New Jersey auto insurance is a safety net if you’re in a car accident, but only if you have the right coverage
There’s that saying about how nothing is certain except death and taxes — but car insurance is a close third. Every state requires some type of insurance if you own or drive a car, but each state also has its own regulations, laws, and requirements.
Car insurance is undoubtedly a good thing. No one wants to use their insurance and we may grumble about paying the monthly premiums. But if you need to use it, you’re going to be really glad to have auto insurance.
What are the New Jersey car insurance requirements?
New Jersey requires the following minimum car insurance coverage:
- $15,000 bodily injury per person per accident
- $30,000 bodily injury for all people per accident
- $5,000 property damage liability
Most auto insurance policies provide these types of coverage:
Bodily injury liability: Covers claims and lawsuits by an injured person after you cause an accident.
Property damage liability: Covers claims and lawsuits by a person whose property you damaged in an accident you caused.
Personal injury protection: Covers your injuries in an auto accident, and injuries of other people covered under your policy. This pays your medical expenses whether or not you were at fault for the accident.
Uninsured/underinsured motorist coverage (UM/UIM): Covers property damage and physical injury if you were injured in an accident caused by a driver who doesn’t have the minimum required insurance or a driver who doesn’t have enough insurance to cover the extent of your injuries. This type of coverage may also be applied in hit and run scenarios.
Collision: Covers your vehicle damage after a collision.
Comprehensive: Covers your vehicle damage that’s not the result of a collision — such as vandalism, theft, fire, weather-related damage, or collision with an animal.
New Jersey basic vs. standard auto insurance policies
The New Jersey Automobile Insurance Cost Reduction Act mandates that every driver has the option to purchase a Basic Policy or a Standard Auto Insurance Policy. Every licensed insurance company in New Jersey must provide a basic policy.
The basic policy isn’t the best choice for everyone. It’s recommended for people who have few financial assets and fewer financial responsibilities.
For example, the basic policy might be a good option for a younger driver until they’re able to afford a more comprehensive insurance policy.
Here’s what the New Jersey standard and basic policies cover:
| Type of coverage | Basic coverage | Standard coverage |
|---|---|---|
| Bodily injury liability | Not covered, but there’s an option for $10,000 per person per accident | Low: $15,000 per person, $30,000 per accident
High: $250,000 per person, $500,000 per accident |
| Property damage liability | $5,000 per accident | Low: $5,000 per accident
High: $100,000 or more |
| Personal Injury Protection (PIP) | $15,000 per person, per accident
Up to $250,000 for significant injuries |
Low: $15,000 per person or accident
High: $250,000 or more |
| Uninsured/underinsured motorist coverage (UI/UIM) | None | Up to liability coverage amount |
It’s important to note that neither a standard nor a basic policy automatically includes collision or comprehensive coverage. If you want those coverages, you’ll need to select them as optional add-ons.
Personal injury protection is $15,000 per person, per accident for a basic policy. However, it could rise as high as $250,000 for severe injuries. It rises to $250,000 in a standard policy for severe injuries even if it’s higher than the limit originally included for your policy.
The types of severe injuries that would require additional coverage include:
- Permanent or significant brain injury
- Spinal cord injury
- Disfigurement
- Medical treatment rendered at a trauma center or acute care hospital immediately after an accident until the patient is stable and can be transferred
Be prepared to show your insurance card:
- Before a motor vehicle inspection
- At the scene if you’re involved in an accident
- When you’re stopped for a traffic violation
- If you’re stopped during a law enforcement spot-check
How does my insurance policy affect my right to sue for my injuries?
Normally, if you’re injured in an accident, you would first make a claim against the correct insurance policy (either your own if it’s a PIP claim or the other driver’s if it falls into one of those categories). Insurance should cover your medical treatment and property loss due to the accident.
If the accident involves more severe injuries, you might want to hold the other driver responsible for your pain and suffering, or other kinds of emotional distress.
There are 2 main options for your insurance policy that would affect your right to sue.
- Unlimited right to sue: Allows you to retain the right to sue a person who caused an auto accident for pain and suffering for any injury.
- Limited right to sue: You can only sue the person who injured you in an accident for pain and suffering if your injury is one of the following:
- Loss of body part
- Significant disfigurement or scarring
- Displaced fracture
- Loss of a fetus
- Permanent injury (where an organ or body part will not heal to normal function, even with medical treatment)
- Wrongful death
How does fault affect insurance?
Often, the first question a driver asks after an accident is:
Whose fault was it?
This is an important question because it can affect how you’re compensated after an accident. New Jersey follows a modified comparative fault system (51% rule). In order to recover damages in any personal injury, you must be found to be less than 51% at fault for the accident.
When you file a report with your insurer, it will conduct an investigation to determine fault. It will evaluate evidence including police reports, witness statements, drivers’ accounts, and other forms of evidence to assign a percentage of fault to each involved party.
