As a personal injury attorney, one of the most disturbing things I find is that people are carrying minimal insurance policies on their vehicles. There are various reasons that people decrease their insurance coverage to obtain a lower premium: changes in household income, adding additional family members to a policy as they become driving age, points on their license, and just not asking the right questions when speaking to an agent. Two critical areas implicated when you are involved in a motor vehicle accident where I see reductions due to cost of coverage are Personal Injury Protection (PIP) and Uninsured/Underinsured Motorist Coverage (UM/UIM).
As with many things in life, all is well so long as the situation remains status quo until the policyholder or another person covered by the automotive insurance policy is injured in an accident and they need medical treatment or compensation for injuries.
New Jersey is what is known as a “No Fault” state; that is, regardless of who causes the accident, we bear our own costs of medical treatment if same should be necessary. For years, the standard amount of PIP on an auto policy was $250,000. This was and remains the minimum we recommend; but auto insurance carriers have recently been giving people the option to carry as little as $15,000 in PIP. Carrying reduced PIP can not only leave an injured person responsible for medical bills, it can result in accident-related costs being born by your health insurance, who you may have to reimburse for medical expenses from compensation you receive via a settlement or trial verdict.
When it comes to UM/UIM, this coverage is available to compensate you when a party causing the injuries carries zero liability insurance or less insurance than the policyholder’s UIM policy limits. It is important to note that your UIM coverage cannot be greater than the liability coverage you carry in the event you cause harm to another person. If you have opted to carry minimum liability coverage, you are restricted to UM/UIM coverage at a maximum of that limited amount. This drastically reduces the amount of coverage available to compensate you if a person with little or no liability coverage injures you. Remember, there are many people on the road who carry the minimum amount. Much of this information is very complex and insurance agents do not have to explain this to you.