When a NJ driver purchases a new or used car for the first time, he/she has to buy a car insurance policy. In most cases, it is probably the driver’s first time dealing with a car insurance company. During the process, the driver buys the car insurance, but probably has no idea what type of insurance coverage he/she has. Further, the driver probably doesn’t realize that the type of coverage purchased may affect the legal right to recover for damages in the event of in a car accident later.
Coverage Options in a NJ Car Insurance Policy
There are many different types of coverage options in a NJ car insurance policy; the 3 most important ones are the following:
- first party benefits or PIP coverage;
- liability coverage; and
- underinsured motorist/uninsured motorist (UIM/UM) coverage.
What are first party benefits (PIP) coverage?
First party benefits (or PIP coverage) come into play and cover the insured driver’s medical expenses when the insured driver is injured in a car accident, regardless of who caused the accident. This is because New Jersey is a no-fault state. Therefore, if a New Jersey driver is rear-ended by a truck at an intersection in Cherry Hill and sustains injuries, he would make a medical benefits claim or PIP claim with his own car insurance company.
What is liability coverage?
Liability coverage comes into play when the insured driver causes an accident and injures someone else. If the insured driver is sued in a car accident lawsuit, liability coverage kicks in and provides coverage to the injured party, up to the amount purchased. Under NJ car insurance law, car insurance policies issued in this state must carry a minimum of $15,000 of liability coverage.
What is UIM/UM coverage?
Unlike PIP benefits and liability coverage, UIM/UM is not mandatory for drivers to purchase, but it is probably the most important coverage a driver should purchase. UIM/UM coverage comes into play when the at fault driver’s liability coverage is not enough to compensate an injured insured driver’s injuries and damages. Some drivers have UIM/UM and don’t even know what it is. Other drivers decline the coverage because it reduces the annual premium. However, when they are injured in a catastrophic auto accident, they often realize they should not have declined UIM/UM coverage.
Consider the following example: a traffic jam on the NJ Turnpike causes traffic to come to a complete stop. Driver A stops his car. Driver B, who is behind driver A, does not realize there is a traffic jam because he is distracted and talking on a cell phone. He does not slow down and slams into driver A from behind. As a result of the violent rear-end collision, driver A sustains serious neck injuries. Driver A files a NJ car accident lawsuit against driver B, who only has $15,000 in liability coverage. Driver A’s injuries and damages amount to $125,000, and he has UIM coverage of $100,000. After recovering $15,000 from driver B’s insurance company, driver A can file a UIM claim with his own car insurance company to recover the remaining damages, up to the limit purchased.
As the above example demonstrates, UIM coverage is vital in this situation. If driver A declined UIM coverage, the maximum he could have recovered is only $15,000.
Help After a South Jersey Accident in Cherry Hill, Marlton or Camden
If you were in a car accident in the South New Jersey area including Cherry Hill, Marlton or Camden and are not sure how your car insurance may affect your recovery, call Phil Ciprietti, a NJ car accident injury lawyer who has been helping victims for over 35 years. Call 800-281-8695 to schedule a FREE consultation.