Understanding Your NJ Car Insurance Policy – Part 1: Liability Insurance Coverage
Understanding you New Jersey car insurance policy is important. Unfortunately, most people don’t pay much attention to anything other than how much their premiums are until after they are involved in a car accident, and at that point it is too late.
To ensure that your car insurance policy provides the protection you need, you first need to be able to understand the various types of coverage that are provided. I know…that is easier said than done. Insurance documents contain a bunch of legal terms that are in comprehensible, and they provide little or no explanation. In order to help New Jersey residents understand the car insurance coverage terminology used in their policies – and how they can affect them – I will be writing a series of blog posts about the most common features of your NJ car insurance policy.
Today I will be covering the Liability Insurance coverage of your car insurance policy. Liability insurance is coverage for damages you (or in some cases your vehicle while being operated by others) cause to people or property. Liability insurance can be classified into two types of coverage: (1) Bodily Injury Liability and (2) Property Damage Liability.
New Jersey Bodily Injury Liability Coverage
Bodily Injury Liability Coverage pays for any physical injuries or death of another individual (including passengers in your vehicle) in an accident for which you were responsible. However, this coverage does NOT cover injuries to you or any other covered driver. It also does not apply to any property damaged. Bodily Injury coverage will cover medical bills, pain and suffering judgments, and loss of income.
I know what you are thinking, “how much liability coverage do I need to have?” Well that is the million dollar question, and frankly the answer is different for everyone. New Jersey does not have minimum amount of coverage required, but the “Standard Policy” minimum is at least $15,000/$30,000 (sometimes shown as “15/30” on an insurance declaration page) of Bodily Injury Liability coverage. This is the minimum amount of coverage you must have and for most people that is nowhere near enough. The first number is how much coverage is available for an injured person and the second number is the total coverage available per accident. So, if you were in an accident that was deemed you fault and three people were injured, the maximum any of them could recover from your insurance was $15,000, but your insurance will not pay any more than $30,000 total. Now that you understand the basic principle, let’s look at an example of what it could mean if you don’t have enough Bodily Injury Coverage.
Imagine that you are involved in an accident where you strike and kill a pedestrian and the accident is deemed you fault. If you only had the New Jersey minimum 15/30 coverage you could be in serious trouble. As you can imagine, $15,000 is not sufficient compensation for the family of the victim that was killed. If the case were to go to trial and a $500,000 judgment was entered against you in that case, the insurance company would pay $15,000 and you would be responsible for the remainder. That could mean having your home or property seized and sold, wages garnished and other unpleasant possibilities. Frankly, the more you have to lose, the more coverage you should purchase. One of the car insurance industries’ biggest secrets is that to raise your coverage from $100,000 to $500,000 will not increase your premiums all that much, but additional protection it provide you is certainly worth the few extra bucks. To further protect yourself there are other options like Umbrella Policies, but we will have to leave the discussion of those for another day. You should talk to your insurance agent immediately about increasing your coverage to the most you can afford to purchase.
New Jersey Property Damage Liability Coverage
Property Damage Liability Coverage is similar to Bodily Injury Liability in that it covers damage caused by you. However, instead of covering injuries to people, this covers damage to the property of others. While this typically comes into play when you damage another vehicle, it will also cover real property, like running over a mailbox. It is important to that you understand that this coverage will NOT cover damage to your own car.
New Jersey requires vehicle owners to carry at least $5,000 of Property Damage Liability Coverage. However, as before the mandatory minimum is not nearly enough for most people. You know what some cars can cost these days. If you cause an accident that totals an expensive luxury car and you have only the minimum amount of coverage you are going to be on the hook for the remainder.
If you or a loved one has been injured in a motor vehicle accident you should contact a New Jersey Car Accident Lawyer today for a free consultation.
The information contained in this post is for educational purposes only and does not constitute legal advice. As always, you should consult an attorney before making any decisions regarding your car insurance coverage.