Auto Insurance Basics: Standard Coverage In New Jersey

Standard auto insurance in New Jersey is one of two types of policies available to drivers in the state. The other is the Basic Policy. Unlike other states that have a single set of minimum coverage limits, state minimums for auto insurance in New Jersey depend on the type of policy chosen. The Standard Policy is the type of policy chosen by most New Jersey drivers. It includes a minimum of $25,000 per person and $50,000 total per accident in bodily injury liability, $5,000 per accident in property damage liability, and a minimum of $15,000 per person or accident in personal injury protection (PIP).

Basic and standard policies

Basic Policy

The Basic Policy is a much cheaper option than the Standard Policy. However, it provides limited benefits and loses several important coverages included in the Standard Policy. The Basic Policy also limits the policyholder's right to sue the other party after an accident.

The Basic Policy provides property damage limits of $5,000 per accident and personal injury protection (PIP) of $15,000 per person. Bodily injury coverage is not included in the basic package but may be added as an option by some companies.

Standard Policy

The Standard Policy is the type of policy chosen by most New Jersey drivers. It provides a number of different coverage options and the opportunity to purchase additional protection. The minimum coverage limits for a Standard Policy in New Jersey are:

• $25,000 bodily injury liability per person and $50,000 per accident
• $25,000 property damage liability per accident
• $15,000 personal injury protection (PIP) per person or per accident

The Standard Policy also allows policyholders to choose between a limited right to sue and an unlimited right to sue, which affects the cost of the premium. With an unlimited right to sue, policyholders can sue for pain and suffering related to any type of injury.

Bodily injury liability

In New Jersey, bodily injury liability coverage is a mandatory component of any auto insurance policy. It is designed to cover the expenses incurred by individuals who are injured or harmed as a result of an automobile accident caused by the policyholder. This coverage extends beyond the other driver and their passengers to include pedestrians, bicyclists, and other individuals outside the vehicle who may be affected.

The purpose of bodily injury liability coverage is to provide financial protection for the policyholder in the event they are held responsible for causing injuries to others in an automobile accident. This coverage typically includes prescription medications, rehabilitation costs such as physical or occupational therapy, lost wages due to the inability to work, and even funeral costs in the tragic event of a fatality.

In New Jersey, the minimum requirements for bodily injury liability coverage are set by the state. As of January 1, 2023, the minimum liability limit requirements are $25,000 per person for bodily injury and $50,000 per accident for bodily injury. These limits are expected to increase in the future. Starting January 1, 2026, the minimum requirements will be $35,000 per person and $70,000 per accident for bodily injury.

It is worth noting that bodily injury liability coverage does not include the policyholder's own injuries or those of their passengers. For that, additional coverage, such as personal injury protection (PIP), would be necessary. Furthermore, liability coverage does not extend to damage to the policyholder's own vehicle; separate coverage, such as collision coverage or comprehensive coverage, would be needed for that.

When purchasing auto insurance in New Jersey, it is essential to carefully consider your specific needs and circumstances. While the state mandates minimum coverage requirements, individuals may benefit from higher coverage limits to ensure they are adequately protected in the event of a serious accident.

Property damage liability

In New Jersey, the minimum property damage liability coverage required is $5,000 per accident. This is the case for both the Basic Policy and the Standard Policy. The Basic Policy is much cheaper but provides more limited coverage and restricts your right to sue after an accident. On the other hand, the Standard Policy is similar to the minimum policies in most other states and offers more comprehensive coverage. While it is more expensive, it allows drivers to lower their rates by limiting their right to sue for pain and suffering after an accident.

It is worth considering increasing your property damage liability coverage above the minimum requirement. For example, if you total another person's luxury car, the repair costs could exceed the minimum coverage limit. Most carriers recommend full coverage of $100,000 in property liability. Additionally, you may want to consider a personal liability umbrella, which can provide additional coverage of $1 million or more above your standard policy limits.

Personal injury protection

The minimum amount of PIP coverage required in the state is $15,000 per person or per accident. However, drivers can purchase additional coverage of up to $250,000. This higher limit may be automatically applied in cases of severe brain or spinal injuries. PIP coverage in New Jersey is unique in that individuals may use their health insurance as their primary medical coverage and may also be able to sue another driver.

PIP covers three main areas in the event of a car accident injury: medical costs, work-loss costs, and funeral costs. Medical costs include services and medication, surgical and hospital expenses, rehabilitative costs, and treatment in accordance with recognised religion. Work-loss costs cover lost income, with the default coverage starting at $100 per week for a $15,000-per-year policy, and it can go up to $5,200 per week. Funeral costs include a payout of up to $1,000 for funeral expenses.

In addition to the financial benefits, PIP also provides essential service benefits, reimbursing individuals for payments made to others for essential tasks such as housework, childcare, shopping, food preparation, or transportation, at a rate of up to $12 per day for up to 365 days.

To file a PIP claim in New Jersey, individuals should notify their auto insurance company about the accident as soon as possible and gather all necessary documentation, including medical records, bills, accident reports, and any other relevant information related to their injuries and treatment.

Uninsured/underinsured motorist coverage

There are two types of uninsured/underinsured motorist coverage in New Jersey: bodily injury and property damage. Both are mandatory. Uninsured/underinsured motorist bodily injury coverage pays for medical expenses, while uninsured/underinsured motorist property damage coverage pays for physical damage to your vehicle. It's important to note that uninsured/underinsured motorist property damage coverage can only be used if the other driver is identified. If they are not, as in the case of a hit-and-run, your collision coverage will cover the damages to your vehicle.

The minimum limits for bodily injury coverage on a standard policy are $25,000 per person and $50,000 per accident, while property damage limits must be at least $25,000. Your uninsured and underinsured motorist coverage limits are capped at your respective liability limits.

If you have a basic policy, you are not protected if your vehicle is damaged by an uninsured or underinsured driver. However, you can purchase higher limits for uninsured/underinsured motorist property damage coverage, up to your liability coverage limits.

Frequently asked questions