It takes more than a 30-second commercial to purchase a policy to be properly protected.

We have all seen the auto insurance commercials on TV: Cavemen, lizards, Flo, ziplining pigs, bum ba dum dum dum. You’ll agree they are entertaining and humorous. Some of those catchy little jingles even stick in our heads for days. However, underneath the clever ads and commercials can lie a very risky situation affecting the families of every day drivers in New Jersey if they are not properly informed as to what it is they are purchasing. Forget the “15 minutes or less can save you” commercial for a second. Reading this article for 15 minutes or less can save you and your family a potential financial, or worse, medical nightmare.

Many of the commercials from automobile insurance companies are designed to attract potential customers to their websites and make purchasing automobile insurance easy and inexpensive. Any moderately computer literate person can go from a commercial to a web site and have an automobile insurance policy in a matter of minutes. Don’t forget, “15 minutes or less.” For many people living paycheck to paycheck and struggling with bills, wanting to pay any more then they have to for insurance is not an attractive option. Most likely reading the details of what they are actually purchasing gets short attention. All they know is that they need insurance and this is the quickest and cheapest way to get it. So these easy websites are the perfect solution. If you don’t know the dangers- who would blame them.

If not properly informed of potential risks with bad automobile insurance, any of the following thoughts make perfect sense to someone who does not want to spend any more than they have to on insurance: “Why pay for something we would never need?”; “Just get me in the car, I’ll change it later.”; “I have health insurance, so why pay extra money per month for medical coverage?”; “No one is going to sue me, I don’t have anything.”; “What is this UM/UIM anyway- I’m not paying any extra for that.”

Now is the time to take out your automobile “declaration page”. This is the one or two page document that explains your coverage limits. It may look confusing at first, but let’s simplify this and focus on the three most important things for you: (1) PIP (personal injury protection); (2) Liability; and (3) UM/UIM (Uninsured/Underinsured Motorist Coverage). In most cases, the New Jersey minimum of coverage for each of these is $15,000. As explained above, the commercials for many insurance companies draw you to websites with the idea that it is so easy to purchase a policy with these $15,000 limits. If you take away nothing else from this article, please take away that $15,000 coverage on any of these three items is potentially putting you and your family at significant risk.

First, a quick primer on those three important terms.

  1. PIP ( personal injury protection) – these are your limits for medical bills if you are injured in an accident. In New Jersey, your insurance policy limits control your medical bills if you are involved in an accident- regardless of who is at fault. If you are injured in a car accident, this portion of your insurance covers your medical treatment- regardless of who is at fault for the accident. This coverage also applies to members of your family who are passengers in the vehicle. If you are ever involved in an automobile accident with serious injuries to you or your family, a $15,000 policy will most likely not be enough coverage. A hospital room visit may be in the thousands. With any duration of conservative medical care including tests and treatment, you may already be approaching the policy limits. If more extensive medical treatment, such as injections or surgeries, are warranted you may now be at the mercy of your health insurance policy. If you do not have health insurance that applies, these medical bills become your personal financial responsibility. Additionally, your selection of health care providers may be substantially limited under your health insurance policy versus your car insurance policy where you generally have choice of the doctor. For the same reason, the “health insurance primary” option is usually not the best choice. While you will save on your premium, your car insurance will almost only provide you better options for medical treatment, with more affordable deductibles. A standard policy has $250,000 in PIP coverage. I strongly recommend seeing if you can afford the increase of premium to increase that coverage amount. The additional premium cost may be less than you think. At the minimum, at least get this policy limit up to $50,000.
  2. Liability – these are your limits if you get sued. This is an easy one. Accidents happen. People sue. You need more than $15,000 in coverage. If someone is injured in a car accident that you caused, that person has a right to bring suit against you for the value of their injuries- their pain and suffering and any economic losses. Your insurance company will cover you up to your limits. If your case goes to trial and a jury awards the injured person over $15,000, you can be personally responsible for those costs. That includes any assets you have and yes, your home. And if you are wondering, well I don’t have much money so what can they sue for- keep in mind one day you may. A judgment against you will last for years. Once again, explore the costs of raising your limits. I recommend at least $100,000 in liability coverage. The cost of going from $100,000 to $250,000 may not be much more and if you do own a home or some assets, I recommend increasing to at least the higher limit.
  3. UM/UIM – these are your limits to recover money for your injuries in the event that the person who caused this accident is driving without insurance coverage or has one of these small $15,000 liability policies discussed above This is the very important coverage that protects you and your passengers in the event that the other party has caused an accident which resulted resulting in injuries, AND that party has a limited insurance policy or did not have insurance at all; or the responsible party has fled the scene. This is best explained by an unfortunate scenario that we see all too often An innocent, perfectly healthy person is driving to work one day, stopped at a light, and is rear-ended by someone not paying attention. They are taken by ambulance to a hospital. They have injuries to their neck, back, shoulder or knee that did not respond to conservative medical treatment and required a surgery. The pain stays with them and resulted in a permanent injury. They lost time from work due to the injuries and treatment. They retain an attorney to pursue their legal right for a recovery due to their damages. If the person that caused this accident is covered by one of these $15,000 policies, your recovery for all of these injuries may be limited to that $15,000. This is where your UIM coverage becomes important. Regardless of what the other person’s policy limits are, you have a right to recover up to your UIM policy limits in this scenario. For this reason, it is essential not to have a $15,000 UIM policy limit. I encourage strongly to have at least $100,000 and once again if you can dig a little deeper, increase to $250,000.
    • While your premiums will go up when you increase your UM/UIM limits, you may be surprised that that amount is very affordable. If you have to pay $50 more a year to increase those UM/UIM limits above $15,000, I strongly recommend you make that investment to protect you and your family.

There are other parts of your insurance policy that are important such as property damage coverage and tort threshold. But the three mentioned above are those where the wrong policy coverage can be devastating financially for you and your family. Do not fall victim to the fancy commercials and jingles that you can’t get out of your head. Insurance companies want you to pay a premium for these $15,000 policies while their exposure is limited. By shopping around and digging just a little deeper into your pocket (sometimes only $10-$20 more a month) you can easily increase these dangerous $15,000 policy limits and protect you and your family.

RAM Law attorneys deal with auto insurance policies and their provisions every day. Any of our attorneys would be happy to chat with you by phone or sit down with you and show you exactly how your policy works. Hopefully you consider this some good advice… in 15 minutes or less.

Written by Jay Mascolo