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Guide to Car Insurance in New Jersey

Here's what you need to know...
  • A basic policy is best for young drivers who have fewer assets to protect
  • A standard policy has more options for drivers to choose from and is better for drivers with families or those with more assets
  • In New Jersey, insurance companies can use credit-based insurance scoring for drivers who select a standard policy or have not had an extraordinary life event
Auto insurance can be a mystery to drivers. Many drivers do not understand the ins and outs of their policy unless they have recently been in an accident. However, understanding your coverages is part of being an informed consumer and driver in New Jersey.

When you know what coverages are required and which ones are optional in the state of New Jersey, you can assess your financial circumstances and decide which coverages you want and which ones you don’t want.

You can also lower your auto insurance premium by using an online comparison tool to compare and contrast several different policy quotes at one time.

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Understanding Your New Jersey Auto Insurance Policy

AdobeStock_40672072-1600x1600Your New Jersey insurance policy is actually divided into several different types of coverage. Each type provides protection against a certain set of circumstances and damages. Depending on the type of accident or incident, you may be able to file claims on more than one coverage type.

Regardless of which insurance carrier you select, the following coverage types are available on New Jersey auto insurance policies:

– Personal Injury Protection (PIP)

This piece of your auto insurance policy provides medical coverage for injuries that you or others suffer in an auto accident.

PIP coverage is also referred to as no-fault coverage because it pays the medical bills for covered individuals regardless of who is at fault.

A PIP policy consists of two parts. The first pays for treatments received from hospitals, doctors, and other medical professionals, as well as any medical equipment that is needed as a direct result of your accident.

The second part of a PIP policy is for expenses, such as lost wages or hired household assistance, that is directly related to physical injuries sustained in an accident.

– Liability

Liability coverage pays for damages that you cause to others. Additionally, liability insurance provides you with a lawyer if you should ever be sued for damages that you caused in an auto accident.

Liability coverage is divided into two types: bodily injury liability and property damage liability. Bodily injury liability will pay for claims and lawsuits if someone else is injured or dies as a result of damages that you caused in a car accident.

Bodily injury liability is also in place to compensate for any pain, suffering, or economic damages that those involved in an accident may sustain.

In New Jersey, bodily injury liability policies have two different dollar amounts. The smaller number refers to the monetary amount that the policy will pay out for each person, and the larger number indicates the maximum payout for all individuals injured in one accident.

Property damage liability coverage will pay for damages that you caused to other people’s property in an accident. Types of property can include vehicles, motorcycles, bicycles, cargo, car seats, buildings, and mailboxes.

– Uninsured Motorist Coverage

If you are the victim of an accident that was caused by another driver who was not insured, uninsured motorist insurance will cover your physical and property damages.

– Underinsured Motorist Coverage

In some cases, drivers may have auto insurance but not enough insurance to pay for all of the physical or property damages created in the accident. When such a situation occurs, the victim’s underinsured motorist policy will kick in where the at-fault driver’s coverage leaves off.

– Collision Coverage

If your car collides with another car or object, collision coverage compensates for damages. This coverage also comes into effect when your car rolls over in an accident.

– Comprehensive Coverage

Comprehensive coverage pays for damages to your vehicle that occur outside of a collision. Such occurrences include hitting a wild animal, running over a pothole, or having your car vandalized or stolen.

Also, comprehensive coverage pays for damages caused by natural disasters, such as flooding and fire.

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New Jersey Auto Insurance Requirements

In the state of New Jersey, all drivers are legally required to carry auto insurance policies.

However, because policies are based on the driver’s own life circumstances and financial abilities, the types of coverage and amounts included in a policy can vary from driver to driver.

Drivers have several options that make obtaining the minimum amount of auto insurance easier and more affordable.

Driving without auto insurance can result in the following consequences:

  • Arrest and jail time
  • Fines
  • Suspension of one’s driver’s license
  • Suspension of one’s car registration
  • Community service
  • Mandated SR-22 insurance

The Basic Policy in New Jersey

AdobeStock_21446507-1600x1600If you have few family responsibilities and real assets, you may want to consider a basic policy. Young drivers are ideal candidates for this policy, which provides basic coverage at an affordable price.

To make basic policies even more attractive to young New Jersey drivers, additional coverages may be added to them.

In New Jersey, a basic policy includes:

  • $10,000 in bodily injury liability coverage
  • $5,000 per accident in property damage liability coverage
  • $15,000 per person and up to $250,000 per accident in personal injury protection coverage
  • Options to add collision and comprehensive coverages
  • A limited right to sue

The Standard Policy

AdobeStock_66413216-1600x1600For top protection, New Jersey drivers will need to purchase a standard policy. This policy offers more coverage options so that drivers can choose how to best protect themselves.

A standard policy includes the following:

  • Bodily injury liability – This coverage ranges from $15,000 per person and $30,000 per accident to $250,000 per person and $500,000 per accident.
  • Property damage liability – Property damage liability ranges from $5,000 per accident to $100,000 or more.
  • Personal injury protection (PIP) – PIP coverage ranges from $15,000 per person or accident to $250,000 or more. You may also opt for up to $250,000 to cover certain injuries regardless of selected limit.
  • Uninsured/underinsured motorist protection – Drivers may select any amount as long as it is no more than the amount they selected for liability coverage.
  • Comprehensive and collision – All insurance carriers must offer you the choice to carry these coverages.
  • Unlimited right to sue – You will also receive the unlimited right to sue with a standard policy.

What is a limited right to sue?

A limited lawsuit option, as offered in New Jersey’s basic policies, limits your ability to sue for pain and suffering unless you suffer a certain permanent injury, which includes the following:

  • Loss of a body part
  • Significant disfigurement or significant scarring
  • A displaced fracture
  • Loss of a fetus
  • Permanent injury (a body part or organ that has not completely healed and will not function normally despite continued medical efforts; must be based on objective proof)
  • Death

However, selecting an option with a limited right to sue does not affect your legal right to sue for any financial damages, such as lost wages or medical expenses, that you may suffer in an accident.

Insurance Scoring

Dollarphotoclub_102323835-1600x1600Auto insurance underwriters use a variety of information about a driver to determine their premium. One of these pieces of information in New Jersey is an insurance credit score.

However, the New Jersey Department of Banking and Insurance requires auto insurance companies to make exceptions to this practice for consumers who have credit damaged by exceptional life events.

Such life events include the following:

  • Catastrophic illness or injury
  • Death of a spouse, parent, or child
  • Temporary loss of employment
  • Divorce
  • Identity theft

In addition, auto insurance carriers are not allowed to use credit-based insurance scoring on drivers who have elected a basic insurance policy in New Jersey.

Being familiar with your New Jersey auto insurance policy can help you be sure that you are fully protected in the event of an accident.

In addition, understanding insurance requirements can also give you options for lowering your premiums.

Using an online insurance price comparison calculator can help you compare several different insurance companies, policies, and premiums all in one place. This allows you to choose the coverage you need at prices you can afford.

Start comparing auto insurance rates now using the FREE price comparison tool below!

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