NJPAIP NEW JERSEY CAR INSURANCE CONSUMERS BUYER’S GUIDE
This contains only general information and is not a legal document.
When you purchase a new insurance policy or renew your current policy, you must make many decisions about what you need to buy and how much you can afford to spend.
You must decide:
Do I need a policy with a broad range of choices that 1 can adjust to meet my needs and offers the most protection but at a higher cost? THIS IS THE STANDARD POLICY.
Do I need a policy with fewer choices about the type of insurance and the amounts of insurance I buy, which offers less protection but at a lower cost than the Standard Policy? THIS IS THE BASIC POLICY.
How much insurance do I need to cover medical bills and other related expenses if I am in an accident? THIS IS PERSONAL INJURY PROTECTION OR “PIP”.
How much insurance do I need if someone sues me because of an accident I caused that injures them or damages their property? THIS IS BODILY INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY.
How much insurance do I need if I am in an accident caused by someone who has little or no insurance? THIS IS UNINSURED AND UNDERINSURED MOTORIST COVERAGE. See page 5.
Do I need to buy insurance to cover my car if it is damaged in an accident I cause, or if it is stolen or damaged in some other way? THIS IS COLLISION AND COMPREHENSIVE COVERAGE.
How much money can I afford to pay out of my own pocket before the insurance company begins paying, if I have an insurance claim? THESE ARE DEDUCTIBLES AND COPAYMENTS. See page 4.
Do I want to be able to sue another driver for my pain and suffering when the accident was not my fault and I was injured? Am I willing to limit my ability to sue for only the most serious injuries? THESE ARE THE LAWSUIT OPTIONS.
WARNING: Insurers, producers, the new jersey personal automobile insurance planning, and their respective representatives shall not be held liable for choices you make for insurance coverages or limits as long as your choices provide at least the Page 1 of 7 minimum coverage required by law. Insurers, producers, the new jersey personal automobile insurance planning, and their respective representatives also shall not be held liable if you choose not to purchase higher limits of PIP medical expense coverage, bodily injury liability coverage, higher limits of uninsured/underinsured motorist coverage, collision coverage or comprehensive coverage. Insurers, producers, the new jersey personal automobile insurance planning, and their respective representatives can lose this limitation on liability by failing to act in accordance with the law. See N.J.S.A. 17:28-1.9 for more information.
SOME TERMS USED IN THIS GUIDE
Your auto insurance policy is divided into different COVERAGES based on the type of loss from which you are protected. COVERAGES are:
- PERSONAL INJURY PROTECTION
- UNINSURED/UNDERINSURED MOTORIST
Most coverages are offered at several LIMITS, which are the maximum dollar amount the insurer will pay in the event of an accident.
The lower the limit of coverage, the less the insurance will cost you. However, low limits of coverage may not be sufficient to pay for all of your losses (injuries or damage to property) or cover the losses of those making claim against you.
Some coverages also have DEDUCTIBLES. DEDUCTIBLES are payments you have to make before the insurer starts to pay. For example, a $500 DEDUCTIBLE means that you pay for the first $500 of each loss.
Higher deductibles can lower the cost of your automobile insurance. However, you should consider how high a deductible you can pay if you are involved in an accident.
A PRODUCER is someone who is licensed insurance. Automobile insurance.
LIABILITY coverage pays other people for damages that you cause if you are found to be at fault in an accident. There are two kinds of liability coverage: BODILY INJURY and PROPERTY DAMAGE.
- BODILY INJURY LIABILITY COVERAGE
BODILY INJURY liability coverage protects you from claims and lawsuits by people who are injured or die as a result of an accident you cause. It compensates those people for pain, suffering and other personal hardships and will also pay for some economic damages, such as lost wages.
BASIC POLICY–Bodily injury liability is optional for a basic policy. It is available at a limit of $10,000 total for all persons, per accident.
CAUTION: If you do not have liability coverage, you will be responsible for paying for the pain, suffering and other personal hardships and some economic damages, such as lost wages that you cause. The insurer will not provide or pay for a lawyer to represent you if you are sued. Your assets will be at risk, including the risk of having money deducted from your wages if a judgment is entered against you.
STANDARD POLICY–Bodily injury liability is required by law for a standard policy. The minimum limits are:
- $15,000 for any one person’s injuries, per accident;
- $30,000 for more than one person’s injuries, per accident;
Also available is a combined single liability limit for bodily injury and property damage coverage of $35,000 per accident.
