It is mandatory to have at least the Basic Insurance Policy if you own a motor vehicle in New Jersey. Driving a vehicle without insurance is a crime. The penalties for driving without insurance are more severe since New Jersey passed the Automobile Insurance Cost Reduction Act. Your driver’s license could be suspended, your vehicle impounded, and you could face jail time. Your registration could be revoked and your car impounded. New Jersey law requires that all drivers have access to the Basic policy.
If you don’t have any financial assets or family responsibilities, the Basic Policy should be considered. This policy can be used to provide minimum protection for younger drivers who might not have the financial resources or ability to purchase a more comprehensive policy.
There is a difference between Standard and Basic Coverage.
Bodily Injury Protection protects you from lawsuits and claims brought by others as a result an accident in which you were found to be at fault. If you are found at fault, you could be held responsible for pain, suffering, and other personal hardships as well as some economic damages like lost wages. If you are sued, your insurance won’t pay for a lawyer. Your assets could be put at risk. This can lead to the possibility of having a portion taken from your wages in order to pay any judgments against you. Bodily Injury Protection is not mandatory, but Basic Coverage is an option that provides $10,000 per accident per person.
Property damage liability protects you against lawsuits and claims by property owners whose property has been damaged due to an accident you caused. With Basic Coverage, the minimum amount is $5,000 per accident.
Personal injury protection (PIP protects you and others who are riding in your vehicle. This is a state requirement. It is included in the Basic Policy as well as the Standard Policy. PIP covers injuries to both the at-fault vehicle and the vehicle not at fault. It is mandatory in states with no-faults like New Jersey.
If you are involved in an accident with an uninsured, or underinsured motorist that causes bodily harm to you or your passengers, your PIP coverage kicks in and covers you and your passengers until the limit of your policy.
New Jersey adopted a Choice No Fault system. Drivers have the choice to reject the No-Fault system or use the Tort System. Drivers can sue for all injuries resulting from auto accidents under the Tort System.
Basic coverage includes PIP at $15,000 per person. For certain injuries, the maximum is $250,000. These include injuries that result in permanent or significant brain injury, disfigurement or injuries requiring critical care.
Uninsured motorist coverage protects you against property damage and bodily injury when you are in an accident with an uninsured/underinsured motorist. Uninsured motorist coverage is not available. You cannot sue your insurer for any injuries caused by someone who hits you. This adds an extra layer of protection to your Personal Injury Protection. It is not part of Basic Coverage.
Collision protects your vehicle from damage caused by a collision with another vehicle or object. This coverage is not included in Basic Coverage.
Comprehensive covers your vehicle against damage or loss that is not due to an accident. It can cover damage from fire, theft, flood, vandalism, or acts of nature. You will be covered if you are involved in an accident with an animal. This coverage is not included in Basic Coverage