TRIVIAL PURSUIT
I’ll take “Auto Insurance” for $100, Alex. Details, minutiae, fine points, trivia, the hard part…
Yes, we know the site is called “Automobile Insurance Made Simple”. But, hey, if you bought this site you must have something going for you, right? You’re smart enough to make a wise investment and you’re also smart enough to understand some of the details about car insurance coverages.
Before you shop around, it’s important to know exactly what
you’re paying for. This post describes coverages that are
required by law in New Jersey and many other states. It also
describes the “minimum limits” of liability coverage that are
required by New Jersey law. This post ends with a
discussion of the “basic policy” which provides less
coverage than what has traditionally been required by law
prior to March 22, 1999.
Let’s look at the coverages in a little more detail.
Bodily Injury coverage involves cases in which another person is hurt or dies as a result of an auto accident. If you are legally responsible, it will compensate the other party for pain, suffering or other personal hardships, and will also pay for some economic damages, such as lost wages.
Let’s say you’re driving down the street, come to a stop sign and hit the car in front of you. The accident is clearly your fault. If the driver in the car that you hit is injured, Bodily Injury Liability coverage will pay for his pain and suffering, lost wages and certain other economic damages that he may sue you for in a court of law.
If you need an attorney as a result of a lawsuit, the insurer will pay for defense costs under this coverage portion of the automobile policy.
Defense costs, such as payments to an attorney, are not included within the limits of liability. Also, please keep in mind that when an insurer’s payments reach the limit of liability, the insurer no longer has an obligation to pay for defense costs.
Let’s say the declaration page of your auto insurance policy shows the minimum bodily injury limits required by law, $15,000 per person and $30,000 per accident. If the person in the other car sues you for a higher amount, say $50,000, you may not have enough coverage to protect your assets.
