What is a Basic Auto Insurance policy?

Auto insurance is mandatory in the State of New Jersey. Failure to carry appropriate coverage can result in fines, suspension of driver’s license or registration, having your car impounded, and even time in jail. This means you must have auto insurance If you are a driver in New Jersey.

The Basic Auto Insurance Policy

This was

The Basic Policy provides two standard coverages, property damage liability and personal injury protection (PIP) but the limits on both are low.

Property Damage coverage applies to claims for physical damage to property, such as cars, walls, and other tangible things that might be damaged in an auto accident.-The Basic policy provides $5,000 in property damage coverage per accident.  This is the minimum amount required by the State of New Jersey.

Another required basic coverage is Personal Injury Protection.

This provides coverage for injuries sustained in an automobile accident by you or other persons covered under your policy. In a basic policy, PIP provides up to $15,000 per person per accident and up to $250,000 for certain severe injuries.

You can add coverage options to your basic policy such as higher limits of liability or more comprehensive coverage.  Adding coverage will increase the price, but provide more protection.

A basic auto insurance policy is designed to provide minimal coverage.  Most drivers risk significant exposure by only taking a basic auto insurance policy.  In the event of a serious accident, a basic auto insurance policy often falls short and could leave you liable for significant out-of-pocket expenses.

The NJ Department of Banking and Insurance website says that “the basic policy could be an option for those with few family responsibilities and few assets to protect including income from a job[1]”.

An important limitation of a Basic Auto Insurance policy is the limited right to sue.  This option is built into the basic policy and means you give up the right to sue the person who caused an auto accident for your pain and suffering unless sustaining one of the permanent injuries listed on the policy.   Again, this lowers the cost of the auto insurance policy by limiting you to the contract agreement.

The Basic Auto is certainly better than driving uninsured but still leaves significant gaps in coverage.  Most drivers should speak with a licensed agent and consider taking out a more comprehensive policy.

No matter the situation, if you want to drive in New Jersey you need to have insurance.  Be sure to have your documents in the car with you and know what numbers to call in case of an emergency.  For more information about auto insurance in New Jersey please contact us any time.

[1] https://www.state.nj.us/dobi/division_consumers/insurance/standardpolicy.html