Important information about automobile insurance coverage and your right to make a claim for personal injuries sustained in an automobile accident.

This brochure has been prepared as a community service by the Association of Trial Lawyers of America - New Jersey Educational Foundation

On May 19, 1998, the State of New Jersey adopted the (NJ Legislature:) Automobile Insurance Cost Reduction Act The statute was intended to reduce the cost of automobile insurance; however, that purpose was accomplished primarily by reducing the benefits available to persons who are injured in automobile accidents. This means less coverage to pay for medical treatments and less rights to recover monetary damages from careless drivers who cause accidents.

        Q. What choices do I have when I purchase or renew my
           auto insurance policy?
        
        A. You are required to elect either the standard policy
           or the basic policy.
        
        Q. What is the basic policy?
        
        A. The basic policy (also known as the mini-policy)
           provides only $5,000 of property damage liability
           coverage if someone makes a claim against you and
           $15,000 of medical expense benefits (up to $250,000
           for catastrophic brain and spinal cord injuries)
           if you or a resident family member are injured.
           The basic police does not provide coverage if you
           injure someone else, however, you have the option
           of electing coverage in the amount of $10,000 for
           injury to one or more persons in the same accident
           if someone makes a claim against you. The basic policy
           does not provide any uninsured motorist coverage to
           protect you and your family if the careless driver
           who causes the accident is uninsured or is insured
           under the basic policy with no bodily injury
           liability coverage.
        
        Q. If I elect the basic policy, will my insurance company
           hire an attorney to defend me if I am sued for damages
           by someone else who was injured?
        
        A. If you elect a basic policy with no bodily injury liability
           coverage, your insurance company will not provide an attorney
           to represent you. If you are sued - even if you are not
           at fault for the accident - you will have to hire your own
           lawyer at great expense to defend you or else you will risk
           the entry of a default judgement against you with the loss
           of your driver's license.
        
        Q. Should I purchase the basic policy?
        
        A. No. The members of ATLA-NJ believe that the basic policy
           does not provide adequate protection for your assets
           if you are sued nor adequate coverage for you or your family
           if you were injured by a careless driver.
           WE RECOMMEND THAT YOU DO *NOT* ELECT THE BASIC POLICY.
        
        Q. What is the standard policy?
        
        A. The standard policy provides liability coverage if
           someone makes a claim against you with minimum limits
           for bodily injury of $15,000 per person/$30,000 per
           accident and property damage of $5,000. In addition,
           the standard policy provides uninsured motorist coverage
           with minimum limits of $15,000 per person/$30,000 per
           accident if you or a resident member of your family
           is injured by a person who is uninsured or has no
           bodily injury liability coverage. WE RECOMMEND THAT YOU
           ELECT THE STANDARD POLICY.
        
        Q. Does the standard policy provide coverage for medical expenses?
        
        A. Yes. The standard policy provides personal injury
           protection (PIP) coverage which includes medical expenses
           up to $250,000 per person per accident. You may elect to
           purchase less coverage in the amounts of $15/50/75/150,000;
           however if you do, you may not have enough insurance to obtain
           all of the medical treatment you need or to pay for all your
           medical bills.  WE RECOMMEND THAT YOU PURCHASE $250,000 OF
           PIP MEDICAL EXPENSE COVERAGE.
        
        Q. If I am injured, can I make a claim or file a lawsuit against
           the careless driver who caused the accident?
        
        A. It depends on your policy and the nature of your injuries.
           If you purchase a standard policy, you are required to elect
           a "tort option" that will determine if you have the right to
           make a claim. You must elect either the "limitation on lawsuit
           option" or the "no limitation on lawsuit option." If you
           purchase the basic policy, you are assigned the "limitation on
           lawsuit option."
        
        Q. What is the "limitation on lawsuit option"?
        
        A. The lawsuit limitation option (also known as the verbal
           threshold) limits your legal rights to make claim for
           monetary damages or to file a lawsuit against a careless
           driver unless you sustain one of the following types of injury.
        
           Type 1 - Death
           Type 2 - Dismemberment
           Type 3 - Significant disfigurement or scarring
           Type 4 - Displaced fracture
           Type 5 - Loss of a fetus
           Type 6 - Permanent injury
        
           A permanent injury occurs when a body part has not and will not
           heal to function normally. WE RECOMMENT THAT YOU DO *NOT* ELECT
           THE "LIMITATION ON LAWSUIT OPTION."
        
        Q. What is the "no limitation on lawsuit option"?
        
        A. The no limitation option (also known as "no threshold")
           permits you to make a claim or to file a lawsuit against
           a careless driver for any and all personal injuries. WE
           RECOMMEND THAT YOU ELECT THE "NO LIMITATION ON LAWSUIT OPTION."
        
