A Lawyer’s Guide to Automobile Insurance

Introduction:
This purpose of this guide is to help you, when purchasing auto insurance, to select the coverage that will best protect you and your family if you are ever involved in an auto accident. If you have any questions left unanswered by this pamphlet or would like a lawyer’s opinion about your auto insurance policy, call Kamensky - Cohen & Associates for a free consultation.

The New Law:
The new auto insurance law in New Jersey that went into effect in 1999 has made significant changes to your coverage and we have some critical consumer tips, which we believe will protect you and your family. The first and foremost of these tips is never select the "basic policy". When it comes time to renew your auto insurance, you’ll have to choose between what government regulators have named the "basic policy" and the better levels of coverage found in a "standard policy". The standard policy will protect you and your family. The cheaper "basic policy" is so lacking in coverage that it provides little more than an insurance card. The "basic policy" only provides limited medical coverage and trivial liability coverage. No individual or family with any assets or income from a job should buy such a policy. Without liability coverage, you can be personally sued. If successful, a judgment can dramatically affect your financial future, your credit rating and even your ability to own or drive a car!

Liability:
How much "Liability" should I be carrying?
As mentioned above, liability insurance is what protects your family and assets in the event you are charged with causing an accident. High liability protection can help assure you will not be financially stripped. If you’re a basic policyholder involved in a collision that is only partly your fault, you could lose your license, your car, your income and other assets. Even if you believe you have no assets to protect today (or that your college bound son or daughter has nothing to protect), consider this: an unpaid judgment is a 20-year judgment. The assets you may gather for the next two decades...a better salary, a better house...are subject to being taken to pay the judgment. And until that judgment is satisfied, you can’t own a car and you can’t drive, not even to your job.

Coverage:
How much should you buy? The best answer is as much as you can afford. Ideally, no less that $100,000. It is not uncommon for juries to award in excess of the minimum coverage for serious injuries. Increasing your coverage to $500,000 or $1,000,000 can make good sense if you own if you own property, have savings, and other assets that you need to protect. The good news is that the cost of incremental increases of liability coverage is far less than you would expect. The highest premium is for the first $50,000 in coverage because most awards for accident related injuries are in that range. Get the exact costs for each level of liability coverage from your broker or insurance company and then opt for the most you can afford.

UM / UMI:
What does Uninsured Motorist (UM) & Under Insured Motorist (UIM) Cover?
This coverage is critical! UM/UIM coverage protects you when you are not the person responsible for the accident, but the person who is, either does not have auto insurance, or has the minimum or a modest auto insurance policy. Since their policy will not sufficiently cover what your damages are "worth" and they have no assets to make up the difference, your own auto insurance will make up the difference up to the amount of your UM/UIM coverage. For instance, If you have a $100,000 UIM/UM coverage on your auto policy and are hit by someone whose has the new "basic policy" or no insurance at all, he/she will quite likely have no liability insurance whatsoever. If your damages due to injuries and economic losses add up to $100,000, and the "other guy" has no liability insurance and no assets, your own UM/UIM coverage will cover your $100,000 in losses.

How much to buy:
How much should you buy? By law your UM/UIM coverage cannot be higher than your liability coverage, but it can be less. We suggest you carry as much UM/UIM coverage as you do liability coverage, again, the most you can comfortably afford, to make sure that you are protected no matter what the "other guy’s" economic or insurance status. Again, we recommend no less than $100,000. We predict that with the new cheap coverage available there will be many more drivers on the road with little or no liability insurance.

Verbal & Zero Threshold:
On the Lawsuit Limitation Option, what do "Verbal Threshold", and/or "Zero Threshold" mean?
These terms all refer to "tort options" or differing rights to sue for non-economic damages in the event that you are injured in an auto accident. The new law continues to offer the option of giving up your rights to the court system in the event of an injury, in exchange for a large reduction in insurance premiums. On the new "basic policy" you are subject to limited options for liability coverage, reduced PIP (medical) benefits, no UIM/UM coverage and very limited ability to sue for injuries.

If you are purchasing a "standard policy" you will have the option of selecting the "Zero Threshold" sometimes called "No Threshold" for your coverage. By making this selection, you are permitted to sue without limitation for damages caused by any injuries resulting in pain and suffering, loss of quality of life, etc. If you select "Verbal Threshold", sometimes referred to as "Lawsuit Threshold", it is quite a different story. While choice of "Verbal" allows you to sue for injuries, it is only under very narrow guidelines and it can still potentially bar you from suing for damages due to injuries unless those injuries meet certain "threshold" criteria. If your injuries do not meet the threshold, you will not be entitled to sue for non-economic damages. This means, you will not be able to sue for any injuries barring those which are extremely severe.

