Automobile accidents, ranging from minor collisions to tragic fatalities, frequently occur in our daily lives. To minimize the damage and losses resulting from such accidents, having automobile insurance is essential. New Jersey mandates automobile insurance by state law. Vehicle owners registered in New Jersey, as well as those whose vehicles are registered in other states but are primarily parked in New Jersey—referred to as “an automobile principally garaged in the State of New Jersey”—must have automobile insurance. If these vehicle owners do not have insurance, they face serious civil and criminal liabilities. So, what type of automobile insurance should one choose? To answer this question accurately, it is crucial to recall the purpose of automobile insurance. We all strive to drive safely to avoid accidents, yet accidents still happen. This is why automobile insurance is necessary. In other words, it serves as a 'contract' that allows you to exercise your legal rights to minimize property damage and maximize benefits for medical treatment when an accident occurs. While low premiums are important, it is essential to understand what legal rights you may be forfeiting in exchange for lower premiums. As a personal injury attorney, I recommend that clients choose standard insurance rather than basic insurance or select coverage that is similar to standard insurance.

STANDARD POLICY VS. BASIC POLICY

Automobile insurance comes in two types: Standard Policy and Basic Policy. While there are differences in details, premium calculations, and benefits, the general concepts are as follows. A Standard Policy includes coverage that provides the “maximum” protection against medical and economic damages resulting from automobile accidents, whereas a Basic Policy includes only the “minimum” coverage, as the name suggests. Additional benefits can be added to a Standard Policy, but provisions cannot be excluded from a Basic Policy. To make a rational choice that meets the needs of you and your family, it is important to understand the following concepts and differences.

1. Personal Injury Protection (PIP): Also known as 'No-Fault' coverage, this is a personal injury protection item that covers the medical expenses of the insured, regardless of who is at fault in the accident.

2. Liability Coverage: This covers damages to others caused by your fault. It is divided into property damage and bodily injury categories.

3. Uninsured/Underinsured Motorist Coverage: If an accident occurs due to the fault of another party who is uninsured or has low liability limits, this coverage allows your insurance company to compensate you for medical expenses and property damage related to your injuries.

4. Collision: This coverage allows you to receive compensation for the repair costs of your vehicle, regardless of fault in the accident.

5. Comprehensive: This coverage compensates for damages caused by incidents other than collisions, such as theft, fire, or flooding.

The most critical aspect to examine among these items is PIP coverage. A Standard Policy allows you to choose medical expense coverage from $15,000 to $250,000 per person or per accident, while a Basic Policy only covers a total of $15,000 for both individual and accident. If you have a Standard Policy with a PIP coverage limit of $250,000 and an accident occurs, your insurance company will pay up to $250,000 for medical expenses resulting from the accident. In contrast, if you have a Basic Policy, your insurance will only cover up to $15,000 for medical expenses due to the accident. In both scenarios, regardless of who is at fault, your medical expenses for treating your injuries will be covered. Considering the costs of seeing a doctor, receiving physical therapy, and undergoing tests like MRIs in the U.S., it is clear how insufficient $15,000 can be. Therefore, it is crucial to choose a Standard Policy and set limits that align with your family's needs and financial situation.

As an attorney assisting victims of automobile accidents, the most unfortunate aspect is that many individuals have automobile insurance but fail to set up coverage that suits their and their families' situations due to a lack of understanding of the various items. When selecting reasonable insurance that considers the needs and financial circumstances of family members, be sure to carefully verify the compensation limits for property damage, the limits for medical expenses, whether compensation for economic losses can be determined, and if additional benefits can be established.

Written by: Eunmi Hwang, Attorney  
Personal Injury Specialist, New York and New Jersey  
Associate Attorney  
Maggiano DiGirolamo & Lizzi  
201 Columbia Avenue, Fort Lee,  
New Jersey 07024  
T: 201-585-9111  
E: ehwang@mdltriallawyers.com