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| Get Legal with New Jersey's Basic Auto Insurance Policy |
Auto
insurance is mandatory in New Jersey, but the type and cost of that coverage
can vary significantly. Every day, consumers are finding that there are options
available to make it easier to comply with the law. The Automobile Insurance
Cost Reduction Act mandated that a basic policy be available to all drivers.
It is important to realize that you are
breaking the law if you drive uninsured. The penalties for driving uninsured are getting more severe — in addition to risking economic loss by not having insurance protection, you
risk fines, suspension of driver's license or registration and even time in
jail. In the future, your car could be impounded if you are caught behind the
wheel without coverage.
Below we will review the Basic Policy. The Basic Policy
offers less protection, but at a lower cost than the Standard auto insurance policy.
(Elsewhere
on this site you will find information about the standard auto insurance
policy, the insurers that sell it and the price
you can expect to pay.) |
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| Who
should consider buying the Basic Policy? |
The
Basic Policy should be considered by those with few family responsibilities
and few real assets. It can provide a transition for younger drivers who are
just beginning work, providing a basic, minimum protection when they may be
least able to afford more comprehensive coverage.
Please Note: If
you do not have any liability coverage, you are responsible for paying for the
pain, suffering and other personal hardships and some economic damages, such
as lost wages, that you cause. The insurer will not provide or pay for
a lawyer to represent you if you are sued. Your assets will be at risk, including
the risk of having money deducted from your wages if a judgment is entered against
you. And, if you lack coverage and someone hits you, you cannot sue. |
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| Where can I purchase the Basic Policy? |
A
Basic Policy may be purchased through any New Jersey licensed insurance producer.
New Jersey law exempts producers from liability on account of selling insurance
with the minimum required coverage.
The chart below compares the differences between the Standard and Basic policies and explains the amounts of coverage you may be able to purchase from an insurer. |
Type of Coverage |
Basic Policy |
Standard Policy |
Bodily
Injury Liability
(Coverage
for claims and lawsuits by people injured as a result of an accident you cause) |
Coverage is not included but
$10,000 coverage for all persons, per accident is available as an option |
Coverage of $15,000 per person,
per accident and $30,000 for all persons, per accident, is provided but
higher limits are available
(limits available may vary by company) |
Property
Damage Liability
(Coverage
for claims and lawsuits by people whose property is damaged as a result of an accident
you cause)
|
Coverage
of $5,000 per accident is provided |
Coverage
of $5,000 per accident is provided but higher limits are available |
Personal
Injury Protection
(Coverage
for injuries sustained in an automobile accident by you or other persons
covered under your policy)
|
Coverage
of $15,000 per person, per accident and up to $250,000 for permanent or significant
injury as defined in the policy |
Coverage
of $250,000 per person per accident unless a lower limit is selected
However,
up to $250,000 for permanent or significant injury as defined in the policy
regardless of selected limit |
Uninsured/Underinsured
Motorist Coverage
(Coverage
pays for property damage or bodily injury if you are in an accident caused by an uninsured motorist (a driver who does not have the minimum level of insurance required by law) or a driver who is insured, but who has less coverage than your underinsured motorist coverage) |
None |
Coverage is available up to amounts
selected for liability coverage |
Collision
(Coverage
for damage to your vehicle as the result of a collision with another car or other object) |
None* |
Available as an option |
Comprehensive
Coverage for damage to your vehicle that is not a result of a collision, such as theft of your car, vandalism, flooding, fire or a broken windshield. Comprehensive coverage also pays if you collide with an animal. |
None* |
Available as an option |
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| *Collision and comprehensive
coverage are available as an option on policies issued through PAIP or on voluntary
policies issued by some insurance companies. This
is very important for anyone who has a vehicle loan or lease that requires physical
damage coverage. |
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| Obtaining a Basic Policy |
If you have
any questions about the Basic Policy your agent, insurance company or DOBI can
assist you. If you have any problem purchasing the basic policy please contact
DOBI immediately.
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| Updated 07-04 |