Which option to choose:
Which option is the best choice for me? Without a right to access the court system in the event of an injury, even a prolonged injury or death will not be compensated. You might be tempted to give up this right in exchange for a large reduction in insurance premiums. Weigh whether the cost savings offered is worth giving up your or your family’s ability to be fairly compensated in the event of an accident. We strongly advise against the "basic policy" in which there are very limited options offering the right to sue. And when you are looking at the "standard policy", your insurance company and/or broker often encourage you to purchase "Verbal" or "Lawsuit" threshold because, they will point out, it is cheaper. Again, be sure you are aware that when you choose to save money on this coverage, you may be locking yourself out of the right to sue for injuries that may forever alter the quality of your life. Be sure you ask the exact difference in cost between the "Verbal" and "Zero" Threshold coverage. We highly recommend your choosing "Zero" or "No" Threshold coverage if you can afford it. It may be no more than $100-225 a year per car depending on the amount of your liability and UIM/UM coverage. Too often we have had to tell people who are suffering significant pain and discomfort as the result of an auto accident that they have no case because they have "Verbal" or "Lawsuit" Threshold coverage on their auto policy and their injuries do not meet the requirements that would allow them to sue for pain and/or suffering.

PIP:
What are Personal Injury Protection (PIP) benefits?
These are the coverage you receive from your auto insurance carrier without regard to whose fault the accident is. If you are involved in an auto accident, even if you are not in your own car, your insurance company is required by law to pay for your medical expenses. However, the new law allows many different options regarding these coverage. The most important thing to remember is that you want to maintain your right to choose your own doctor. Do not choose any plan requiring "pre-certification of all treatment" by an insurance company. Choose, if you can afford it, $250,000 PIP coverage since many private health plans exclude treatment for auto injuries or require repayment to them from any compensation awarded you.

Saving money on Collision & Compensation:
Can I Save money on Collision and Comprehensive?
The short answer is yes! These coverage is for damages to your car (including theft, fire, etc.) That are not the result of someone else’s negligence. Your insurance company pays you the cost of repair or replacement less the amount of the deductible you have chosen. The lower your deductible, the higher your premium. You may think you are playing it safe by selecting a low deductible because the insurance company pays more when you make a claim. However, if you were to file a claim every time you had a $500 dent in your car, your premiums would sky-rocket and/or your policy would be canceled. We advise that you increase your deductible to as high as you think you are financially able to absorb the cost of your own occasional damages. The money you save on this option can be applied to better coverage for protection against bodily injury and serious economic losses due to injury. What you save on Collision & Comprehensive can go towards providing you with "Full Tort" coverage. This is a smart transfer of costs if protecting your and your family’s health and financial security in the event of an accident is your goal.

General Rules of Thumb:

• Ask several insurance companies and/or agents to cost our your policy choices before you buy auto insurance. Ask each of them for ;more than one quote, showing the costs for the different options you would like to evaluate. Make this request in writing. 
• Don't ever purchase the "Basic Policy". Do not think that the "cheapest" is always the best way to go. People are often surprised and disappointed at how little their coverages offer them when they find themselves a victim of an auto accident.
• If you are ever injured in an auto accident, do not rely on your insurance company’s claims adjuster to have your best interests at heart. Let decisions about your medical treatment be determined by you and your doctors, not by your insurance adjuster or the insurance company’s doctor. Remember, they tell you they are there to protect you but their real purpose is to make money! 
• If you are ever in an auto accident in which you or any member of your family is injured, always consult a lawyer specializing in auto injury accidents. We, of course, suggest you call Kamensky - Cohen & Associates! Our attorneys have been practicing law in the New Jersey courts for over 25 years. And, along with giving special attention to Personal Injury Law...at Kamensky - Cohen & Associates, we specialize in people! 

One last word:
You purchase auto insurance for safety and security, not just to comply with the law. Please take our advice, when you talk to your insurance agent or broker tell them you want coverage that protects you in case you or a family member is injured in an auto accident. You want an auto insurance policy that reflects your real needs...both for today and the future, one that will protect you and your family.

If you need guidance, Kamensky - Cohen & Associates will gladly answer any questions and offer advice tailored to your particular needs. Please call us or e-mail your questions.

Also See: NJ Auto Insurance Checklist

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