The "Basic Policy" option for car insurance in New Jersey, and how no-fault coverage works (including the “limited right to sue”).
New Jersey requires drivers to carry certain types and minimum amounts of auto insurance coverage. In this article, we'll explain the "Basic Policy" option for car insurance in New Jersey, how no-fault coverage works (including the "limited right to sue"), and other key rules and regulations related to auto insurance in the Garden State. (For more information on state laws that could affect a car accident case in New Jersey, see our companion article, Car Accident Laws in New Jersey.)
The "Basic" Car Insurance Policy in New Jersey
New Jersey drivers are required to carry at least a "Basic Policy," which meets minimum car insurance coverage requirements in the state. These minimums are:
- $5,000 in Property Damage Liability coverage (if you cause a car accident that results in damage to someone else's vehicle or other property; does not apply to damage caused to your own vehicle), and
- $15,000 in Personal Injury Protection coverage per person, per accident (which covers car accident injuries suffered by you or anyone else covered under your policy; up to $250,000 for certain serious injuries, such as permanent/significant brain or spinal cord injuries, or disfigurement).
Keep in mind that the Basic Policy does not require or include bodily injury liability coverage (although you can add $10,000 in bodily injury liability coverage to your Basic Policy). Without liability coverage, if you're responsible for causing a car accident, and other people are injured, you'll be personally responsible for losses not covered by their no-fault "personal injury protection" insurance. Even the State of New Jersey Department of Banking & Insurance cautions that the Basic Policy is "not for everyone," but that it "could be an option for those with few family responsibilities and few assets to protect (including income from a job)."
The "Basic Policy", No-Fault, and the Limited Right to Sue
For drivers who carry the Basic Policy in New Jersey, after a car accident resulting in injuries, the medical expenses and other economic losses incurred by the driver (or anyone else covered by the policy) will be paid under the no-fault "personal injury protection" coverage, up to the limits of the coverage, regardless of who was at fault for the accident.
Under a Basic Policy, a policyholder (and anyone covered by the policy) is automatically subject to a "limited right to sue." An injured person can only step outside the no-fault provisions of PIP coverage and file a lawsuit against the at-fault party if the accident resulted in:
- loss of body part
- significant disfigurement
- significant scarring
- a displaced fracture
- loss of a fetus
- permanent injury (the affected body part has not healed to allow normal function, and is not expected to), or
- death.
In the event of a qualifying accident, the injured person gains the right to file a personal injury lawsuit to recover "pain and suffering" damages and other non-economic losses, which are not available via a no-fault or PIP claim.
Learn more about New Jersey's Basic Auto Insurance Policy (from the State of New Jersey Department of Banking & Finance).
Standard Policies and the "Limited/Unlimited Right to Sue" Choice
The other kind of car insurance policy in New Jersey is the "Standard Policy," with coverage options that include bodily injury liability limits from as low as $15,000 per person/$30,000 per accident to up to $250,000 per person/$500,000 per accident.
Holders of a "Standard Policy" also must choose between the "limited right to sue" and the "unlimited right to sue" options. In this way, New Jersey is often referred to as a "choice" no-fault car insurance state.
The "limited right to sue" option (discussed in the previous section) is a cheaper option, but it means you're giving up your right to the at-fault driver for your non-economic damages (including "pain and suffering") unless the accident resulted in certain kinds of losses (these are detailed in the bulleted list in the previous section).
The "unlimited right to sue" means all options for a legal remedy are on the table after a car accident, no matter how minor or serious the resulting injuries are. That includes the option to file a lawsuit against the at-fault driver, and the recovery of compensation for all economic and non-economic losses.
Keep in mind that, as the policyholder in New Jersey, when you choose between the "limited right to sue" and the "unlimited right to sue" options, you're also making the choice on behalf of anyone covered under your policy.
