WHERE DO I START? ………………………………. 1
UNDERSTANDING YOUR POLICY …………… 2-6
Types of Coverages
Standard and Basic Policies
What are Limits and Deductibles?
UNDERSTANDING YOUR OPTIONS ………. 6-11
Personal Injury Protection (PIP)
Uninsured/Underinsured Motorist Coverage
Comprehensive Coverage/Collision Coverage
The Right to Sue
POLICY OPTIONS CHART………………………… 12
WHERE TO GET MORE INFORMATION AND
HELP ……………………………………………………. 13
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WHERE DO I START?
Car insurance is required in New Jersey. Whether you are buying a new
insurance policy or renewing your current policy, you must make many decisions
about what coverage you need and how much you can pay. The following
guide outlines how to make choices that work for you.
UNDERSTAND YOUR NEEDS. Do you rent or own your own home?
Do you have assets to protect (including income from a job)? Will your own
health insurance cover auto accident injuries? How much insurance coverage
can you afford? These are some of the questions you should ask yourself
before choosing a specific coverage plan.
UNDERSTAND YOUR OPTIONS. Use this guide to learn about the
words and phrases used in auto policies. Know the many coverage options.
Review the different benefits of each option.
UNDERSTAND CONSUMER PROTECTIONS. As a New Jersey
auto insurance consumer, you have rights. You have a right to fair and equal
treatment, and you have the right to get the information you need to make
informed decisions.
Agents, brokers and companies must inform you of your coverage
options when applying for a new policy, or at any time upon your
request if you are already insured. You have the right to know how
each choice may affect what you pay and what your benefits would
be in the event of an accident. You always have the right to ask about
additional options.
You can shop for auto insurance at any time – not just when your
policy is up for renewal, and if you find a better price, you can cancel
your old policy and seek a refund of your unused premium.
You have the right to change your coverages and policy limits at
any time, even if you are not near your renewal date. If you select
options that save you money, you have a right to a refund of your
unused premium within 60 days.
UNDERSTANDING YOUR POLICY
Types of Coverages
Insurance policies use terms that may be unfamiliar to the average driver. It is
useful to understand what these terms mean so you can make better, more
informed decisions about your coverage.
COVERAGES — Your auto insurance policy is divided into different
coverages based on the type of claim that will be paid to you or others.
These COVERAGES are:
PERSONAL INJURY PROTECTION — Otherwise known as “PIP,”
this is your medical coverage for injuries you (and others) suffer in an auto
accident. PIP pays if you or other persons covered under your policy are
injured in an auto accident. It is sometimes called “no-fault” coverage because
it pays your own medical expenses no matter who caused the auto accident.
PIP has two parts — (1) coverage for the cost of treatment you receive from
hospitals, doctors and other medical providers and any medical equipment
that may be needed to treat your injuries and (2) reimbursement for certain
other expenses you may have because you are hurt, such as lost wages and
the need to hire someone to take care of your home or family.
LIABILITY— This coverage pays others for damages from an auto accident
that you cause. It also pays for a lawyer to defend you if you are sued for
damages that you cause.
There are two kinds of liability coverage: BODILY INJURY and
PROPERTY DAMAGE.
BODILY INJURY LIABILITY COVERAGE — Pays for claims and
lawsuits by people who are injured or die as a result of an auto accident you
cause. (See page 10 for lawsuit options). It compensates others for pain,
suffering and economic damages, such as lost wages.
This coverage is typically given as two separate dollar amounts: (1) an amount
paid per individual and (2) an amount paid for total injuries to all people
injured in any one accident that you cause. It can sometimes be purchased as
a combined single limit, which offers a maximum limit of protection per
accident of bodily injury and property damage liability combined.
PROPERTY DAMAGE LIABILITY COVERAGE— Pays for claims
and lawsuits by people whose property is damaged as a result of an auto
accident you cause. (May also be purchased as a combined single limit
with bodily injury liability coverage.)
UNINSURED MOTORIST COVERAGE — Pays you for property
damage or bodily injury if you are in an auto accident caused by an uninsured
motorist.
UNDERINSURED MOTORIST COVERAGE — Pays you for property
damage or bodily injury if you are in an auto accident caused by a driver who
is insured, but who has less coverage than your underinsured motorist
coverage.
COLLISION COVERAGE — Pays for damage to your vehicle as the
result of a collision with another car or other object.
COMPREHENSIVE COVERAGE — Pays 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. However, it will pay if you collide with an animal.
There are two common types of auto insurance policies in New Jersey. They
are referred to as STANDARD and BASIC. Both offer options as well.
STANDARD POLICY — The Standard Policy provides a
number of different coverage options and the opportunity to buy
additional protection. The Standard Policy is the type of policy
chosen by most New Jersey drivers.
BASIC POLICY — The Basic Policy usually costs
significantly less than a Standard Policy, but provides limited
benefits. It is not for everyone, but it does provide enough coverage
to meet the minimum insurance requirements of New Jersey law.
The Basic Policy could be an option for those with few family
responsibilities and few assets to protect (including income from
a job).
See chart on page 5 for differences between the STANDARD and BASIC
polices.
WARNING: Insurance companies or their
producers or representatives shall not be held
liable for your choice of lawsuit option (Limited
Right to Sue or Unlimited Right to Sue) or for
your choices regarding amounts and types of
coverage. You cannot sue an insurance company
or its producers or representatives if the Limited
Right to Sue option is imposed by law because
no choice was made on the coverage selection
form. Insurers and their producers or
representatives can lose this limitation on liability
for failing to act in accordance with the law. See
N.J.S.A. 17:28-1.9 for more information.
11
UNLIMITED RIGHT TO SUE — Under the No Limitation on Lawsuit
Option, you retain the right to sue the person who caused an auto accident for
pain and suffering for any injury.
LIMITED RIGHT TO SUE — By choosing the Limitation on Lawsuit
Option, you agree not to sue the person who caused an auto accident for
your pain and suffering unless you sustain one of the permanent injuries listed
below: (Choosing this option does not affect your ability to sue for economic
damages such as medical expenses and lost wages.)
- loss of body part
- significant disfigurement or significant scarring
- a displaced fracture
- loss of a fetus
- permanent injury (Any injury shall be considered permanent when
the body part or organ, or both, has not healed to function normally
and will not heal to function normally with further medical treatment
based on objective medical proof.) - death
UNDERSTANDING YOUR OPTIONS UNDERSTANDING YOUR POLICY
The Right to Sue continued
WHERE TO GET MORE UNDERSTANDING YOUR POLICY
INFORMATION AND HELP
This Buyer’s Guide is intended to provide general
information to help you make coverage choices. It is not a
substitute for the policy language, which governs.
Additional information regarding coverages or premiums
is available from the insurer or producer.
(Insurers that write at least two percent of the New Jersey
private passenger automobile market shall provide a toll-free number for insureds.)
Contact the Department of Banking and Insurance
on the web:
www.dobi.nj.gov
by phone:
(609) 292-7272
or the Consumer Hotline at 1-800-446-7467
by mail at:
NJ DOBI
P.O. Box 471
Trenton, NJ 08625-0471
or in person at:
NJ DOBI
20 West State Street
Trenton, NJ 08608
13
WHERE TO GET MORE UNDERSTANDING YOUR POLICY
INFORMATION AND HELP
This Buyer’s Guide is intended to provide general
information to help you make coverage choices. It is not a
substitute for the policy language, which governs.
Additional information regarding coverages or premiums
is available from the insurer or producer.
(Insurers that write at least two percent of the New Jersey
private passenger automobile market shall provide a toll-free
number for insureds.)