To reduce the costs of unnecessary medical treatments and control the rising costs of overall auto insurance, the New Jersey Legislature passed the Automobile Insurance Cost Reduction Act. Under this act, New Jersey drivers have the choice of insuring themselves under the standard policy option or the basic policy option. While both options meet the state’s financial responsibility requirements, there are noticeable differences in the overall protection as well as the overall cost.
The standard policy option provides drivers with the required coverages, as well as options for higher levels of protection and additional coverages. The standard policy coverages include bodily injury and property damage liability with limits of, at least, $15,000 per person and $30,000 per accident, with $5,000 in property damage. This policy also has personal injury protection, or PIP, of at least $15,000, with certain injuries being protected up to $250,000 regardless of the selected PIP coverages. Uninsured and underinsured motorist coverages, as well as comprehensive and collision coverages, are also options in the standard policy package.
Under the basic policy package, bodily injury liability coverage is not included but is an available option, with a maximum limit of $10,000. The basic policy also provides $5,000 in property damage liability and $15,000 in PIP coverage, with only certain injuries covered up to $250,000. Uninsured and underinsured motorist protection is not an available option. Insurance carriers are not required to offer comprehensive and collision coverages in the basic policy package.
Right to Sue
New Jersey drivers are required to choose whether they want to limit their right to sue others for damages and injuries. Drivers that elected the unlimited right to sue retain all their litigation rights against the at-fault party. The policyholder may sue for medical expenses and rehabilitation costs that exceed the limits of the insurance coverages, as well as for pain and suffering. Drivers that limit their right to sue can litigate for pain and suffering only when permanent injuries are sustained. These injuries include loss of a body part, scarring or disfigurement, displaced fracture, permanent injury and miscarriage of an unborn child or fetus.
In addition to maintaining auto insurance coverage, New Jersey drivers must carry proof of compliance in their vehicles at all times. Drivers must provide a valid New Jersey auto insurance ID at the time of vehicle inspection, at the scene of an accident, at the time of a traffic violation and upon the request of a police officer or court official.