Gerald H. Baker- New Jersey Law Journal
February 9, 2012
The State of New Jersey has a comprehensive system of laws with respect to compulsory automobile insurance. The statutes require the owners of every automobile registered in this state to purchase an insurance policy that includes bodily injury liability coverage in case someone makes a claim against them; uninsured motorist coverage in case they are involved in an accident with an uninsured driver; and personal injury protection (PIP) coverage in case they incur medical expenses, loss of income or loss of essential services.
The two primary purposes of compulsory insurance are to provide prompt compensation to persons injured in automobile accidents and to ensure the existence of financially responsible persons to satisfy those claims. Thus, the law permits the owners of automobiles to purchase insurance to protect their own assets if they are sued by a person who is injured because of the negligent operation of their automobile (a “third-party” liability claim). In addition, the law permits policyholders to purchase insurance that will provide coverage to them, to resident family members and to occupants of their automobiles if they are injured in an accident caused by a person who is uninsured or underinsured (a “first-party” UM/UIM claim).
The insurance laws provide the owner of an automobile with a choice of three different types of policies. A “standard” policy includes all of the liability, UM/UIM and PIP coverage required by New Jersey law. A “basic” policy provides no liability or UM/UIM coverage and only limited PIP. A “special” policy is available only to persons who qualify for Medicaid and provides only limited emergency PIP benefits. I recommend that you purchase a standard policy.
A standard policy provides liability and uninsured motorist coverage with minimum limits of $15,000 per person and $30,000 per accident; however, a policyholder has the option to purchase additional uninsured and underinsured motorist coverage up to $250,000/$500,000 split limits or $500,000 single limit. I recommend that you purchase automobile insurance with liability and UM/UIM coverage in the amount of $500,000 single limit.
In addition, you should purchase a personal catastrophe umbrella with liability limits of $1 million. Some insurance companies offer an “umbrella” with UM/UIM coverage of $1 million. If your company does not offer this coverage, I suggest that you increase the liability and UM/UIM limits on your automobile policy to $1 million.
These recommendations are more than the minimum limits required by New Jersey law and more than the average policyholder has; however, they will provide you with the maximum insurance protection if you are sued by another person or if you are injured in an automobile accident.
In addition to liability and UM/UIM coverage, standard policies provide PIP benefits with medical expenses up to $250,000 and a deductible of $250. The law provides a policyholder with the option to reduce the amount of medical expenses to as low as $15,000 and to increase the deductible to as high as $2,500. The amount of savings for either of these options does not justify the loss in benefits. Thus, I recommend that you reject all of the options and purchase the full PIP coverage provided by the standard policy.
The ownership of an automobile is a serious undertaking with serious risks and obligations. If you own a car, you must accept the responsibility to purchase an insurance policy that will provide you and your family with adequate coverage if you or they are injured in an accident, and that will protect your assets if someone else is injured. Choose your insurance coverage wisely
Contact: MKK – Attorneys at Law: 1-877-NJLAW4U