All states require that motorists have some form of insurance. New Jersey is no different. If you have registered or plan to register your vehicle in New Jersey, make sure you know the minimum car insurance coverage required by law before choosing your policy.
Bodily Injury Liability
This type of insurance covers people who suffer injuries in an accident you cause. For example, if you rear end someone who was waiting at a red light and he sues you for neck injuries sustained in the accident, your insurance company will pay the injured person up to the amount that you chose in your bodily injury liability policy.
The coverage will include payment for the other driver’s medical bills, other economic damages, and pain and suffering as a result of their injury. Your bodily injury coverage does not cover your own injuries.
Property Damage Liability
Like it sounds, property damage liability covers damage to someone else’s property in an accident you cause. If we take the example above, the property damage liability coverage would cover the damage to the other driver’s vehicle. Depending on your policy, this may cover damaged items inside the car as well. Again, it is important to note that this covers the property of the other driver. This does not cover damage to your vehicle.
Personal Injury Protection
Personal injury protection (also known as PIP coverage) is first party benefit coverage. This means that it covers you and the others on your policy. If you sustain injuries after rear-ending another vehicle, your insurer will pay your medical bills up to your policy limit.
How low can you go?
New Jersey provides motorists two choices when purchasing insurance; you can choose a standard plan or the cheaper basic plan. The basic plan contains the minimum coverage allowable by New Jersey law.
The Standard Policy
A standard insurance policy must include $15,000 per person and $30,000 per accident in bodily injury coverage. [N.J.S.A. § 39:6A-3]. Take our example above; if the driver sustained $20,000 in damages and his passenger sustained $15,000, the minimum coverage will pay $15,000 to each victim, leaving you with the $5,000 bill.
The standard insurance policy also requires a minimum of $5,000 for property damage. So if the accident results in a repair bill of $6,000 dollars, the insurance company will only pay up to the limit of $5,000 and you will be responsible for the remaining $1,000.
Lastly, the minimum standard plan contains a minimum of $15,000 per person/accident personal injury protection (PIP) coverage. Essentially, this means that your insurer will pay up to your policy limit for damages you or anyone covered by your policy suffered.
The Basic Policy
The Automobile Insurance Cost Reduction Act of 1998 requires insurance companies to offer a basic plan that offers even less coverage [N.J.S.A. § 39:6A–1.1]. This allows motorists to purchase cheaper insurance and opt for less coverage, increasing their risk personal liability.
The basic plan still requires that you maintain a minimum coverage of $5,000 for property damage liability. Again, this covers damage to the property of others sustained in an accident that you cause. The basic plan also requires that you maintain $15,000 in PIP coverage insurance [N.J.S.A. § 39:6A–3.1]. This will cover your own medical expenses no matter who is at fault.
The basic policy does not include bodily injury liability coverage. This means that if you cause an accident and injure someone, you will be responsible for the damages you cause. This includes medical bills and recovery for pain and suffering. While the basic policy may save you on monthly premiums, it could end up costing you tens of thousands of dollars in the long run.
Do I need to know anything else about New Jersey’s insurance laws?
Definitely. While you now know the basics, there are other important insurance rules and regulation that you need to know. Be sure to read more about how the verbal threshold and limitations on lawsuit liability can affect your ability to receive compensation. You should also check out other coverages that are available, including uninsured and underinsured motorist coverage and full coverage.