenses?
A. Yes. The Standard Policy provides
medical expense benefits (PIP) coverage which includes medical
expenses up to $250,000 per person per accident. You may elect to
purchase less coverage in the amounts of $15/50/75/150,000; however,
if you do, you may not have enough insurance to obtain all of the
medical treatment you need or to pay for all of your medical bills.
Safe Choice --- WE RECOMMEND THAT
YOU PURCHASE $250,000 OF PIP MEDICAL EXPENSE COVERAGE.
Q. Who decides what type of
medical treatment and diagnostic testing I am to receive?
A. You will probably rely upon your
treating doctor to make decisions about the nature of your injuries
and treatment; however, some insurance companies may offer or
require "pre-certification." This requires your doctor to
request authorization from the insurance company before rendering
any medical treatment or administering any diagnostic tests. We
believe that the choice of treatment should be the responsibility of
your doctor, not your insurance company.
Safe Choice -- WE RECOMMEND THAT YOU
SELECT AN INSURANCE COMPANY THAT DOES NOT REQUIRE PRE-CERTIFICATION.
- If I am injured, can I make a claim or file a
lawsuit against the careless driver who caused the accident?
- It depends on your policy and the nature of your
injuries. If you purchase a Standard Policy, you are required to
elect a "tort option" that will determine if you have
the right to make a claim. You must select either the
"limitation on lawsuit option" or the "no
limitation on lawsuit option." If you purchase a Basic
Policy, you are assigned the "limitation on lawsuit
- What is the "limitation on lawsuit
- The lawsuit limitation option (also known as the
verbal threshold) limits your legal rights to make a claim for
monetary damages or to file a lawsuit against a careless driver
unless you sustain one of the following types of injury.
- Type 1 ï¿½ Death
- Type 2 ï¿½ Dismemberment
- Type 3 ï¿½ Significant disfigurement or
- Type 4 ï¿½ Displaced fractures
- Type 5 ï¿½ Loss of a fetus
- Type 6 ï¿½ Permanent injury (which occurs when
a body part has not and will not heal to function normally with
Q. What is the
"no limitation on lawsuit option"
A. The no limitation option
permits you to make a claim or to file a lawsuit against a careless
driver for any and all personal injuries.
Safe Choice -- WE RECOMMEND THAT YOU
CHOOSE THE "NO LIMITATION ON LAWSUIT OPTION."
Q. What happens if I do not purchase
any automobile insurance?
A. New Jersey law requires the owner of
every motor vehicle to purchase insurance. If you do not purchase
insurance, you will be subject to civil and criminal penalties. In
addition, if you are injured while operating an uninsured automobile,
you will not be permitted to make a claim or file a lawsuit against
the careless driver for economic or non-economic loss, even if you
were not at fault for the accident.
Q. How can I protect myself and my
family if we are sued?
A. A Standard Policy provides liability
insurance with minimum limits of $15,000 per person/$30,000 per
accident if you or your family are sued. And you may purchase additional
coverage to protect your assets.
Q. How can I protect myself and my
family if we are injured by a careless driver who is uninsured or
A. A Standard Policy automatically
provides coverage for injuries caused by an uninsured or hit-and-run
driver in the amount of $15,000 per person/$30,000 per accident. You
may purchase additional coverage up to the amount of your
Q. How can I
protect myself and my family if we are injured by a careless driver
who is insured but does not have adequate coverage?
A. The amount of
your recovery from a careless driver may be limited by the amount of
liability insurance purchased by that driver and the owner of the
vehicle. However, if you purchase a Standard Policy, you can purchase
underinsured motorist coverage up to the amount of your liability
Q. How much coverage do you
A. Most people feel that the minimum
limits of $15,000 per person/$30,000 per accident are inadequate. Many
people purchase additional coverage up to $100,000, $300,000 or
$500,000, single limit.
Choice -- WE RECOMMEND THAT YOU PURCHASE LIABILITY
COVERAGE WITH SINGLE LIMITES OF AT LEAST $100,000 OR THE HIGHEST LIMITS
THAT YOU CAN AFFORD UP TO $500,00. IN ADDITION, YOU SHOULD PURCHASE
UNINSURED AND UNDERINSURED MOTORIST COVERAGE WITH THE SAME LIMITS AS
YOUR LIABILITY COVERAGE.
Q. Who benefits if I purchase a
Basic Policy or a Standard Policy with the lawsuit
- The careless drivers who cause accidents will
benefit because they may have no legal responsibility for your
pain and suffering. The insurance companies who provide coverage
for careless drivers will benefit because they may not have to pay
any monetary damages for your injuries
Q. Can I purchase other insurance
protection in addition to automobile insurance?
A. Yes. You can purchase a personal
catastrophe liability umbrella at a reasonable cost that will provide
you with additional coverage of $1 million if a claim is made
against you (or any resident family member) for injuries sustained by
another person. In addition, some companies offer umbrella policies
that include underinsured or uninsured motorist coverage of $1
Safe Choice-- WE RECOMMEND THAT YOU PURCHASE A PERSONAL CATASTROPHE
LIABILITY UMBRELLA WITH LIMITS OF $1 MILLION.
- What is ATLA-NJ?
- The New Jersey chapter of the Association of
Trial Lawyers of America is an organization of over 2,300
attorneys who represent citizens who are injured in accidents. In
addition, we represent the interests of accident victims in
hearings before the Legislature, Executive agencies and the
Judiciary. If you are injured in an accident, you should contact a
member of ATLA-NJ for legal advice or contact the ATLA-NJ Lawyer
Referral Service 1-800-367-0089.
You are faced with many choices when
you purchase or renew your automobile insurance policy. The failure to
purchase the correct coverage will affect both your ability to receive
medical care if you are injured in an accident and your legal rights
to receive monetary damages from the careless driver who caused the
accident. We strongly recommend that you select the following
coverages to properly protect yourself and your family.
Automobile Insurance Checklist
Liability Coverage (A minimum of $100,000 of the
highest limits that you can afford up to $500,000).
Uninsured Motorist Coverage (A minimum of
$100,000 or the highest limits that you can afford up to
Underinsured Motorist Coverage (A minimum of
$100,000 or the highest limits that you c an afford up to
PIP Medical Expense Benefits ($250,000)
PIP Medical Expense Benefits (less than
Pre-certification of Medical Treatment
No Limitation on Lawsuit Option
Limitation on Lawsuit Option