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What types of auto insurance coverage exist in New Jersey?

In the event of an auto accident, the insurance coverage of the other driver plays a vital role in compensating a victim for treatment of injuries, lost wages and pain and suffering. Understanding the auto insurance regulations in New Jersey is necessary for all drivers, however, the information in this post should not be considered specific legal advice.

All drivers in New Jersey must carry auto insurance. There are predominantly two types -- standard and basic. A standard policy is usually more expensive and comes with provisions for many different types of coverage. It is the most common type of policy chosen by New Jersey drivers. A basic policy is less expensive and has provisions for only limited benefits that are mandatory for meeting state law requirements. It is an option for those people who have fewer assets to protect.

Auto insurance policies come with a number of coverage options. Understanding those options is important because, in the event of an accident, a victim is able to make an assessment regarding the amount of compensation that the person is able to obtain from the insurance company of the driver who was responsible for the car accident.

The primary type of coverage with auto insurance policies is Personal Injury Protection, also known as "no-fault" coverage. PIP covers expenses for injuries sustained in an accident irrespective of who was at fault. It covers expenses incurred for medical treatment of injuries and reimbursement for financial challenges, which may result from lost wages or hiring a person to take care of a victim at home.

Next is liability insurance, which also has two types -- bodily injury coverage and property damage coverage. Bodily injury coverage pays for claims made through lawsuits by the victim or the victim's family members after a car accident. Property damage coverage, on the other hand, pays for lawsuits filed by those whose property was damaged due to an accident caused by a driver.

New Jersey laws also have provisions for uninsured drivers and underinsured drivers. It means that if a driver who caused an accident does not carry insurance or has insufficient insurance to cover the damages caused to a victim, the victim's insurance company bears the expenses of treatment and other economic losses, such as lost wages.

Source: New Jersey Department of Banking and Insurance, "New Jersey Auto Insurance Buyer's Guide," Accessed on Oct. 23, 2014

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