Auto Insurance Questions: A Guide to Making Safe Choices When Purchasing or Renewing Your Auto Insurance Policy
The New Jersey Association for Justice and the New Jersey Chapter of the Association of Trial Lawyers of America (ATLA-NJ) gives the following tips on how to protect yourself and your family when purchasing or renewing auto insurance policies.
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.
Q. What choices do I have when I purchase or renew my auto insurance policy?
A. 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 against you.
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.
Safe 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 don’t hire your own lawyer, you risk having a monetary judgment entered against you and the loss of your driver’s license and vehicle registration.
Q. Should I purchase the Basic Policy?
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 STANDARD POLICY.
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 — ATLA-NJ RECOMMENDS 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 — ATLA-NJ RECOMMENDS THAT YOU SELECT AN INSURANCE COMPANY THAT DOES NOT REQUIRE PRE-CERTIFICATION.
Q. 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 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 option.”
Q. What is the “limitation on lawsuit option”?
A. 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- Death
Type 2 – Dismemberment
Type 3 – Significant disfigurement or scarring
Type 4 – Displaced fractures
Type 5 – Loss of a fetus
- Type 6 – Permanent injury (which occurs when a body part has not and will not heal to function normally with further treatment)
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 — ATLA-NJ RECOMMENDS 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 unidentified?
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 liability coverage.
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 under insured 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, $500,000 or more, single limit.
Safe Choice — ATLA-NJ RECOMMENDS 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 limitation option?
A. 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 under insured or uninsured motorist coverage of $1 million.
Safe Choice– ATLA-NJ RECOMMENDS THAT YOU PURCHASE A PERSONAL CATASTROPHE LIABILITY UMBRELLA WITH LIMITS OF $1 MILLION.
Q. What is ATLA-NJ?
A. 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, ATLA-NJ 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. ATLA-NJ strongly recommends that you select the aforementioned coverages to properly protect yourself and your family.
For more information visit – http://njconsumerlaw.com/InsEngpg2.htm