When it comes to car insurance, most consumers are focused on getting the lowest possible monthly premium. However, this can actually hurt you if you are not aware of what the medical coverages are in your policy.
New Jersey is a “no fault” car insurance state. This means that for all car related injuries, as a driver, passenger or pedestrian, the payment of medical bills must be paid by you. Not the person who injured you.
This is a surprise for most consumers. What it basically does is give each person with a car the responsibility to have insurance for medical bills. This means that most people (should be all-but that’s another topic for another day) are covered for their car related injuries by the insurance policy they themselves purchase. It is a personal policy. This part of the car insurance policy is called “PIP”, short for personal injury protection and the standard amount the law requires is $250,000.
PIP is what pays the bills for medical care for injuries. If the limits were set lower than $250,000, then no doctor will want to treat you, no therapist to give PT or OT, because there will not be enough money to pay them.
Unfortunately, in the zeal to advertise lower car insurance rates, insurance companies and many agents will shortchange critical parts of the insurance policy to show a lower monthly premium and convince the unknowing consumer that it’s all good, they get ‘full insurance’ and save 15% give or take! What it really means is that you get less insurance. You get less PIP!
Even though the standard PIP is $250,000, many agents will tell the consumer to lower it ‘to save money’. The savings are very limited. To knock down a $250,000 medical bill payment obligation to anything less (such as $15,000) very little is saved -yet in the event of a crash, regardless of fault, low PIP limits means no medical coverage. It is a self-made disaster.
The insurance company makes out like a bandit on these policies. The unwitting consumer saves maybe $50-$100 per year, buys $15,000 PIP, has bills that can exceed that with one short hospital stay alone.
The company gives you $235,000 LESS coverage for a premium that is reduced by just a few bucks. That’s a boon for the insurance carrier and a disaster for you, the consumer.
The moral of this story is that you should never, ever lower your PIP to anything less than the standard $250,000 because only you will be hurt. If an agent tries to sell you less, go to another agent!