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Most people do not understand automobile insurance beyond the bottom line of the premium they must pay. Insurance brokers and agents who sell policies are immune under New Jersey law (N.J.S.A. 17:29-1.9 ), even if they give bad advice to a customer. Since the options and coverage selected impacts the rights and remedies available to not only the insured driver but all resident relatives within their household who may someday be injured in an automobile accident, the obvious importance of informed decisions cannot be understated. The following is offered as a summary of the laws and pitfalls to avoid, along with recommendations as to the coverage that consumers should select.
Most people understand liability insurance provides money that is paid by your insurance company on your behalf to someone if you are liable for their injuries. In essence, therefore, in selecting coverage above the minimums required by state law, the consumer often evaluates his or her own assets and net worth and attempts to secure the appropriate insurance coverage for his or her budget. Unfortunately, even if your current financial situation does not justify higher coverage, the impact of insufficient coverage potentially subjects you to liability in excess of your liability limits and can result in a docketed judgment that remains on your record for 20 years and can be renewed for another 20 years. A consumer must consider the impact down the road, for example, when he or she may wish to buy a house or secure a loan and the mortgage company or bank sees the docketed judgment.
In addition, you are not allowed under New Jersey law to purchase UM or UIM coverage in excess of the liability coverage you have selected. Surprisingly, few people consider or understand the importance of this particular aspect of their insurance. It provides protection for you and your family in the event someone has an accident with someone who has no insurance or has insurance that is less than the coverage you have selected. UM covers you if someone without insurance causes an accident and UIM comes into play if the other driver is underinsured. Since so many drivers are operating without insurance or inadequate coverage, careful attention should be given to this crucial component of your coverage. Consumers are wise to search for an insurance company that is willing to provide this coverage up to the limits of the underlying liability coverage they have selected. Keep in mind that the marginal cost of higher limits should decrease as policy limits increase and the premium for the higher limits of UM or UIM coverage should be relatively low as well. A wise consumer will also inquire into excess or umbrella policies as the cost likewise provides a bigger bang for the buck. Umbrella policies, which every homeowner should consider, can also be a means to secure optimum UM or UIM coverage.
The most important selection on your insurance policy is the “threshold” option. The right to compensation for personal injuries is directly linked to this option. It impacts upon your rights as well as all members of your household. It is incumbent whenever economically feasible to select the “No Threshold” or “Zero Threshold” option in order to preserve your rights to sue if you are hurt by someone else’s negligence. Too often consumers are advised they can still recover for the more serious personal injuries even if they elect what is called “the money saving” option. Before buying this cheaper insurance the consumer should understand that many serious injuries do not meet the definition imposed by a policy containing the “threshold” limitation (also known as “Verbal Threshold” or “Limitation On Lawsuit”). If you or a family member is governed by this limitation you cannot sue unless the accident causes (1) death, (2) dismemberment, (3) significant disfigurement or scarring, (3) a displaced fracture, (5) the loss of a fetus, or (6) a permanent injury.
In the case of a permanent injury the law requires “objective verification,” which oftentimes is simply impossible because the injury cannot be documented by tests and pain is often subjective by its very nature. Moreover, the insurance companies will deny compensation if they believe they can convince a jury the condition verified by objective studies can be attributed to a pre-accident condition such as the aging process or other degenerative conditions. Likewise, threshold cases are often defended by claims that the victim was injured in another accident and cannot by way of a medical test, objectively distinguish between the pre- and post-accident condition. Because this is so complicated and the medical debate is so complex, insurance companies often bank upon a victim’s inability to sustain their burden of proof before a judge and jury, thus denying fair compensation to many an injured victim.