Since a New Law Took Effect on January 1, 2023, New Jersey has Raised the Minimum Coverage Requirements for Auto Insurance Policies.

Changes in the Dynamics of Auto Insurance Minimum Coverage Limits in NJ

New Jersey has a statewide no-fault auto insurance system that has been around for 50 years. All vehicle owners have personal injury protection (PIP), liability insurance, and uninsured or underinsured motorist insurance. The latter is used to pay for damages and injuries when you have an accident with a driver who has no insurance or whose coverage isn’t enough to pay for your losses. The amount of protection and what is included adjust according to the desired premium.

No-fault insurance decreases the number of lawsuits because it limits the awards for losses, pain and suffering. Because the insurance is “no-fault,” your PIP covers your medical expenses based on your policy’s limit. Both parties will seek coverage from their respective insurance providers during a car accident. In most states, the driver who caused the accident uses their insurance coverage to pay for the other party’s damages because they have an at-fault system.

Comparison of Basic and Standard Auto Insurance Policies under the Existing System in New Jersey

Around 53,000 car owners have a basic policy that costs significantly less than the standard plan but provides much less coverage. The basic policy minimum is $5,000 in property damage liability per accident, personal injury protection (PIP) of $15,000 per person per accident, and an optional $10,000 in coverage for bodily injury liability. Also, coverage for underinsured/uninsured motorists is $5,000 and cannot be more than the amount for property damage liability. There is an availability of up to $250,000 for specific injuries. They are permanent or significant brain injury, trauma center, or acute care hospital treatment immediately following the accident until the patient’s condition is stable, spinal cord injury, or disfigurement

The standard coverage before the increase required a minimum of $15,000 each for bodily injury per person, personal injury protection (PIP), uninsured motorist bodily injury per person, and underinsured motorist bodily injury per person. Property damage liability per accident was $5,000. In contrast, bodily injury liability per accident and optional coverage for uninsured/underinsured motorist bodily injury per accident required a minimum of $30,000 in coverage for each. Collision and comprehensive coverage are optional.

Threshold Options for NJ Standard Auto Insurance Policy Holders

Standard insurance policyholders have two options regarding their right to sue for lost wages, medical bills, and pain and suffering. Vehicle owners with a standard policy can choose a verbal threshold (a limited right to sue)  or a zero threshold (an unlimited right to sue). Primary policyholders automatically have a verbal threshold. A verbal threshold allows the policyholder to sue for noneconomic damages in the event of a car accident, but the amount that can be sued for is limited. Only the following injuries can be part of a lawsuit where there is a verbal threshold:  loss of a body part, significant scarring or disfigurement, a displaced fracture, loss of a fetus, permanent injury causing disability, or death. A zero threshold has no limits on the noneconomic damages that can be sought. New Jersey officials chose this option to lessen the number of frivolous lawsuits involving minor injuries.

Annually Limited Medical Coverage Only Option

There is limited coverage for drivers who can receive Federal Medicaid benefits with hospitalization. The Special Policy allows for a medical coverage-only policy and costs $365 per year.

Recent Increases and Future Phases of New Jersey Auto Insurance Coverage Minimums

In the past, New Jersey had one of the country’s lowest minimum requirements for auto insurance. Lawmakers decided the increase was long overdue because settlements are more costly now than ever before. The average settlement can start at $20,000, $5,000 above the previous lowest minimum.

First Round of Increases in 2023

The first round of increases that began as of January 1, 2023, includes $25,000 in bodily injury liability per person and property damage liability per accident. Bodily injury liability per accident is $50,000, and underinsured/uninsured coverage can be equal to or more than the minimum amount for bodily injury liability ($25,000).

As of January 1, 2023, new policies will be affected by the first increase, as will insurance holders who need to renew their policy. Old policies will gradually be phased out, with vehicle owners renewing their insurance policies and taking on the new minimums. This will happen again as of January 1, 2026.

Second Round of Increases in 2026

As of January 1, 2026, the second phase will take place, and policies will have the following minimums:  $35,000 in bodily injury per person and for uninsured/underinsured motorists, $70,000 in bodily injury per accident, and $25,000 in property damage per accident.

Acknowledging that these limits are the absolute minimum coverage a vehicle owner can have is important. Policyholders can request more coverage and pay higher premiums if they feel it is necessary. With the standard policy, the options for collision (damage due to a collision with a car or object) and comprehensive (damage caused by theft, vandalism, fire, etc.) coverage can be purchased to provide additional protection to the motorist.

Effects of Raising Car Insurance Coverage Limits for New Jersey Policyholders

These premium increases are expected to affect drivers’ premiums from $100 to $200 per vehicle. The change will affect an estimated 1.2 million vehicle owners, accounting for 30% of drivers. Besides New Hampshire and Virginia, car insurance is necessary throughout the country. Driving in New Jersey without insurance can cause a motorist stiff fines and possible jail time. Additionally, if a driver has an accident and is at fault, they must pay for all the damages out of pocket. Considering that the average hospital bill for a moderate injury from a car accident can be over $3,500, it is better to be insured as the law requires.

Hikes in Car Insurance Coverage Minimums in New Jersey

Expanding Your Compensation Options with More Coverage

The minimum coverage you can have is not necessarily the best coverage for their needs. Paying for the absolute least amount of coverage available could expose you to lawsuits and cost overages they will have to pay out of pocket. Experts recommend speaking with an insurance agent about your needs and how much coverage is best for you. Consider adding options such as collision and comprehensive insurance and a zero-threshold option allowing you to sue for non-economic damages.

Questions About the Proper Use of Insurance Policies After an Accident in New Jersey? Talk to a Car Accident Lawyer for Assistance Now

Dealing with an insurance claim can be confusing, especially with the recent changes in insurance policies. Car insurance isn’t usually something you think about until you are in an accident. Figuring out who will pay for your medical costs while trying to heal from your injuries can hinder your recovery and peace of mind.

Let our seasoned car accident attorneys at Cohen & Riechelson work to get you the settlement you need to cover your financial issues during this difficult time in Lawrence, Hamilton, West Windsor, Titusville, Pennington, Princeton, Trenton, and throughout Mercer, Burlington, and Middlesex County. We are experienced negotiators and litigators who know New Jersey’s no-fault car insurance laws inside and out. If you have been in an accident or know someone who has, call us today at (609) 528-2596 or contact us using our online contact form