Higher limits of liability coverage available are listed on the Coverage Selection Form.
CAUTION: If you choose the Basic Policy, you can not collect bodily injury liability coverage under a Standard Policy upon which you are a named insured.
- PROPERTY DAMAGE LIABILITY COVERAGE
PROPERTY DAMAGE liability coverage protects you from claims and lawsuits by people whose property is damaged as a result of an accident you cause.
STANDARD POLICY and BASIC POLICY–Property Damage liability coverage of $5,000 per accident is required by law for both the Standard and Basic policies.
For the STANDARD POLICY, higher property damage liability limits are available and are listed on the Coverage Selection Form.
CAUTION: If you choose the Basic Policy, you can not collect property damage liability coverage under a Standard Policy upon which you are a named insured.
III. PERSONAL INJURY PROTECTION COVERAGE
PERSONAL INJURY PROTECTION COVERAGE or PIP pays if you or other persons covered under your policy are injured in an automobile accident. It is often called NO-FAULT coverage because it pays your own medical expenses no matter who caused the accident. PIP coverage has two parts: medical expense coverage and the extra PIP package coverage.
PIP Medical Expense Coverage
PIP medical expense coverage pays hospitals, doctors and other medical providers for treatment of injuries from automobile accidents. It also pays for medical equipment you may need.
Both STANDARD and BASIC POLICIES have medical expense coverage.
STANDARD POLICY LIMITS: The medical expense coverage limit is $250,000 per person per accident, unless you choose a lower limit.
You can select medical expense coverage with the following lower limits of coverage per person per accident:
$15, 000; $50,000; $75,000; or $150,000
Even if you choose one of the lower limits above, you will be covered for medically necessary treatment above the limit and up to $250,000 for permanent or significant brain injury, spinal cord injury or disfigurement or treatment of other permanent or significant injuries rendered at a trauma center or acute care hospital immediately following the accident and until a doctor says that you no longer require critical care.
BASIC POLICY LIMITS: For the basic policy, the medical expense coverage limit is $15,000, per person per accident. You are also covered for all medically necessary treatment above $15,000 and up to $250,000 for permanent or significant brain injury, spinal cord injury or disfigurement or treatment of other permanent or significant injuries rendered at a trauma center or acute care hospital immediately following the accident and until a doctor says that you no longer require critical care.
DEDUCTIBLES and COPAYMENTS: STANDARD and BASIC POLICIES: You will pay for part of the first $5,000 of medical expenses you or other covered persons have in an auto accident. Your insurer will pay medical bills over the deductible amount you choose. In addition, there is a 20 percent copayment for medical expenses in excess of the deductible up to $5,000. That means that you pay 20 percent of the medical expenses and the insurer pays 80 percent. For necessary medical expenses over $5,000, the insurer pays 100 percent.
The chart below shows the choice of deductibles and the total out-of-pocket expenses you would have to pay for deductibles and copayments if you were injured in an accident and had medical expenses of $5,000 or more.
|Deductible Choice||Highest Copay||Total Deductible and Copav|
|$2, 000||$600||$2, 600|
CAUTION: Higher deductibles reduce the cost of your insurance but you may not have that cash available when you or a person covered under the policy has an accident. In some cases, your health insurer may cover part of the deductible. Contact your health insurer for more information.
PRECERTIFICATION PLAN: Your auto insurer may have established a precertification plan that includes preauthorization for reimbursement of certain diagnostic testing, treatments, durable goods, care and services that are medically necessary when you are involved in an auto accident. Your auto insurer will tell you everything necessary to comply with the precertification plan upon receiving notice of an injury loss covered under your policy. If the injured person fails to comply with the precertification plan, an additional copayment of 50% may be applied.
- HEALTH INSURER FOR PIP OPTION–STANDARD POLICY ONLY
You may choose your health coverage provider to pay medical expenses for injuries you sustain in an auto accident instead of your automobile insurer. Please consider the factors below to see if this option is right for you.
- Does your health coverage provider cover injuries from automobile accidents?
- What limits and deductibles apply?The deductibles and copayments of your health policy or plan will apply to treatment for injuries from auto accidents. In addition, the coverage limits of your health policy or plan will also be in effect. Your automobile insurer will only pay for necessary expenses not covered by your health policy or plan.
- What if I lose my health coverage?You must maintain your health coverage. If you are in an accident and your coverage is no longer in effect, your auto insurer must pay PIP medical benefits. However, you will be required to pay a $750 additional deductible.
