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1999, the State of New Jersey adopted the Automobile Insurance Cost
Reduction Act. 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.
The following information is compliments of ATLA and the attorneys
that protect consumer rights.
1. 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.
2. 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 catastrophic brain and spinal cord injuries) if you
or a resident family member are 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.
3. Q. If I elect the basic policy, will my insurance company hire
an attorney to defend me if I am sued for damages by someone else
who was injured?
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 judgment
against you with the loss of your driver's license.
4. Q. Should I purchase the basic policy?
A. No. 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. WE RECOMMEND THAT
YOU DO NOT ELECT THE BASIC POLICY.
5. 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. WE
RECOMMEND THAT YOU ELECT THE STANDARD POLICY.
6. Q. Does the standard policy provide 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 in
the amounts of $15/50/75/150,000; 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.
7. 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."
8. 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. WE RECOMMEND THAT YOU DO NOT ELECT THE
"LIMITATION ON LAWSUIT OPTION."
9. 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."
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. Q. How do I choose the type of automobile insurance coverage
that I want for myself and my family?
A. When you purchase or renew your policy, you will be provided
with a coverage selection form. We recommend that you make the following
selections:
Standard policy - Yes Basic policy - No
No limitation on lawsuit option - Yes Limitation on lawsuit option
- No
PIP medical expenses $250,000 - Yes PIP medical expenses $15,000/50,000/75,000/150,000
- No
Uninsured/Underinsured - Yes, with same limits as liability coverage.
If you do not sign the coverage selection form, you will be assigned
a standard policy with $250,000 of PIP medical expenses and the
lawsuit limitation option.
16. 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.
17. 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.
AUTOMOBILE INSURANCE CHECKLIST
Since March 23, 1999, you will be faced with many new 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 (limits of at least $100,000)
X Uninsured Motorist Coverage (limits of at least $100,000)
X Underinsured Motorist Coverage (limits of at least $100,000)
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 judgment 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.
SOURCE: ATLA- NJ We thank the Association of Trial Lawyers of America-
NJ for providing this information to motorists in NJ. Please distribute
this information to your friends.
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