New Jersey Auto Insurance Coverage Checklist


If you have received your car insurance renewal form – and a bill that is higher than last year’s – you may be tempted to save money by shopping for a new insurance company or reducing your benefits.

The lawyers of Davis, Saperstein & Salomon, P.C., urge you to become informed about your auto insurance coverage options so you do not regret your decision after you are involved in a car accident.

Do not be fooled by funny or clever TV commercials. When you buy auto insurance, you are buying a sophisticated and complex product. It is designed to protect you, your family members and your assets in the event of an auto accident. The policy you purchase will affect all of your household family members.

Generally, good quality insurance costs more that bare-bones coverage.  For that reason, we strongly recommend that you buy your insurance through an independent insurance agent. An independent agent can shop your coverage through multiple insurance carriers and help you find the best coverage for the lowest premium.

Also, when you apply for or renew your coverage, you must list all members of your household that hold driver’s licenses and all your designated drivers. This may even include children just getting their permits.

If you have any car that is registered in New Jersey, it must be insured.  If you fail to insure a registered car, you will not be able to bring a claim for injuries for injuries you suffered while driving, and you will be denied medical benefits no matter how life-threatening or serious your injuries may be.

So, be certain to insure all cars and all potential drivers.  If you are lending a car to a family member for an extended period of time, list them as a designated driver and tell the insurance company where the car will be garaged in the future. If you don’t, your coverage may be retroactively canceled, and you or they may not be given insurance coverage.

In New Jersey, we have no-fault insurance. This means that your own car insurance may pay for your medical bills and lost wages regardless of who caused the accident. The medical benefits and lost wage benefits are called personal injury protection, or PIP benefits.

Types of Insurance Coverage Options

When you purchase or renew your auto insurance coverage, you will need to make decisions in four key areas:

1. Liability coverage

Liability insurance represents your coverage if you or someone driving your car causes an accident. Your coverage should equal the value of all of your property and assets as well as your salary.

Too often, people buy only $15,000 in bodily injury coverage and $5,000 in property damage. That decision could prove to be a terrible decision and a costly mistake. If you rear-end a new Mercedes-Benz, totaling the car and seriously injuring the driver, it will be your responsibility to pay for the losses above your coverage. You could be responsible for the extra $95,000 in property damage to the Benz and perhaps $100,000 or more for the injuries to the driver.

Your uninsured and underinsured motorist coverage (UM/UIM) should match your liability coverage. If you are hurt by someone who has only the minimum liability coverage, your own coverage will have to pay for the pain and suffering related to your injuries.

We suggest that you buy $300,000 single-limit coverage as a minimum.  Also, never make your health insurance company from work primary over your car insurance policy. It is best to always make PIP primary over your health insurance company, especially if your employer provides benefits through an ERISA qualified plan.

2. Personal Injury Protection (PIP Coverage)

Medical care is very expensive. It does not take much to rack up $100,000 or more in medical bills.  Until a few years ago, all policies had $250,000 in medical coverage. But the law now allows insurance companies to sell lower PIP medical coverage – and they love doing it because they can save themselves a lot of money if you get hurt. When you ask an insurance company for a quote on auto insurance coverage, be sure it is not based on lower PIP medical coverage. Always make PIP primary over your major medical coverage.

3. Uninsured and Underinsured Motorist (UM/UIM) Coverage

If you are hurt by someone who does not have insurance, your own uninsured motorist (UM) coverage will pay for your injuries. But your uninsured or underinsured motorist (UIM) coverage cannot exceed your liability coverage. We recommend that you purchase a minimum of $300,000 in liability coverage so that you can insure yourself for that amount as well.

If you have a good homeowner’s insurance policy or an umbrella (excess liability) policy, you may also be able to have that extra coverage as additional underinsured or uninsured motorist coverage. Some insurance carriers offer excess UM and UIM coverage as part of their homeowner’s and umbrella coverage.

4. Your right to sue

You can purchase no-threshold or limited–threshold coverage in New Jersey. This will affect your right to sue for non-permanent, soft-tissue injures. If you purchase limited threshold, you may not be able to sue for non-permanent injuries, pain and suffering and future losses. However, you can sue for an injury to a body part that causes it to no longer function normally again without further medical treatment. All you need is one of your injuries to break the threshold, then all the injuries are qualified for compensation. You also can sue for death, dismemberment, significant scaring, a fracture that is displaced or loss of a fetus. (A major exception to the threshold involves accidents caused by a truck or commercial vehicle. No threshold applies in such accidents.)

Even though it will increase the cost of your insurance, we recommend that you protect your right to sue by selecting no-threshold coverage.

Contact Our New Jersey Car Accident Lawyers for Help with your Auto Insurance Issues

If you would like to know more about how your insurance coverage can impact your right to sue after a car accident, or if you are faced with legal issues involving your auto insurance coverage, contact Davis, Saperstein & Salomon, P.C. We can provide a free review of your situation. Call us toll-free at 1-800-LAW-2000 or complete our online form.

We also encourage you to read our book, “The Consumer’s Guide to New Jersey Personal Injury Claims.” The soft cover version of the book is free to all New Jersey residents who call our office for a copy. It can also be downloaded for a minimal fee on