Motor Vehicle Insurance

Since 1972, automobile insurance for private passenger vehicles has been compulsory.  Under the standard policy, the  minimum coverage requirements are $15,000 individual, $30,000 aggregate and $5,000 property damage for each accident. Uninsured/underinsured coverage requirements are $15,000 individual and $30,000 aggregate for each accident.

New Jersey has “no fault” policies which means that regardless of fault each driver’s policy pays personal injury protection benefits (“PIP”).  Therefore, the insured’s medical expenses are covered under the automobile policy up to a certain limits.

Insureds can select the Limitation on Lawsuit Threshold (commonly referred to as the “Verbal Threshold”) or the No Threshold Option.  If the Limitation on Lawsuit Threshold is selected, the insured will generally be prohibited from filing lawsuits for compensation unless the injury falls under the following categories: death and dismemberment, significant disfigurement or scarring, displaces fractures, loss of fetus, permanent injury which is an injury that has not healed to function normally and will not heal to function normally without further medical treatment.  The No Threshold Option has no such restrictions for injury claims.

In 1998, a “basic coverage” option was introduced.  This option provides for extremely limited coverage.  The “basic coverage” policy does not require mandatory liability coverage and it provides $5,000 for property damage and  very limited personal injury protection (“PIP”) coverage.  The standard policy usually provides PIP coverage of $250,000; the basic policy provides PIP coverage not to exceed $15,000.  The basic policy provides for the purchase of certain optional coverages.

Uninsured and underinsured motorist coverage are part of the automobile policy.  This coverage is provided directly to the insured in case of injury where the other vehicle is uninsured or underinsured.  Underinsured and uninsured coverage can be purchased up to the personal liability insurance limits.  Therefore, if $300,000 in liability coverage is purchased, the insured has the option to purchase up to $300,000 in underinsured/uninsured coverage to protect from injuries in the event that the insured is involved in an automobile accident and sustains injuries as a result of negligence of the operator of the other vehicle which is either uninsured or underinsured.  In order to procure coverage in excess of the mandatory $15,000, the insured must select increased coverage when completing the coverage selection form or request that the insurance agent increase this coverage.