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Car insurance is required in New Jersey. Whether you are buying a new car insurance policy or renewing your current policy, you must make many decisions about what coverage you need and how much you can pay. The following New Jersey Car Insurance Guide outlines how to make choices that work for you.

UNDERSTAND YOUR CAR INSURANCE NEEDS. Do you rent or own your own home? Do you have assets to protect (including income from a job)? Will your own health insurance cover car accident injuries? How much car insurance coverage can you afford? These are some of the questions you should ask yourself before choosing a specific insurance plan in New Jersey.

UNDERSTAND YOUR OPTIONS. Use this guide to learn about the words and phrases used in auto policies. Know the many coverage options. Review the different benefits of each option.

UNDERSTAND CONSUMER PROTECTIONS. As a New Jersey auto insurance consumer, you have rights. You have a right to fair and equal treatment, and you have the right to get the information you need to make informed decisions.

Car insurance agents, brokers and companies must inform you of your car insurance coverage options when applying for a new policy, or at any time upon your request if you are already insured. You have the right to know how each choice may affect what you pay and what your benefits would be in the event of an accident. You always have the right to ask about additional options.

You can shop for auto insurance at any time – not just when your policy is up for renewal, and if you find a better price, you can cancel your old policy and seek a refund of your unused premium.

You have the right to change your car insurance coverages and policy limits at any time, even if you are not near your renewal date. As a New Jersey resident, if you select options that save you money, you have a right to a refund of your unused premium within 60 days.

Insurance policies use terms that may be unfamiliar to the average driver. It is useful to understand what these terms mean so you can make better, more informed decisions about your coverage.

CAR INSURANCE COVERAGES — Your auto insurance policy is divided into different coverages based on the type of claim that will be paid to you or others. These COVERAGES are:

PERSONAL INJURY PROTECTION — Otherwise known as "PIP" in New Jersey, this is your medical coverage for injuries you (and others) suffer in an auto accident. PIP pays if you or other persons covered under your policy are injured in an auto accident. It is sometimes called "no-fault" coverage because it pays your own medical expenses no matter who caused the auto accident. PIP has two parts — (1) coverage for the cost of treatment you receive from hospitals, doctors and other medical providers and any medical equipment that may be needed to treat your injuries and (2) reimbursement for certain other expenses you may have because you are hurt, such as lost wages and the need to hire someone to take care of your home or family.

LIABILITY INSURANCE— This coverage pays others for damages from an auto accident that you cause. It also pays for a lawyer to defend you if you are sued for damages that you cause.

There are two kinds of liability coverage in New Jersey: BODILY INJURY and PROPERTY DAMAGE.

BODILY INJURY LIABILITY COVERAGE — Pays for claims and lawsuits by people who are injured or die as a result of an auto accident you cause. It compensates others for pain, suffering and economic damages, such as lost wages.

PROPERTY DAMAGE LIABILITY COVERAGE— Pays for claims and lawsuits by people whose property is damaged as a result of an auto accident you cause. (May also be purchased as a combined single limit with bodily injury liability coverage.)

UNINSURANCE AND UNDERINSURED COVERAGE IN NEW JERSEY

UNINSURED MOTORIST COVERAGE — Pays you for property damage or bodily injury if you are in an auto accident caused by an uninsured motorist.

UNDERINSURED MOTORIST COVERAGE — Pays you for property damage or bodily injury if you are in an auto accident caused by a driver who is insured, but who has less coverage than your underinsured motorist coverage.

COLLISION COVERAGE — Pays for damage to your vehicle as the result of a collision with another car or other object.

COMPREHENSIVE COVERAGE — Pays for damage to your vehicle that is not a result of a collision, such as theft of your car, vandalism, flooding, fire or a broken windshield. However, it will pay if you collide with an animal.

There are two common types of auto insurance policies in New Jersey. They are referred to as STANDARD and BASIC. Both offer options as well.

STANDARD POLICY — The Standard Policy provides a number of different coverage options and the opportunity to buy additional protection. The Standard Policy is the type of policy chosen by most New Jersey drivers.

BASIC POLICY — The Basic Policy usually costs significantly less than a Standard Policy, but provides limited benefits. It is not for everyone, but it does provide enough coverage to meet the minimum insurance requirements of New Jersey law. The Basic Policy could be an option for those with few family responsibilities and few assets to protect (including income from a job).

