As with every area of law, it is important to note that there are almost always differences, across every state border. This does not mean your policy changes across state lines (unless potentially you are either renting a vehicle or technically a resident in a state differing from where you are listed on your policy as residing), but the rules regarding what policy you must have as a state resident will vary. Ideally, the following will provide an essential sketch of basic insurance rights and responsibilities for drivers: to learn more, this article also hopes to provide you with basic skills to make sure your policy matches your needs. With the preceding in mind, you are encouraged to periodically review your insurance policies, especially as your personal circumstances (residence, marriage or divorce, income, and children) may change. While addressing the minimum coverage required in New Jersey, additional coverage may, and should, be discussed with your agent.

Minimum Required Insurance Coverage in New Jersey

Virtually every state (except for Florida and New Hampshire) requires some type of traditional auto insurance: those that don’t still require evidence that you can essentially be ‘self-insured.’ This means having enough assets to compensate for any auto accidents you may have. Bear in mind, however, that experts (such as the Insurance Information Institute) recommend insurance of at least $100,000 for bodily injury per person, and $300,000 per accident.

The basic requirements are “15/30/5.” This means MINIMUM coverage in the following three amounts are required:

I. Bodily Injury Liability (BIL): Liability for injury or deaths to someone else, in another vehicle. Because of limited BIL coverage, usually excluding injuries you as the driver or other party on your policy (such as spouse or children) may suffer, many people choose to add PIP, discussed below. Because of limited BIL coverage, usually excluding injuries you as the driver or other party on your policy (such as spouse or children) may suffer, many people choose to add PIP, discussed below.

• $15,000

II. Bodily Injury Liability (BIL): This coverage is the maximum for ALL injuries in one accident.

• $30,000

III. Property Protection Insurance (PPI): Coverage over others’ property (e.g., other automobiles, lampposts, fences, real estate, and property of others than the insured).

• $5,000

Personal Injury Protection (PIP): treatment of injuries to a driver, but also to any passengers of the policyholder. PIP may also cover medical services, lost wages, and sometimes even funeral expenses. PIP is available in states that use the no-fault system, and increasingly in at-fault states, too…it is important to know that PIP may still allow a lawsuit against an at-fault driver, once the PIP limits are reached. PIP is available in states that use the no-fault system…it is important to know that PIP may still allow a suit against an at-fault driver, once the PIP limits are reached.

• PIP, with some important exceptions, is required in New Jersey.

• No-Fault Insurance System. The concept of no-fault is to decrease the costs of litigation to prove who is “at fault.” Studies indicate auto insurance policies, due to covering fraud alone, are $300 more per year than they would otherwise have to be. Thus, your own no-fault policy (if you carry it) must pay medical bills for you, and any injured passengers, regardless of who was at fault.

New Jersey is a no-fault state…only one of a dozen states with that policy. But New Jersey also has several wrinkles to that policy, discussed below.

Additional Insurance Options

• New Jersey, unlike most states, does require uninsured/underinsured motorist coverage; that means you do not assume the risks of being involved in an accident with an uninsured/underinsured motorist. The American Insurance Research Council estimates (2007) the percentage of uninsured/underinsured drivers in New Jersey to be 8%.
• Collision and comprehensive coverage options are not required by any state’s Auto insurance laws, unlike bodily injury and property damage liability and sometimes personal injury protection and uninsured motorist. Collision and comprehensive, however, may be ideal for unique or specially valued vehicles, such as antique automobiles.
• New Jersey offers a unique basic policy (with limited coverage of only 10/10/5) if the insured can demonstrate financial hardship for a standard policy…but uninsured/underinsured coverage cannot be issued for this basic policy.

Unique Aspects of New Jersey’s Auto Insurance Laws; Sources & References

• New Jersey Department of Insurance
  State Insurance Commissioners
  Office 20 West State St CN325
  Trenton, NJ 08625
  Main Phone: 1-609-292-7272

• Because New Jersey uses a no-fault system, there are strict limits on suing another driver, even if they are negligent. There is a legal “threshold” for allowing suits, primarily in cases where PIP limits would be inadequate or unfair. The threshold in New Jersey is thus called a “verbal” threshold: the party injured must introduce written testimony that PIP is not enough. The legal threshold will include virtually only these extreme instances: (a) loss of a major bodily function; (b) permanent injury, determined with a reasonable degree of medical probability; (c) death, significant scarring or disfigurement. Even extreme “mental distress,” is not sufficient by itself.
• New Jersey, however, is only one of three states that employs a “choice” no-fault rule: a party may opt out of no-fault in writing, and retain a right to sue (or be sued) for auto accidents.
• Driving without New Jersey auto insurance can bring fines of $100 to $500, 10 days to six months in jail, and/or seizure of your license plates. In the future, it may also mean the inability to renew your plates, car registration and/or driver’s license. (You can review the specific law at section (Maintenance of motor vehicle liability insurance coverage (NJ Statutes 39:6B-1).