Understanding New Jersey’s New Auto Insurance System

Recent changes in New Jersey Insurance laws have led to varying degrees of changes that will impact all New Jersey motorists.

Below are some of the important changes:

You will have more choices under the new law. These choices give you the option to choose coverage limits that best fit your individual needs at the time you buy or renew your policy. The new law will let you choose either a “standard” auto insurance policy or a new “basic” type of policy.

 The new basic policy allows vehicle owners to purchase lower amounts of certain coverages than New Jersey law previously required.

A basic policy offers $15,000 in personal injury protection coverage and includes up to $250,000 of medical benefits coverage for catastrophic-type injuries, $5,000 property damage liability and an option to purchase $10,000 of bodily injury liability coverage. If you purchase a basic policy, you can not purchase uninsured/underinsured motorist coverage. Companies can, at their option, also offer to sell collision and comprehensive coverages with this type of policy.

A standard auto insurance policy offers motorists a variety of coverage options; State law requires you to purchase certain minimum limits of three coverages:

• Personal Injury Protection – PIP pays for injuries to you and your passengers, no matter who is at fault in an accident. Insurance companies must offer you up to $250,000 of coverage.

• Liability Coverages – Bodily Injury Liability pays for injuries you cause to others in an accident. Under a standard policy the minimum coverage required is $15,000 for injuries to one person and $30,000 for all injuries in an accident. Property Damage Liability pays for damage you cause to others’ property from an accident. The minimum required coverage is $5,000.

• Uninsured/Underinsured Motorist – These coverages protect you against damages and injuries caused by drivers who are uninsured or inadequately insured. These coverages are not available under a basic policy. Minimum limits are the same as for the liability coverages and the basic deductible is $500 for property damage.