New Jersey Private Passenger Automobile Personal Injury Protection (PIP) and Uninsured/Underinsured Motorist Coverage

Personal Injury Protection (PIP) is included on all New Jersey private passenger auto policies. When purchasing a NJ auto policy you must decide whether to make your Health Insurance coverage the Primary coverage that responds in the event you are injured in an auto accident or whether to make your PIP coverage primary. Making your Health insurance primary will save you money on your auto premiums however it may preclude you from receiving benefits under your PIP coverage should you be injured in an auto accident. You should discuss this with your insurance agent as they can help shed light on the advantages and disadvantages of listing your Health Insurance as primary in the event of injury.

You have an important choice to make when purchasing your auto policy in that you must choose between No Threshold and Lawsuit Threshold (Verbal Threshold). If you choose No Threshold this means that you have the right to sue the person who caused an auto accident for pain and suffering for any injury. If you choose Lawsuit Threshold (Verbal Threshold) you are essentially agreeing not to sue someone who causes an accident unless you sustain a “permanent” injury as defined by your auto policy – if you merely sustain a soft tissue injury such as a sore back or neck you are generally not allowed to sue the driver who caused the injury. Any good lawyer will tell you that you should choose the No Tort Threshold as this will give you the freedom to go after the other party who injures you in an auto accident.

Uninsured Motorist coverage comes into play when you’re in a car accident caused by an uninsured driver or a hit-and-run accident. This coverage pays for the medical costs due to injuries to you or your passengers as well as property damage (i.e. damage to your vehicle) which is the result of an accident caused by an uninsured driver. I cannot stress enough the importance of purchasing as high of an Uninsured Motorist limit as you can afford. There are many people who own and drive cars in NJ but who fail to carry a mandatory automobile insurance policy. The cost to increase this coverage limit on your auto policy is nominal considering the importance of the coverage provided.

Underinsured Motorist coverage comes into play if you’re hit by a driver who has auto insurance, but who’s policy does not carry high enough Liability and Property Damage limits to cover the medical bills or the damage to your vehicle. Many people carry very low Liability and Property Damage limits in an effort to keep their policy premiums down. New Jersey allows a private passenger auto policy owners to carry a Liability limits as low as $15,000./person – $30,000./ accident and a Property Damage limit as low as a $5,000. If you are involved in an accident with someone who is carrying very low limits then there is a good chance that most of your sustained medical and property damage costs will come out of your Underinsured Motorists coverage. Again the cost to increase this coverage limit on your auto policy is nominal considering the importance of the coverage provided.   

You should discuss all of these issues with your insurance agent – as a knowledgeable professional your agent is in the position to guide you so that you make the best choices regarding these important coverages.