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NJ AUTO INSURANCE BUYER'S GUIDE
NEW JERSEY
Car insurance is required in New Jersey. Whether you
are buying a new insurance policy or renewing your current
policy, you must make many decisions about what coverage
you need and how much you can pay.
The following guide outlines how to make
choices that work for you.
UNDERSTAND YOUR NEEDS. Do you
rent or own your own home? Do you have assets to protect
(including income from a job)? Will your own health
insurance cover auto accident injuries? How much insurance
coverage can you afford? These are some of the questions
you should ask yourself before choosing a specific coverage
plan.
UNDERSTAND YOUR OPTIONS. Use
this guide to learn about the words and phrases used
in auto policies. Know the many coverage options. Review
the different benefits of each option.
UNDERSTAND CONSUMER PROTECTIONS.
As a New Jersey auto insurance consumer, you have rights.
You have a right to fair and equal treatment, and you
have the right to get the information you need to make
informed decisions.
* Starting in mid-2004, companies and agents must give
you three coverage choices, called "Insurance Scenarios,"
when buying a new policy, or upon your request if you
are already insured. You must be told how each choice
may affect what you pay and what your benefits would
be in the event of an accident.
You can shop for auto insurance at any time
- not just when your policy is up for renewal, and if
you find a better price, you can cancel your old policy
and seek a refund of your unused premium.
* You have the right to change your coverages and policy
limits at any time, even if you are not near your renewal
date. If you select options that save you money, you
have a right to a refund of your unused premium within
60 days.
Insurance policies use terms that may be unfamiliar
to the average driver. It is useful to understand what
these terms mean so you can make better, more informed
decisions about your coverage.
COVERAGES - Your auto insurance
policy is divided into different coverages based on
the type of claim that will be paid to you or others.
These COVERAGES are:
PERSONAL INJURY PROTECTION
Otherwise known as "PIP," this is your medical coverage
for injuries you (and others) suffer in an auto accident.
PIP pays if you or other persons covered under your
policy are injured in an auto accident. It is sometimes
called "no-fault" coverage because it pays your own
medical expenses no matter who caused the auto accident.
PIP has two parts (1) coverage for the cost of treatment
you receive from hospitals, doctors and other medical
providers and any medical equipment that may be needed
to treat your injuries and (2) reimbursement for certain
other expenses you may have because you are hurt, such
as lost wages and the need to hire someone to take care
of your home or family.
LIABILITY This coverage pays
others for damages from an auto accident that you cause.
It also pays for a lawyer to defend you if you are sued
for damages that you cause.
There are two kinds of liability coverage: BODILY INJURY
and PROPERTY DAMAGE.
BODILY INJURY LIABILITY COVERAGE
- Pays for claims and lawsuits by people who are injured
or die as a result of an accident you cause. (See page
10 for lawsuit options). It compensates others for pain,
suffering and economic damages, such as lost wages.
This coverage is tjqi cally given a~ two separate dollar
amounts: (1) an amount paid per individual and (2) an
amount paidfor total injuries to all people injured
in any one accident that you cause. It can sometimes
bepurchasedas a combined single limit, which offers
a maximum limit of protection per accident of bodily
injury and property damage liability combined
PROPERTY DAMAGE LIABILITY COVERAGE
- Pays for claims and lawsuits by people whose property
is damaged as a result of an auto accident you cause.
(May also be purchased as a combined single limit with
bodily injury liability coverage.)
UNINSURED MOTORIST COVERAGE - Pays you for property
damage or bodily injury if you are in an auto accident
caused by an uninsured motorist.
UNDERINSURED MOTORIST COVERAGE
-Pays you forproperty damage or bodily injury if you
are in an auto accident caused by a driver who is insured,
but who has less coverage than your underinsured motorist
coverage.
Jane purchases $100,000 in liability coverage and $100,000
in underinsured motorist coverage. Sam purchases only
$15, 000 in liability coverage. Sam crashes his car
into Jane ~ car causing $25,000 in damages. Sam ~ insurance
company pays $15,000 of the damages, while Jane's insurance
company pays the remaining $10,000 from her underinsured
motorist coverage.
