1) Get Plenty of Uninsured/Underinsured Motorist Coverage
Underinsured/Uninsured Motorist Insurance Coverage is the most important insurance on your car that you can carry. In NJ, besides basic auto policies, all auto policies are required by law to have underinsured/uninsured motorist coverage in the minimum amount of $15,000 per person/$30,000 per accident. This minimal coverage is not enough. If you want to protect yourself and your family, you should increase your limits of uninsured/underinsured motorist coverage.
Uninsured motorist coverage under your own policy is for when a person who has no insurance causes an accident with you. Uninsured motorist insurance also covers the situation of the hit and run driver, where you are not able to identify the vehicle that hit you - the phantom vehicle situation. If these events occur, you then pursue your own policy for the damages caused by that uninsured person.
Underinsured motorist insurance coverage is where someone hits you that does not have adequate insurance to cover the full amount of damage or injury caused. This is probably the most important auto insurance you can have because the vast majority of those driving on the roads do not have adequate insurance to cover their fault. Liability coverage under your own policy is important, but it does not protect you if someone without enough insurance hits you. If someone with only $15,000 in insurance hits you and permanently injures you, this will not be enough to take care of you and your family. If, however, that same person hits you and you have another $500,000 in underinsured motorist coverage, then you at least have that extra cushion of money to protect you and your family. Most persons in New Jersey driving on the roads do not have adequate insurance so this coverage under your own policy is critical.
A minimum of $500,000 in uninsured/underinsured motorist coverage is highly recommended, and we even recommend more. You would be surprised that the expense is not as much as you would think to increase your uninsured/underinsured policy limits.
2) Carry sufficient Personal Injury Protection (PIP) Coverage Under Your Policy
Personal Injury Protection (PIP) in New Jersey is the medical insurance coverage under your automobile policy if you are injured in an accident involving a car. If you are injured in an automobile accident while a driver, passenger or pedestrian, your own insurance company will pay your medical bills, regardless of who caused the accident. In New Jersey, this is referred to as no fault. Stated otherwise, regardless of who is at fault for the accident the PIP medical coverage covers your treatment for injuries from the automobile accident. You should always choose at least $250,000 with a $250 deductible on your PIP coverage. Any insurance coverage less than this and you are taking unnecessary financial risk.
3) Elect your Personal Injury Protection Coverage as Primary Medical Coverage Not Your Health Insurance Coverage
When you take out an automobile policy, you can make your health care insurance primary over your PIP coverage in the event of an accident. You do not want to do this. Your health coverage may be much more limited and may be entitled to reimbursement from third parties who are at fault for the accident. The PIP coverage cannot seek reimbursement from any money recovered from third parties on a lawsuit for injuries. The PIP coverage is usually broader and covers more for injuries from the car accident.
4) Do Not Choose the “Limitation on Lawsuit” or Verbal Threshold Option
Believe it or not, when you take out car insurance you have the choice of options on your right to recover money if someone else injures you or your family members through their negligence in operating their car. There are two options you can choose.
The “limitation on lawsuit option,” which is also known as the verbal threshold or tort threshold, eliminates your rights to file a claim for money damages against another careless driver for your injuries unless you can prove you suffered from one of the following injuries:
Type 1 – Death
Type 2 – Dismemberment
Type 3 – Significant disfigurement or scarring
Type 4 – Displaced fractures
Type 5 – Loss of a fetus
Type 6 – Permanent injury (when a body part has not and will not heal to function normally)
5) Always Choose the “No Limitation On Lawsuit Option”
The “no limitation on lawsuit option,” which is also known as “no threshold” or “zero threshold” permits you to make a claim or to file a lawsuit against a careless driver for any and all personal injuries. Insurance companies do not usually settle claims fairly for injuries where you have chosen the limitation on lawsuit option. You always want to choose the no limitation on lawsuit option when you take out insurance so you receive fair monies if you are injured by the fault of another in a car accident.
6) Buy Umbrella Insurance Coverage
You can purchase a personal liability umbrella policy at a reasonable cost that provides for additional coverage if a claim is made against you or your family for injuries sustained by another person. This umbrella insurance provides coverage over the amounts of your auto insurance liability coverage. For example, if you have $500,000 in liability coverage and purchase a 1-million-dollar umbrella policy, you will have 1.5 million in insurance coverage. You can also increase the uninsured/underinsured motorist coverage under the umbrella policy to increase your protection if someone with no insurance or not enough insurance hits you. We recommend at least a 1-million-dollar umbrella policy or more.
7) How do I Select the Coverage Under My Automobile Insurance?
You must receive a coverage selection form when you apply for a new policy or when you renew your current policy. You should explore the options with your agent and discuss the above areas discussed in numbers 1 through 6 above. More important, you should discuss with an attorney that knows about automobile insurance in New Jersey. A lawyer in our office will agree to discuss with you your car insurance in NJ free of charge and go over your best coverage options. Some choices may cost more, but it is always well worth it if you ever are involved in an accident.
8) Never Buy a Basic Insurance Policy
This will always be the cheapest type of policy but the most dangerous as it affords next to no protection for you and your family. The Basic Insurance Policy in New Jersey does not provide liability coverage if someone sues you for bodily injury. The basic policy does not provide uninsured motorist coverage if you are hit by someone without insurance. As set forth in tip number 1 above, sufficient uninsured/underinsured coverage is probably the most important coverage you can have. The Basic Policy also does not mandate that your insurance company appoint an attorney to defend you if you are sued.
9) Compare Costs of Extra Coverage
Go over with your agent the different costs on each issue discussed above. Get quotes with the most extensive coverage and compare it to quotes with lower coverage. You will be surprised that in certain areas, such as with expanded uninsured/underinsured motorist coverage, the cost difference is not that great. Again, always consult with an attorney in addition to your insurance agent. It is such an important decision that you must have an attorney advise you as to these issues.
10) Never Lie On an Application for Insurance
Any misstatement on an insurance policy application can give the insurance company grounds to deny all coverage. Insurance companies love to find reasons to deny you coverage and save themselves money. Denial of coverage because of a misstatement on an insurance application can be devastating to you and your family. Always disclose everything and make sure you accurately report information on your application for car insurance.
Our office will review your existing automobile policy free of charge to make sure you have sufficient coverage and give you advice. If you are applying for a new policy or renewal of existing automobile insurance policy, we will also provide advice on your choices free of charge. Even if you are in the middle of the term on an existing policy you can expand your coverage to cover these issues at an additional cost.
Please contact an attorney in one of our New Jersey offices if you need assistance. Furthermore, if you are involved in an accident, contact our office for a free consultation.