Auto Insurance

What you don’t know about your automobile insurance can hurt you…and your family.

Important information about automobile insurance coverage and your right to make a claim for personal injuries sustained in an automobile accident.

Automobile Insurance Checklist

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 automobile accident and your legal rights to receive monetary damages from the careless driver who caused the accident. We strongly recommend that you elect the following coverages to properly protect yourself and your family.

YES NO
X Basic Policy (Absolutely Not)
X Standard Policy
X Liability Coverage (A minimum of $100,000 and more if you can afford the protection for your family)
X Uninsured Motorist Coverage (A minimum of $100,000 and more if you can afford the protection for your family)
X Underinsured Motorist Coverage (A minimum of $100,000 and more if you can afford the protection for your family)
X PIP Medical Expense Benefits ($250,000)
X PIP Medical Expense Benefits (less than $250,000)
X Pre-certification of Medical Treatment
X No Limitation on Lawsuit Option
X Limitation on Lawsuit Option

WARNING: The Basic Policy provides no liability coverage if someone makes a claim against you and no uninsured motorist coverage if the careless driver who caused the accident has no insurance. If you are sued you will not have any insurance to pay a judgement against you, your insurance company will not assign a lawyer to represent you and you may lose your credit rating and your driver’s license. NEVER BUY A BASIC POLICY.

The following are answers to some of the most frequently asked questions (FAQ’s) about auto insurance.

The State of New Jersey adopted the Automobile Insurance Cost Reduction Act in 1988. 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?

A. You are required to elect either the Standard Policy or the Basic Policy. WE RECOMMEND THAT YOU PURCHASE A STANDARD POLICY.

Q. What is the Basic Policy?

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 expense benefits (up to $250,000 for permanent or significant brain and spinal cord injury, disfigurement and immediate trauma center treatment) if you or a resident family member is 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.
NEVER BUY BASIC.

Q. If I elect the Basic Policy, will my insurance company hire an attorney to defend me if someone else who was injured sues me for damages?

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 judgement 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. 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.

Q. Should I purchase the Standard Policy?

A. YES. We believe that the 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. WE RECOMMEND THAT YOU ELECT THE STANDARD POLICY.

Q. Does the Standard Policy provide coverage for medical expenses?

A. 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, 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.

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 medical decisions concerning the nature of your injuries and your treatment; however, some insurance companies may offer the option of 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. WE RECOMMEND THAT YOU DO NOT SELECT A POLICY WITH 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 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.”

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 fracture
Type 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. DO NOT ELECT THE “LIMITATION ON LAWSUIT OPTION.”

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 OPTION”.

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 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; however, 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 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. 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 non-economic loss, even if you were not at fault for the accident.

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 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.

This information has been presented as a community service by Cofsky & Zeidman, LLC in conjunction with the ATLA-NJ Education Foundation.

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