        Q. Who benefits if I purchase a basic policy or a standard
           policy with the lawsuit limitation option?
        
        A. You will reduce the cost of your automobile insurance;
           however, you will be giving up insurance benefits and
           legal rights in order to save money. The careless drivers
           who cause accidents will benefit because they may have no
           legal responsibility for for your pain and suffering.
           The insurance companies who provide coverage for careless
           drivers will benefit because they may not have to pay any
           monetary damages for your injuries.
        
        Q. How can I protect myself and my family if we are sued?
        
        A. A standard policy provides liability insurance with minimum
           limits of $15,000 per person/$30,000 per accident if you or
           your family are sued; however you may purchase *additional
           coverage* to protect your assets.
        
        Q. How can I protect myself and my family if we are injured by
           a careless driver who is uninsured or unidentified?
        
        A. A standard policy automatically provides coverage for
           injuries caused by an uninsured or hit-and-run driver
           in the amount of $15,000 per person/$30,000 per accident;
           however, you may purchase *additional coverage* up to
           the amount of your liability coverage.
        
        Q. How can I protect myself and my family if we are injured
           by a carless driver who is insured but does not have
           adequate coverage?
        
        A. The amount of your recovery from a careless driver
           may be limited by the amount of liability insurance
           purchased by that driver and by the owner of the vehicle;
           however, if you purchase a standard policy, you can
           purchase *underinsured motorist coverage* up to the
           amount of your liability coverage.
        
        Q. How much coverage do you recommend?
        
        A. Most people feel that the minimum limits of $15,000
           per person/$30,000 per accident are inadequate.
           Many people purchase additional coverage up to
           $100,000/$300,000 or $$250,000/500,000. We recommend
           that you purchase liability coverage with *single limits*
           of $500,000 or the highest limits that you can afford.
           In addition you should purchase uninsured/underinsured
           motorist coverage with the *same limits* as your
           liability coverage.
        
        Q. How do I choose the type of automobile insurance coverage
           that I want for myself and my family?
        
        A. When you purchase or renew your policy, you will be provided
           with a coverage selection form. We recommend that you make
           the following selections:
        
           Standard policy - Yes
           Basic policy - No
        
           No limitation on lawsuit option - Yes
           Limitation on lawsuit option - No
        
           PIP medical expenses $250.000 - Yes
           PIP medical expenses $15,000/50,000/75,000/150.000 - No
        
           Uninsured/Underinsured - Yes
           With same limits as liability coverage
        
           If you do not sign the coverage selection form, you will
           be assigned a standard policy with $250,000 of PIP medical
           expenses and the lawsuit limitation option.
        
        Q. What happens if I do not purchase any automobile insurance?
        
        A. The law requires the owner of every motor vehicle to
           purchase insurance. If you do not purchase insurance,
           you will be subject to civil and criminal penalties.
           In addition if you are injured while operating an uninsured
           automobile, you will not be permitted to make a claim or
           file a lawsuit against the careless driver for economic
           or noneconomic loss, even if you were not at fault for
           the accident.
        
        Q. Can I purchase other insurance protection in addition
           to automobile insurance?
        
        A. Yes. You can purchase a personal catastrophe liability
           umbrella at a reasonable cost that will provide additional
           coverage if a claim is made against you or any resident
           family member for injuries sustained by another person
           anywhere in the world due to the operation of a motor
           vehicle or for any other reason. In addition some companies
           offer umbrella policies that include uninsured/underinsured
           motorist coverage. WE RECOMMEND THAT YOU PURCHASE A PERSONAL
           CATASTROPHE LIABILITY UMBRELLA WITH LIMITS OF $1 MILLION.
        
        Q. What is ATLA-NJ?
        
        A. The New Jersey chapter of the Association of Trial Lawyers
           of America is an organization of over 2300 attorneys who
           represent citizens who are injured in accidents. In addition,
           we represent the interests of accident victims in hearings
           before the Legislature, Executive Agencies and the Judiciary.
           If you are injured in an accident, we recommend that you contact
           a member of ATLA-NJ for legal advice or that you contact the
           ATLA-NJ Lawyer Referral Service at 1-800-367-0089.

                            REPEAL NO-FAULT

The State of New Jersey adopted the No-Fault Act in 1972. The primary goals of the statute were to reduce the cost of automobile insurance, to increase the availability of insurance coverage, to provide prompt payment of medical expenses and to streamline judicial procedures in liability claims.

The No-Fault Act has been a failure. The State of New Jersey still has the highest average insurance costs in the country. Insurance coverage is not readily available to many motorists, especially in urban areas. Claims for medical expenses remain unpaid for years and thousands of disputed claims are submitted to arbitration each year. The verbal threshold has resulted in unpredictability in the resolution of liability claims and has limited the legal rights of many accident victims.

The members of ATLA-NJ believe that the No-Fault Act is the primary reason for the increase in the cost of automobile insurance in the State of New Jersey. The No-Fault Act has failed. We support the repeal of No-Fault.