Especially after a car accident, New Jersey drivers need to have a basic understanding of how car insurance coverage works in the state:
New Jersey is one of a dozen or so states that follow some form of a no-fault car insurance system. Under no-fault, your own car insurance coverage (in New Jersey, it's your "personal injury protection" or "PIP" coverage) pays for medical treatment and other out-of-pocket losses incurred by anyone covered under the policy, up to coverage limits, no matter who caused the accident. But with a no-fault/PIP claim, you can't get non-monetary damages stemming from the accident, including compensation for your "pain and suffering."
Besides the policyholder, no-fault/PIP car insurance typically applies to:
Depending on whether the "Basic" or "Standard" option is chosen at the time of of a car insurance policy purchase, New Jersey no-fault/PIP insurance covers:
Policy purchasers can choose higher deductibles to lower their PIP premiums in New Jersey, and can also lower the cost of auto insurance by selecting their health insurer as a primary source of coverage for medical treatment after a car accident.
Note: New Jersey also offers a "Special Automobile Insurance Policy" for drivers who are eligible for Federal Medicaid. Learn more about the SAIP option from the New Jersey Department of Banking & Insurance.
For New Jersey vehicle owners who choose only a "Basic" car insurance policy (and we'll spell out what that means a little later), the good news is that medical expenses and other economic losses incurred by anyone covered under the policy will be paid after a car accident, up to the limits of PIP coverage, regardless of who was at fault for the crash.
But with the Basic Policy, the claimant is automatically bound by what's called a "limited right to sue." The injured person can only pursue legal action against the at-fault driver—stepping outside the no-fault provisions of PIP coverage—if the accident caused the injured person to suffer:
If the impact of the accident has meant this threshold, the injured person gains the right to file a third-party car insurance claim or personal injury lawsuit against the at-fault driver, which allows recovery of "pain and suffering" damages and other non-economic losses (which, again, are not available via a no-fault or PIP claim).
A New Jersey no-fault/PIP claim applies to injuries caused by car accidents, not vehicle damage claims. A claim for damage to (or total loss of) a vehicle can be made against the at-fault driver in New Jersey, with no limitations. That means you can file a PIP claim with your own insurance company (for your injuries) and a separate third-party car insurance claim against the other driver's car insurer (or even a lawsuit) for your vehicle damage, if the other driver caused the accident.
Now that you understand how no-fault car insurance works in New Jersey, let's look at a "Basic Policy" and other options for car insurance coverage.
New Jersey drivers are required to carry at least a "Basic Policy," which includes:
Keep in mind that the Basic Policy does not require or include bodily injury liability coverage (you can add $10,000 in bodily injury liability coverage to your Basic Policy). Without liability coverage, if you cause a car accident in which other drivers or passengers are injured, you'll be financially responsible for losses not covered by the injured parties' PIP insurance. In other words, a Basic Policy may not be for everyone, especially those with significant personal assets.
Besides the "Basic" policy, New Jersey vehicle owners have the option of choosing a "Standard Policy," which includes bodily injury liability -- with limits ranging from as low as $15,000 per person/$30,000 per accident, to as high as $250,000 per person/$500,000 per accident.
If you purchase a "Standard Policy," you must choose between the "limited right to sue" and the "unlimited right to sue" options.
The "limited right to sue" option (discussed above) is cheaper, but it also means giving up the right to hold the at-fault driver responsible for your "pain and suffering," unless the accident is one that qualifies for stepping outside the restraints of a no-fault/PIP claim (those are set out in the bullet list two sections above).
The "unlimited right to sue" puts all options on the table after a car accident, no matter the extent of the resulting injuries, including the option to file a lawsuit against the at-fault driver, and the recovery of the full spectrum of compensation (all economic and non-economic losses stemming from the accident). Learn more about car accident lawsuits.
You'll find more details on auto insurance in the state on the New Jersey Department of Banking & Insurance website and its New Jersey Auto Insurance Buyer's Guide. And if you've been in a car accident (especially if your injuries are serious), you might want to understand more about your options. Learn how an attorney can help with your car accident case, or connect with a New Jersey car accident lawyer in your area using the tools on this page, and find out how to get a free case evaluation.