Princeton, You’re Underinsured – and That Can Hurt You in an Accident (Part 1)

At Lependorf & Silverstein, P.C., we deal with a lot of car accident claims, and in the past few years we’ve noticed a worrisome trend that really hurts our clients. It’s the fact that they are woefully underinsured. Being underinsured is a big problem, especially in a no-fault state such as New Jersey. You need good coverage in case you are hurt and require expensive medical treatment.

Nobody anticipates a car accident, but they happen every single day, even to the most careful drivers. And when they happen, you have to be prepared. With full car insurance coverage, you at least know that all your financial bases will be covered.

Having car insurance is just as important as having a registration or a license. Auto insurance is a requirement in New Jersey, but you have a lot of say in what type of insurance coverage you get.

Here are things to consider when purchasing car insurance coverage:

• How much coverage can you afford? With this question, it’s important to think of the flipside: how much more it will cost you not to have this coverage in the event of a serious accident?
• Will your personal health insurance cover medical costs if you get hurt in a car accident? If not, up your personal injury protection!
• Who should have a Basic policy? Who shouldn’t?

We believe every Princeton driver should take a second look at their policy and truly understand what it means. Wealthy or not, you should purchase as much insurance as you can reasonably afford. If you don’t, you may end up paying some serious fees out of pocket—and have very few options when it comes to filing a lawsuit.

What Is a No-Fault State?

When two cars collide, people assume that the insurance policy of the driver who caused the crash will cover all expenses, including the other person’s medical treatment. However, that is not always true. New Jersey has a no-fault system, which means each driver is covered by their own insurance regardless of who was at fault. There are a few good reasons for this. One of them is to protect the healthcare providers from having to wait while insurance companies battle out who should foot the bill.

In a no-fault state, you have to have personal injury protection (PIP) coverage to pay for your medical expenses.

What Auto Insurance Is Required?

You are breaking the law if you drive uninsured in New Jersey, but the required amount of insurance is low. It begins with the Basic Policy, which is recommended for drivers with “few family responsibilities and few assets.” You must have:

• $5,000 in property damage liability
• $15,000 in personal injury protection per person, per accident, with up to $250,000 for permanent or significant brain injury, spinal cord injury, disfigurement, or other severe trauma requiring acute medical treatment.

Basic policyholders are allowed to add up to $10,000 in bodily injury liability for all persons in an accident, but it is not required. Some insurers may offer collision and comprehensive coverage in a Basic Policy as well, but again, it’s not required by the state. A Basic Policy may be purchased through any New Jersey licensed insurance producer. New Jersey’s Department of Banking & Insurance does carry a strict warning, however:

“If you do not have any liability coverage, you are responsible for paying for the pain, suffering and other personal hardships and some economic damages, such as lost wages, that you cause. The insurer will not provide or pay for a lawyer to represent you if you are sued. Your assets will be at risk, including the risk of having money deducted from your wages if a judgment is entered against you. And, if you lack coverage and someone hits you, you cannot sue.”

The Standard Policy is a little better in its minimum requirements:

• $15,000 per person, $30,000 per accident in bodily injury liability
• $5,000 per accident in property damage liability
• $15,000 in personal injury protection per person, per accident, with up to $250,000 for permanent or significant brain injury, spinal cord injury, disfigurement, or other severe trauma requiring acute medical treatment.

Under a Standard Policy, uninsured/underinsured motorist, collision, and comprehensive coverage are available as options only. If your insurer offers UIM/UM, they only have to offer you up to whatever liability limits you’ve chosen to purchase.

How to Get the Best Insurance Possible

To get insurance coverage that’s right for you, the best thing to do is shop around and compare what different insurance agencies have to offer and at what rate.

Certain auto insurance companies in New Jersey use insurance scores to determine rates for their clients. Your insurance score is based off of your credit history and helps determine the kind of risk the company might be taking with you financially.

Some factors might affect your insurance score, such as:

• The length of your credit history: the longer, the better.
• Any negative financial issues: things such as bankruptcy or foreclosures.
• Number of open credit lines: if you have a few credit cards, it reflects well on your score.
• Past payment history: the number of late payments.

If you want to improve your insurance score, it’s a good idea to pay your bills on time, keep your credit debt balanced, and open new credit accounts wisely.

Remember, it is your right to shop for cheaper car insurance at any point in time. You do not have to wait for your policy to be up for renewal to look for a better deal. If you find a better deal, you can cancel your old insurance and get a refund on your unused premium. But do not cancel your old policy until the new one is ready to go because not having coverage can result in higher insurance rates in the future.

Contact Us with Your Insurance Questions

A lot of the people who come to us for help in Princeton are underinsured. This is a big hindrance after a car accident. If you’re hurt in an accident and have tens of thousands of dollars in medical bills, you don’t want to be stuck paying for it out of pocket. Worse, if you cause injury to someone else, you will be responsible for paying with your personal assets, no matter how little you have.

If you or someone you know has questions about an insurance policy, call Lependorf & Silverstein, P.C., at (609) 240-0040. We’ll help you parse your policy and know if you’re truly covered. To continue reading the second part of this blog series, please click here.