COLLISION COVERAGE Pays for
damage to your vehicle as the result of a collision
with another car or other object.
COMPREHENSIVE COVERAGE Pays
for damage to your vehicle that is not a result of a
collision, such as theft of your car, vandalism, flooding,
fire or a broken windshield. However, it will pay if
you collide with an animal.
There are two common types of auto
insurance policies in New Jersey. They are referred
to as STANDARD and BASIC. Both offer options as well.
STANDARD POLICY
- The Standard Policy provides a number of different
coverage options and the opportunity to buy additional
protection. The Standard Policy is the type of policy
chosen by most New Jersey drivers.
BASIC POLICY
- The Basic Policy usually costs significantly less
than a Standard Policy, but provides limited benefits.
It is not for everyone, but it does provide enough coverage
to meet the minimum insurance requirements of New Jersey
law. The Basic Policy could be an option for those with
few family responsibilities and few assets to protect
(including income from a job).
The Dollar-a-Day policy is a new initiative to help
make limited auto insurance coverage available to drivers
who are eligible for Federal Medicaid with hospitalization.
Such drivers can obtain a medical coverage -only policy
a ta cost of$365 a year For more information, ask your
agent or call the Department of Banking and Insurance
at 1-800- 446-7467.
DEDUCTIBLE OPTIONS-In addition to any savings you may realize from how much coverage
you buy, deductibles also provide savings opportunities.
Cost savings can be achieved by choosing higher deductibles.
Thus, if you feel you need a high level of PIP coverage
but want to reduce your premium, you can save money
by agreeing to pay more out-of-pocket through a higher
deductible if you are injured in an auto accident. Your
insurer will pay the medical bills over the deductible
amount you choose. In addition, there is a 20 percent
co- payment on medical expenses in excess of the deductible,
up to $5,000. That means you pay 20 percent, and your
insurer pays 80 percent, after you pay the deductible.
HEALTH CARE PRIMARY
- Cost savings can also be achieved
by using your own health insurance as a primary source
of coverage in the case of injury related to an auto
accident. Before selecting this option, you should find
out if your health insurance will cover auto accident
injuries and how much coverage is provided.
MEDICARE and MEDICAID do not
offer the Health Care Primary option.
EXTRA PIP PACKAGE COVERAGE These are
additional benefit options provided under the STANDARD
POLICY.
INCOME CONTINUATION - If you cannot work
due to accident-related injuries, this coverage pays
lost wages, less Temporary Disability Benefits you may
receive if your disability prevents you from working,
up to the amount you select.
ESSENTIAL SERVICES - Pays for necessary
services that you normally do yourself, such as cleaning
your house, mowing your lawn, shoveling snow or doing
laundry if you are injured in an auto accident.
DEATH BENEFIT - In the case of death,
family members or estates will receive any benefits
not already collected under the income continuation
and essential services coverages.
FUNERAL EXPENSE BENEFIT Pays for reasonable
funeral expenses up to the limit you select if you die
as a result of an auto accident. Even if you choose
one of the lower PIP limits, you will be covered for
medically necessary treatment up to $250,000 regardless
of your selected limit.
UNINSURED MOTORIST COVERAGE
Pays you if you are in an auto accident caused by a
driver who does not have the minimum level of insurance
required by law. Claims that you would have made against
the uninsured driver who caused the accident are paid
by your own policy. Uninsured motorist coverage does
not pay benefits to the uninsured driver. A minimum
amount of Uninsured/Underinsured. Damages greater than
the limits of the other driver's policy are covered
by your policy up to the difference between the limits
of your underinsured motorist coverage and the other
driver's policy limit. Collision coverage pays you for
damage that you cause to your automobile. You can also
make a claim under your own collision coverage for damage
to your car from an auto accident you did not cause.
This may take less time COMPREHENSIVE (also known as
comp or other than collision) and COLLISION coverage
are not required by law, but may be required under the
terms of an automobile leasing or financing contract.
than making a property damage liability claim against
the driver who caused the auto accident. Your insurer
then seeks reimbursement from the insurer of the driver
who caused the auto accident. Comprehensive coverage
pays you if your automobile is stolen or for damage
to your automobile caused by things not covered under
collision coverage, such as vandalism, flooding, fire,
a broken windshield or damage from an animal.
