New Jersey Car Insurance Reform Updates

New Jersey Auto Insurance Reform Updates

New Jersey Auto Insurance Buyers Guide

Beginning March 22, 1999, a number of New Jersey auto reforms took effect. You should be aware of these changes so you can make an informed choice about your auto insurance coverage and costs.

For specific information about how these changes will impact you, consult with your agent or New Jersey Car insurance company representative.

BASIC POLICY
For drivers who may not currently have insurance, due to an inability to afford standard coverage, the reforms authorized the creation of a new basic auto insurance policy. This is a low-cost policy with minimum coverage that will meet mandatory insurance requirements. It has a $15,000 personal injury protection (PIP) medical expense limit, although treatment of certain extremely serious injuries and costs for hospital care of other significant injuries is covered up to $250,000. Other PIP benefits, such as income continuation and essential services, are not offered under the basic policy. Bodily injury liability coverage is also not included, although $10,000 in coverage is available as an option at additional cost. The policy provides a maximum property damage coverage of $5,000 and the "Limitation on Lawsuit Threshold" is mandatory for the basic policy.

NAMED DRIVER EXCLUSION
This option is aimed at parents wishing to avoid some of the high costs of comprehensive and collision typically associated with adding a teenaged driver to a policy. If such a driver will not be permitted to drive the most expensive family car, they can now be excluded from coverage on that car. If the named driver uses the car and has an accident, the insurer will not pay comprehensive and collision claims to have the car repaired.

NEW LOWER PIP LIMITS
While $250,000 in personal injury protection (PIP) medical coverage remains an option, consumers may now choose to buy reduced levels of PIP: $15,000, $50,000, $75,000 or $150,000. In the case of certain serious/permanent injuries, the $250,000 limit still applies to all policies.

LAWSUIT LIMITATIONS
For those who want to sue for any reason, regardless of the severity of the injury, the no-limit-on-lawsuit option remains available. As in the past, the premium for this option is significantly higher than for the lawsuit limitation threshold option which limits an individual's right to sue. The new reforms tighten up the lawsuit limitation threshold language used to define injuries eligible for suit.

MEDICAL PROTOCOLS
To combat the over-use of medical benefits long associated with New Jersey's auto insurance system, new medical protocols have been established for the treatment of soft tissue injuries to the neck and spine. These protocols are used as guidelines only - and are not intended to replace a treating physician's medical judgement. A new arbitration system has been established to ensure that an independent panel of medical peers will resolve conflicts over what treatments are medically necessary.

TIER RATING
Insurers began implementing their tier rating plans at the end of 1998. Under tier rating, drivers are assigned to different rating tiers according to driving history and a variety of other risk characteristics including coverage limit, vehicle type and years of driving experience. Insurance companies created tiers based on risk characteristics that are important to them. They were required to prove to the state that the risk characteristics they chose were not arbitrary, capricious, or unfairly discriminatory and that the tiers were reasonable based on their loss experience. In addition, the tier systems for each company had to be revenue neutral, that is, companies could not take in more dollars, or be forced to take in less dollars, under the new system.

Because the tier systems vary and because risk characteristics that might place a driver in a particular tier with one company may not be viewed in the same way by another, it is now more important that ever for consumers to compare a number of companies to ensure that they find the coverage and rating plan best suited to their individual circumstances. Quite often, drivers who experience a rate increase with one company pay significantly less with another.

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New Jersey Car Insurance Reform Updates

New Jersey Auto Insurance Reform Updates

New Jersey Auto Insurance Buyers Guide

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