- A health coverage provider may be an insurance company, a HMO or some other type of benefit plan provided by your employer. You must make sure that your health coverage provider will pay for automobile accident injuries. Medicare and Medicaid will not provide this coverage.
- EXTRA PIP PACKAGE COVERAGE STANDARD POLICY ONLY
The following package of additional benefits goes with your PIP medical expense coverage with the following minimum benefits. This coverage is available for the STANDARD POLICY ONLY.
- Income Continuation: If you cannot work because of an auto accident injury, you can collect up to $100 a week up to a total limit of $5,200 for lost wages.
- Essential Services: You can collect as much as $12 a day, up to a total limit of $4,380 to pay someone to do necessary services that you normally do yourself, such as cleaning your house, mowing your lawn, shoveling snow or doing laundry.
- Death Benefit: If you die from auto accident injuries, your family or estate will receive any benefits you have not already collected under the income continuation and essential services coverages.
- Funeral Expense Benefit: In addition to the death benefit, reasonable funeral expenses are covered up to $1,000
EXTRA PIP PACKAGE OPTIONS–STANDARD POLICY ONLY
You may choose not to receive the extra PIP package benefits and only have your PIP coverage be for medical expenses.
Alternatively, you may choose higher limits of income continuation, essential services, death and funeral benefits. Refer to the table below for Extra PIP Package Options.
|INCOME BENEFIT||ESSENTIAL SERVICES BENEFIT||DEATH BENEFIT||FUNERAL BENEFIT|
|16||700||Unlimited||20||14,600||10 000||2 000|
CAUTION: If you choose the Basic Policy, you can not collect Personal Injury Protection Coverage under a Standard Policy upon which you are a named insured.
- UNINSURED MOTORIST COVERAGE–STANDARD POLICY ONLY
Uninsured motorist coverage protects you if you are in an accident caused by someone who does not have the minimum level of insurance required by law. Claims that you would have made against the driver who was at fault are paid by your own policy up to the limits of your own uninsured motorist coverage. Your uninsured motorist coverage may not have a limit higher than your own bodily injury liability coverage limit. Uninsured motorist coverage does not benefit the uninsured driver.
VII. UNDERINSURED MOTORIST COVERAGE–STANDARD POLICY ONLY
Underinsured motorist coverage protects you if you are in an accident caused by someone who is insured but who has lower liability limits than your underinsured motorist limits. If your damages are greater than the limits of the other driver’s policy, you can make a claim against your own policy for the amount of damages not covered by the other driver’s policy up to the difference between the limits of your underinsured motorist coverage and the other driver’s policy limit.
LIMITS: You are required to have uninsured motorist coverage at the minimum liability limit. Uninsured/underinsured motorist coverage is sold together and is available up to the limits of your own liability coverage. CAUTION: If you choose the Basic Policy, you can not collect uninsured/underinsured motorist P age 5 of 7 coverage from any policy under any circumstance.
VIII. COLLISION COVERAGE
Collision coverage protects you from damage that you cause to your automobile. For example, collision coverage would pay for repairs to your automobile if you were at fault in an accident or hit a tree. You can also make a claim under your own collision coverage for damage to your car from an accident in which you were not at fault. This is instead of making a property damage liability claim against the driver who caused the accident. Your insurer will then seek reimbursement from the insurer of the at fault party.
- COMPREHENSIVE COVERAGE
Comprehensive coverage (also known as “other than collision coverage”) protects you if your automobile is stolen and for damage to your automobile caused by things not covered under collision coverage, such as vandalism or fire.
LIMITS–The limit of collision and comprehensive coverage is how much your automobile is worth on the market.
DEDUCTIBLES–The standard deductible for collision coverage is $500 and higher deductibles are available and are listed on the Coverage Selection Form. The standard deductible for comprehensive is $500. Higher deductibles are available and are listed on the Coverage Selection Form.
COLLISION and COMPREHENSIVE COVERAGES ARE OPTIONAL for both the BASIC and STANDARD policies.
NOTE: The maximum loss payable in New Jersey PAIP is $40,000.
Your insurer will require you to buy comprehensive coverage if you buy collision coverage. Many automobiles have to be inspected within seven (7) days of being covered by collision and comprehensive coverage. This inspection prevents fraudulent claims for preexisting damage. See the section entitled “Mandatory Insurance Inspection For Newly Insured Vehicles” for more details.