If you were at fault for any part of the accident, the insurance company will reduce any compensation you’d receive from other drivers based on that percentage of fault. If you were mostly or completely responsible for the accident, you cannot collect damages from the other driver’s insurance company.
Penalties for driving without insurance in New Jersey
It’s against the law to drive without auto insurance in New Jersey. Driving uninsured is punishable as a crime, and may result in steep fines and possibly jail time.
Penalties become steeper if you’re convicted of driving without insurance more than once.
| New Jersey penalties for driving without insurance | |
|---|---|
| Fines | Between $300 and $1,000; up to $5,000 for subsequent convictions |
| Surcharge | $750 to NJ Motor Vehicle Commission (in addition to fine) |
| Points | 9 insurance eligibility points for a second or repeat offense (no points for first offense) |
| Community service | At judge’s discretion |
| Driver’s license suspension | Up to 1 year; up to 2 years for second offense |
| Jail | Mandatory 14-day jail sentence for a second offense |
Possible defenses to a charge of driving without insurance include:
- Your insurance didn’t actually lapse. If this is the situation, you should be able to provide evidence that you had continuous coverage, including the time when the ticket was issued.
- You drove a borrowed car. The owner of the vehicle is responsible for insurance coverage. The driver is not liable.
- The insurance company didn’t provide notice of cancellation. An insurance company is required to inform the vehicle owner that cancellation is imminent if it’s unpaid (or being cancelled for any other reason). But if the insurance company provided notice and you had some reasonable explanation for why you didn’t receive it, you might have a defense.
New Jersey verbal, lawsuit, and tort thresholds
When you purchase a New Jersey auto insurance policy, you’ll be asked which of these options you prefer when it comes to non-economic claims (pain and suffering damages):
- Lawsuit or verbal or tort threshold: Limits your ability to sue for certain types of injuries.
- No tort threshold, or no lawsuit threshold: Allows you to sue for any injury.
Many people choose the lawsuit threshold, which can be unwise. This would limit your ability to sue for pain and suffering. People choose this option because it’s less expensive, and perhaps they believe that they won’t need compensation for pain and suffering. But not knowing what the future will bring (as none of us does), it’s often safer to select a no lawsuit threshold so that you preserve your right to sue.
As mentioned above, if you’ve limited your ability to sue, you can only sue if you have a very serious injury that meets specific criteria.
| When the verbal threshold applies | When the verbal threshold does NOT apply |
|---|---|
| A NJ resident has a basic policy. That person and the members of their household are subject to the lawsuit threshold. | The insured person has a standard policy and selected the no tort threshold. |
| The insured selected the verbal threshold. | A member of the household of someone who is insured under the no tort threshold option. |
| An immediate family member of the insured person who has verbal threshold coverage and is not insured under a separate policy. | A person has PIP benefits as a passenger, non-immediate family member of the insured, or is driving the car with the insured person’s permission. |
| The insured person has not selected a tort option on their insurance policy. | A person is injured by a motor vehicle that’s not an automobile covered under PIP benefits (for example, a commercial truck). |
| A person who has failed to maintain their PIP coverage. | A person injured as a passenger on a NJ Transit bus or other public transportation could sue the driver who caused the accident. |
| An out-of-state driver injured in a New Jersey car accident, as long as their insurance carrier is authorized to do business in New Jersey. | An out-of-state driver injured in a New Jersey car accident, if their insurance carrier is not authorized to do business in New Jersey. |
| A pedestrian injured in an automobile accident who is also in one of the categories above. | |
| A New Jersey resident in one of the above categories who was injured in an accident that happened out of state. |
Remember — these limitations only apply to lawsuits that include claims for pain and suffering or other non-economic damages. You can file a lawsuit for damages above the limits of a driver’s insurance policy.
When do I need a New Jersey car accident lawyer?
Insurance is complicated.
Before you purchase car insurance, talk with your broker about all of your options. Don’t necessarily choose the least expensive coverage because that’s likely not going to help you as much when you need it most. Your insurer should be able to explain your options and help you evaluate what type of policy best meets your needs.
But the insurance company isn’t always on your side after an accident.
Remember this:
The insurance company profits when it gives an insured the lowest possible damages settlement. That means if you’ve been injured in an accident, even your own insurance company is going to try to cover your claim by paying out the lowest amount of money possible.
If your injuries are minor, they will heal quickly with medical treatment, and there is a clearly defined set of expenses, your insurance coverage might be capable of fully providing payment for your bills. But if it’s a more complicated matter, or if your recovery will take a long time and involve future medical bills, you should consult a lawyer to help negotiate that process.
Your lawyer works for you, not the insurance company, and they’re goal is to get you the compensation you need and deserve after a New Jersey car accident. If you’ve been injured in a car accident and need a New Jersey lawyer, the Enjuris law firm directory is the place to start. Find a lawyer near who can answer your questions and provide the assistance you need to make a successful claim.
See our guide Choosing a personal injury attorney.