DEDUCTIBLE
- The STANDARD deductible for comprehensive and collision
coverage is $750. Higher and lower deductibles are available
as options. Higher deductibles can reduce your premium.
NAMED DRIVER
EXCLUSION - Prevents
certain drivers on your policy from being covered by
collision and/or comprehensive coverage on a specific
automobile. This can lower your premium, but if the
excluded driver operates the automobile and is involved
in an auto accident, you are not insured for collision
and/or comprehensive coverage; which means you could
be personally responsible. Comprehensive and Collision
Coverage are available as options of the STANDARD POLICY.
Some insurers also provide these options in the BASIC
POLICY. For the STANDARD POLICY, you must make a choice
about the rights you will have if you are injured in
an automobile accident. (The BASIC POLICY includes the
LIMITED RIGHT TO SUE option.) IMPORTANT The choice you
make affects how much your insurance will cost and what
claims will be paid in the event of an accident. The
choice you make regarding your right to sue another
driver applies to you, your spouse, children and other
relatives living with you who are not covered under
another automobile insurance policy.
The UNLIMITED RIGHT TO SUE and LIMITED
RIGHT TO SUE options only cover lawsuits
for pain and suffering" or non-economic losses. Your
medical expenses and some economic losses for injuries
in auto accidents will be paid up to the limits of your
PIP coverage and are not affected by the choice you
make here.
UNLIMITED RIGHT TO SUE -Under the No
Limitation on Lawsuit Option, you retain the right to
sue the person who caused an auto accident for pain
and suffering for any injury.
LIMITED RIGHT TO SUE -
By choosing the Limitation on Lawsuit
Option, you agree not to sue the person who caused an
auto accident for your pain and suffering unless you
sustain one of the permanent injuries listed below:
(Choosing this option does not affect your ability to
sue for economic damages such as medical expenses and
lost wages.) * loss of body part * significant disfigurement
or significant scarring * a displaced fracture * loss
of a fetus * permanent injury (Any injury shall be considered
permanent when the body part or organ, or both, has
not healed to function normally and will not heal to
function normally with further medical treatment.) *
death WARNING: Insurance companies or their producers
or representatives shall not be held liable for your
choice of lawsuit option (Limited Right to Sue or Unlimited
Right to Sue) or for your choices regarding amounts
and types of coverage. You cannot sue an insurance company
or its producers or representatives if the Limited Right
to Sue option is imposed by law because no choice was
made on the coverage selection form. Insurers and their
producers or representatives can lose this limitation
on liability for failing to act in accordance with the
law. See N.J.S.A. 17:28-1 .9 for more information.
LIABILITY - Bodily Injury $35,000; $300,000
$500,000 and Property Damage $50,000; $100,000
PERSONAL INJURY PROTECTION (PIP)
Medical Expense Limit $15,000; Some
insurers $50,000; $250,000 may offer more $75,000; than
$250,000 $150,000 Medical Deductible $500; $1 000; $250
$2,000; $2,500 Extra PIP Options: Income Continuation,
You can decline Most consumers Packages may Essential
Services, the Extra PIP choose the be available in Death
Benefit and Package Extra PIP Package higher amounts
Funeral Expense Benefit Health Insurer for Choose your
own Most consumers do PIP Option health insurer
not choose their own health insurer
The Department can be reached
at: (609) 292-5316 or by mail at:
New Jersey Department of Banking
and Insurance
Office of Consumer Protection
P.O. Box 329 Trenton, NJ 08625-0472
The Office of Insurance Claims Ombudsman
is established in the New Jersey Department of Banking
and Insurance to investigate and help resolve complaints
from consumers, including complaints relating to the
payment of claims, inquiries concerning policy provisions,
and the availability of insurance coverage.
New Jersey Department of Banking and
Insurance Office of Insurance Claims Ombudsman P.O.
Box 427 Trenton, NJ 0862
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