Named Driver Exclusion-Normally, the coverage choices you make apply to all persons covered under the policy. However, you can choose to exclude certain drivers on your policy from being covered by collision and comprehensive coverage on an automobile. This can lower your premium, but means that if the excluded driver operates the automobile and is involved in a loss, you are not insured for collision and comprehensive coverage. Contact your producer or insurer for more information about this option.
- LAWSUIT OPTIONS
For the STANDARD POLICY, you must make a choice about the rights you will have if you are injured in an automobile accident. The choice you make does affect how much your insurance will cost. The choice you make will apply to you, your spouse, children and other relatives living with you who are not covered under another automobile insurance policy.
For the BASIC POLICY, you do not have a choice and will have the limitation on lawsuit option described below.
LIMITATION ON LAWSUIT OPTION
Under the limitation on lawsuit option, you agree not to sue the person who caused an accident for your pain and suffering unless you sustain one of the injuries that appears on this list:
- significant disfigurement or significant scarring;
- a displaced fracture; o loss of a fetus; or
- permanent injury within a reasonable degree of medical probability other than scarring or disfigurement. Any injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment.
NO LIMITATION ON LAWSUIT OPTION
Under the no limitation on lawsuit option, you can sue the person at fault in an accident for pain and suffering for any injury, no matter how minor.
STANDARD POLICY–You must choose one of these two options. If you do not make a choice, you will receive the limitation on lawsuit option. The limitation on lawsuit option will decrease your premium. It is also important to remember that these options only cover lawsuits for “pain and suffering” or non-economic losses. Your medical expenses and some economic losses for injuries in auto accidents will be paid up to the limits of your PIP coverage and are not affected by the choice you make here.
WARNING: Insurers, producers, the New Jersey Automobile Insurance Plan, and their respective representatives shall not be held liable for your choice of lawsuit option (limitation on lawsuit option or no limitation on lawsuit option). Insurers, producers, the New Jersey Automobile Insurance Plan, and their respective representatives also shall not be liable if the limitation on lawsuit option is imposed by law because no choice was made on the Coverage Selection Form. Insurers, producers, the New Jersey Automobile Insurance Plan, and their respective representatives can lose this limitation on liability for failing to act in accordance with the law. See N.J.S.A. 17:28-1.9 for more information.
- MANDATORY INSURANCE INSPECTION FOR NEWLY INSURED VEHICLES
Under state law, many vehicles to be insured for collision or comprehensive (also known as “other than collision”) coverage must first be inspected for insurance purposes. The law is intended to reduce insurance fraud by documenting the condition of newly insured private passenger automobiles.
Whenever you acquire a vehicle and desire collision or comprehensive coverage on it, you should notify your auto insurer immediately. The company will tell you everything necessary to comply with the law and obtain the coverage you desire. Until you notify your auto insurer, the vehicle may not be covered for collision or comprehensive coverage.
It is important to understand that the mandatory insurance inspection is in addition to the Motor Vehicle Inspection program conducted by the State of New Jersey. The two inspections are separate and unrelated requirements.
In many cases, an insurance inspection may not be necessary. The law says that insurance inspections may be waived for vehicles which are older than seven model years. The law also says that an insurance inspection may not be necessary for a new automobile purchased from a franchised dealer if you submit an invoice documenting your purchase. And if your auto insurance policy has been in effect for four years or longer, an inspection may not be required by law. Your auto insurance company will explain when you call.
Otherwise, an inspection is required for newly insured vehicles. If your vehicle must be inspected, your auto insurer can provide temporary coverage for only seven days after the day you notify the company about the vehicle.
The only way to make sure that you meet the state requirements and receive the coverage you want is to call your auto insurance company before or as soon as any change of a vehicle occurs.
XII. ANTI-THEFT AND SAFETY DISCOUNT
State law requires all auto insurers to provide comprehensive and collision premium discounts for certain anti-theft devices and safety features. Most insurers use make and model year rating. Their rates already include the discounts.
Anti-Theft Device Discount – Your auto insurance company encourages the use of anti-theft and vehicle recovery devices as another means to reduce losses. The following types of devices are among those which may qualify for a reduction in the comprehensive premium:
- Alarm system;
- Fuel cut-off;
- Hydraulic brake lock;
- Ignition or starter cut-off;
- Steering wheel collar;
- Transmitter which enables the location of the vehicle to be traced; or
- Window etching vehicle identification system.
Other types may also qualify. If your auto is equipped with an anti-theft or vehicle recovery devise, contact your auto insurance company for an anti-theft questionnaire.
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