On May 19, 1998 the State of New Jersey adopted the Automobile Insurance Cost Reduction Act.
The statute was intended to reduce the cost of automobile insurance; however, that purpose was accomplished primarily 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.
Q: What choices do I have when I purchase or renew my auto insurance policy?
You are required to elect the standard policy or the basic policy.
Q: What is the
A: The basic policy (also known as the mini-policy)
provides only $5,000 of property damage liability coverage if someone makes a claim against you and $15,000 of medical expenses
(up to $250,000 for catastrophic brain and spinal cord injuries) if you or a resident family member are injured. The basic
policy does not provide coverage if you injure someone else, however, you have the option of electing 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.
If I elect the basic policy, will my insurance company hire an attorney to defend me if I am sued for damages by someone else
who was injured?
A: If you elect a basic policy with no bodily
injury liability coverage, your insurance company will not provide an attorney to represent you. If you are sued – even
if you are not at fault for the accident – you will have to hire your own lawyer at great expense to defend you or else
you will risk the entry of a default judgment against you with the loss of your driver’s license.
Q: Should I purchase the basic policy?
A: No. We
believe that the basic policy does not provide adequate protection for your assets if you are sued nor adequate coverage for
you or your family if you are injured by a careless driver. WE RECOMMEND THAT YOU 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. WE RECOMMEND THAT YOU ELECT THE STANDARD POLICY.
Q: Does the standard policy provide coverage for medical expenses?
Yes. The standard policy provides personal injury protection (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. WE RECOMMEND THAT YOU PURCHASE $250,000 OF PIP MEDICAL EXPENSE COVERAGE.
If I am injured, can I make a claim or file a lawsuit against the careless driver who caused the accident?
A: 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 elect
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 option".
What is the "limitation on lawsuit option"?
the lawsuit limitation option (also known as the verbal threshold), you agree not to sue the person who caused an accident
for your pain and suffering unless you sustain one of the injuries that appear on this list:
1 - Death
Type 2 - Dismemberment
3- Significant disfigurement or scarring
Type 4 - Displaced fracture
5 - Loss of a fetus
Type 6 - Permanent injury
A permanent injury occurs
when a body part has not and will not heal to function normally. "WE RECOMMEND
THAT YOU DO NOT ELECT THE "LIMITATION ON LAWSUIT OPTION- IT SEVERELY LIMITS YOUR RIGHT TO BE COMPENSTAED FOR INJURIES
CAUSED BY THE NEGLIGENCE OF OTHERS".
Q: What is the "no limitation
on lawsuit option"?
A: The no limitation option (also known
as "no threshold") permits you to make a claim or to file a lawsuit against a careless driver for any and all personal
injuries. "WE RECOMMEND THAT YOU ELECT THE "NO LIMITATION ON LAWSUIT
Q: Who benefits if I purchase a basic policy or a standard
policy with the lawsuit limitation option?
A: You will reduce
the cost of your automobile insurance; however, you will be giving up insurance benefits and legal rights in order to save
money. 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: 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; however, you may want to 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 unidentified?
A standard policy automatically provides coverage for injures caused by an uninsured or hit-and-run driver in the amount of
$15,000 per person/$30,000 per accident; however, you may purchase additional coverage up to the amount of your liability
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?
The amount of your recovery from a careless driver may be limited by the amount of liability insurance purchased by that driver
and by 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 coverage.
Q: How much coverage do you recommend?
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 $250,000/$500,000. We recommend
that you purchase liability coverage with single limits of $500,000 or the highest limits that you can afford. In addition,
you should purchase uninsured/underinsured motorist coverage with the same limits as your liability coverage.
Q: How do I choose the type of automobile insurance coverage that I want for myself and my family?
A: When you purchase or renew your policy, you will be provided with a coverage selection
form. We recommend that you make the following selections:
Standard Policy – Yes
Basic Policy – No
No limitation on lawsuit option – Yes
Limitation on lawsuit option – No
PIP medical expenses $250,000 – Yes
PIP medical expenses $15,000/$50,000/$75,000/$150,000 – No
With same limits as liability coverage
If you do not sign
the coverage selection form, you will be assigned a standard policy with $250,000 of PIP medical expenses and the lawsuit
Q: What happens if I do not purchase any automobile insurance?
A: The 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 noneconomic loss, even if you were not at fault for the accident.
Q: Can I purchase
other insurance protection in addition to automobile insurance?
Yes. You can purchase a personal catastrophe liability umbrella at a reasonable cost that will provide additional coverage
if a claim is made against you or any resident family member for injuries sustained by another person anywhere in the world
due to the operation of a motor vehicle or for any other reason. In addition, some companies offer umbrella policies that
include uninsured/underinsured motorist coverage. WE RECOMMEND THAT YOU PURCHASE A PERSONAL CATASTROPHE LIABILITY UMBRELLA
WITH LIMITS OF $1 MILLION.
CALL 732-244-0500 for a FREE telephone consultation
with an experienced personal injury attorney.