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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.

 
More resources
 
 
Find a PAIP producer (or call 1-800-652-2471)
 
 
Auto Insurance Purchasing Planner (interactive guide to buying a policy)
 
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.
 
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
*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.
 
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.
Updated 07-04

 
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