Key Takeaways
- New Jersey offers a choice between Standard Policy (15/30/5 minimum) and Basic Policy (10/20/5 minimum)
- New Jersey is a no-fault state where Personal Injury Protection (PIP) is mandatory
- Drivers can choose between "lawsuit threshold" (verbal threshold) or "no limitation on lawsuit" option
- The verbal threshold limits lawsuits to serious injuries: death, dismemberment, significant disfigurement, displaced fractures, loss of fetus, or permanent injury
- Uninsured/Underinsured Motorist coverage is required unless specifically rejected in writing
New Jersey Auto Insurance Requirements
New Jersey has one of the most complex auto insurance systems in the nation, offering consumers choices that affect both coverage and lawsuit rights.
The Choice System
New Jersey offers drivers a choice between two policy types:
Standard Policy vs. Basic Policy
| Feature | Standard Policy | Basic Policy |
|---|---|---|
| Bodily Injury Liability | 15/30 minimum | 10/20 (optional, not required) |
| Property Damage Liability | $5,000 minimum | $5,000 minimum |
| Personal Injury Protection (PIP) | $250,000 | $15,000 (medical only) |
| Uninsured Motorist | 15/30 (waivable) | Not included |
| Collision/Comprehensive | Optional | Not available |
Memory Tip: Remember 15/30/5 for Standard Policy and 10/20/5 for Basic Policy minimum liability limits.
Standard Policy Minimum Limits (15/30/5)
| Coverage | Minimum Limit |
|---|---|
| Bodily Injury per Person | $15,000 |
| Bodily Injury per Accident | $30,000 |
| Property Damage | $5,000 |
Basic Policy Limits (10/20/5)
| Coverage | Limit |
|---|---|
| Bodily Injury per Person | $10,000 (optional) |
| Bodily Injury per Accident | $20,000 (optional) |
| Property Damage | $5,000 |
| PIP Medical | $15,000 |
Important: Basic Policy provides very limited coverage. It's designed for cost-conscious drivers but offers minimal protection.
No-Fault Insurance (PIP)
New Jersey is a no-fault state, meaning Personal Injury Protection (PIP) is mandatory:
PIP Coverage
| Policy Type | PIP Benefits |
|---|---|
| Standard Policy | $250,000 (medical + income + essential services) |
| Basic Policy | $15,000 (medical expenses only) |
Lawsuit Threshold Options
New Jersey allows drivers to choose their right to sue for pain and suffering:
The Verbal Threshold (Lawsuit Limitation)
The verbal threshold (also called "limitation on lawsuit" option) restricts the right to sue except for:
| Qualifying Injury | Description |
|---|---|
| Death | Fatal injuries |
| Dismemberment | Loss of body part |
| Significant Disfigurement | Permanent, visible scarring |
| Displaced Fracture | Bone broken and displaced |
| Loss of Fetus | Pregnancy loss |
| Permanent Injury | Medically verified permanent impairment |
No Limitation on Lawsuit Option
Choosing "no limitation" means:
- Can sue for any injury, including pain and suffering
- Higher premium than verbal threshold option
- Full right to seek compensation preserved
- Available only with Standard Policy
Exam Tip: The verbal threshold is frequently tested. Remember the six qualifying injuries: death, dismemberment, significant disfigurement, displaced fracture, loss of fetus, permanent injury.
Uninsured/Underinsured Motorist Coverage
Standard Policy Requirements
- UM/UIM coverage is included at 15/30 minimum
- Can be rejected in writing
- Can select lower limits than liability
Basic Policy
- UM/UIM coverage not automatically included
- May be added for additional premium
Other Required Coverages
| Coverage | Requirement |
|---|---|
| Property Damage Liability | $5,000 minimum (both policies) |
| PIP | Mandatory (amount varies by policy) |
| Proof of Insurance | Must carry in vehicle |
What are the minimum liability limits for a New Jersey Standard auto policy?
Under the New Jersey verbal threshold, which of the following is NOT a qualifying injury that allows a lawsuit for pain and suffering?
What is the PIP limit under a New Jersey Basic auto policy?