Unbelievably, New Jersey law permits insurance policies to be issued in their state that do not provide liability coverage. Liability coverage is the portion of insurance that will pay for an injured person’s pain and suffering, lost wages, medical bills, and other damages if you are injured in an accident.
This means that there are drivers in New Jersey who have absolutely no coverage available to pay for your damages or injuries if that driver hurts you in a car accident.
New Jersey refers to these types of policies as “basic policies”. According to the State of New Jersey Department of Banking & Insurance website, this type of basic coverage should be considered by those with few family responsibilities and few real assets. The state’s website says that this coverage can help younger drivers stay legal until they can afford more comprehensive coverage.
In practice however, insurance companies push these policies as a cheaper alternative to policies that provide liability coverage. I know of several people that had these policies not understanding that their insurance company was under no obligation to defend them or pay for damages if the person caused a car accident. The driver would be personally liable to pay for any pain and suffering or damages they cause in an accident. The reality is that most people do not have money to do so, so the injured person is left with no ability to recover whatsoever.
This ridiculous law means that you must take action to protect yourself and your family. I previously posted about the importance of having uninsured and underinsured motorist coverage (UM/UIM). You should get as much UM/UIM coverage as you can afford. It is often the only way to ensure that you will be adequately compensated if a driver with little or no insurance injures you in an accident.