What is the basic policy?

A “basic” policy must provide:

  • PIP coverage, in an amount not to exceed $15,000, per person, per accident, for the benefit of the named insured; resident family members; occupants and permissive users of the insured vehicle, except that treatment for catastrophic injuries is covered up to $250,000;
  • Liability coverage for property damage in the amount of $5000 per accident, and
  • An option to purchase an additional $10,000 in liability insurance against a claim for personal injuries.

[N.J.S.A. 39:6A-3.1a-c]

In addition, an option to purchase comprehensive and collision insurance may be made available with basic policy. N.J.A.C. 11:3-3.4(c). No other options, aside from the foregoing, may be offered with a basic policy. N.J.A.C. 11:3-3.4(d). Thus, a basic policyholder cannot carry uninsured (UM) or underinsured (UIM) motorist coverage.

PIP coverage for purposes of a basic policy consist only of a medical expense benefits in an amount not to exceed $15,000 per person per accident, except that $250,000 of medical expense benefits must be paid “for all medically necessary treatment of other permanent or significant injuries rendered at a trauma center or acute care hospital immediately following  the accident and until the patient is stable.” N.J.S.A. 39:6A-3.1.

Election of a basic policy must be in writing and signed by the named insured on a coverage selection form that clearly states that (a) election of a basic policy results in less coverage than the $250,000 required under former law, and (b) failure to purchase the optional $10,000 liability insurance under a basic policy may subject the insured to a claim or judgment for noneconomic loss that is not covered by the policy, that may place his assets at risk, and with respect to which the insurer has no duty to provide a defense. N.J.S.A. 39:6A-3.2a.

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