LIMITS— The maximum dollar amount the insurer will pay following an auto accident. Limits vary with each coverage within the policy.

DEDUCTIBLES — Payments you have to make before the insurer pays. For example, a $750 deductible means that you pay the first $750 of each claim.

DEDUCTIBLE OPTIONS — In addition to any savings you may realize from how much coverage you buy, deductibles also provide savings opportunities. Cost savings can be achieved by choosing higher deductibles. Thus, if you feel you need a high level of PIP coverage but want to reduce your premium, you can save money by agreeing to pay more out-of-pocket through a higher deductible if you are injured in an auto accident. Your insurer will pay the medical bills over the deductible amount you choose. No matter what deductible you choose, there is also a 20 percent co-payment for medical expenses between the deductible selected and $5,000. That means you pay 20 percent, and your insurer pays 80 percent.

HEALTH CARE PRIMARY — Cost savings can also be achieved by using your own health insurance as a primary source of coverage in the case of injury related to an auto accident. Before selecting this option, you should find out if your health insurance will cover auto accident injuries and how much coverage is provided. MEDICARE and MEDICAID cannot be used for the Health Care Primary option.

EXTRA PIP PACKAGE COVERAGE — These are additional benefit options provided under the STANDARD POLICY.

INCOME CONTINUATION — If you cannot work due to accidentrelated injuries, this coverage pays lost wages, less Temporary Disability Benefits you may receive if your disability prevents you from working, up to the amount you select.

ESSENTIAL SERVICES — Pays for necessary services that you normally do yourself, such as cleaning your house, mowing your lawn, shoveling snow or doing laundry, if you are injured in an auto accident.

DEATH BENEFIT — In the case of death, family members or estates will receive any benefits not already collected under the income continuation and essential services coverages.

FUNERAL EXPENSE BENEFIT — Pays for reasonable funeral expenses up to the limit you select if you die as a result of an auto accident.

UNINSURED MOTORIST COVERAGE — Pays you if you are in an auto accident caused by a driver who does not have the minimum level of insurance required by law. Claims that you would have made against the uninsured driver who caused the accident are paid by your own policy. Uninsured motorist coverage does not pay benefits to the uninsured driver.

UNDERINSURED MOTORIST COVERAGE — Pays you if you are in an auto accident caused by a driver who is insured, but who has less coverage than your underinsured motorist coverage. Damages greater than the limits of the other driver's policy are covered by your policy up to the difference between the limits of your underinsured motorist coverage and the other driver's policy limit.

COMPREHENSIVE (also known as comp or other than collision) and COLLISION coverage are not required by law, but may be required under the terms of an automobile leasing or financing contract.

Collision coverage pays you for damage that you cause to your automobile. You can also make a claim under your own collision coverage for damage to your car from an auto accident you did not cause. This may take less time than making a property damage liability claim against the driver who caused the auto accident. Your insurer then seeks reimbursement (subrogation) from the insurer of the driver who caused the auto accident. Comprehensive coverage pays you if your automobile is stolen or for damage to your automobile caused by things not covered under collision coverage, such as vandalism, flooding, fire, a broken windshield or damage from an animal.

DEDUCTIBLE — The STANDARD deductible for comprehensive and collision coverage is $750. Higher and lower deductibles are available as options. Higher deductibles can reduce your premium.

NAMED DRIVER EXCLUSION — Prevents certain drivers on your policy from being covered by collision and/or comprehensive coverage on a specific automobile. This can lower your premium, but if the excluded driver operates the automobile and is involved in an auto accident, you are not insured for collision and/or comprehensive coverage; which means you could be personally responsible.

For the STANDARD POLICY, you must make a choice about the rights you will have if you are injured in an automobile accident. (The BASIC POLICY includes the LIMITED RIGHT TO SUE option.)

UNLIMITED RIGHT TO SUE — Under the No Limitation on Lawsuit Option, you retain the right to sue the person who caused an auto accident for pain and suffering for any injury.

LIMITED RIGHT TO SUE — By choosing the Limitation on Lawsuit Option in New Jersey, you agree not to sue the person who caused an auto accident for your pain and suffering unless you sustain one of the permanent injuries listed below: (Choosing this option does not affect your ability to sue for economic damages such as medical expenses and lost wages.) • loss of body part • significant disfigurement or significant scarring • a displaced fracture • loss of a fetus • permanent injury (Any injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment based on objective medical proof.) • death