If you're shopping for car insurance in New Jersey, you've probably noticed something confusing: the state offers multiple coverage options that sound similar but work very differently. Basic or Standard? Limited or Unlimited Right to Sue? What's the deal with PIP? Here's the thing—New Jersey's no-fault insurance system gives you real choices, but those choices have serious consequences if you're ever in an accident. Let's break down what you actually need to know.
Understanding New Jersey's No-Fault System
New Jersey operates under a no-fault insurance system, which means your own insurance company pays for your medical expenses after an accident, regardless of who caused it. This is different from traditional fault-based systems where the at-fault driver's insurance pays for everything. The centerpiece of this system is Personal Injury Protection, or PIP coverage.
Every driver in New Jersey must carry at least $15,000 in PIP coverage per person. This pays for medical treatment related to car accident injuries, and you can increase it to $250,000 or more if you want additional protection. The benefit of this system is that you get immediate medical care without waiting to determine fault or fighting with another driver's insurance company. The trade-off? Your ability to sue other drivers for damages is more limited than in traditional fault states.
Basic vs. Standard Policy: The Foundation of Your Coverage
Your first major decision is whether to buy a Basic Policy or a Standard Policy. This isn't just about coverage limits—it's about what types of coverage you get at all.
A Basic Policy is the bare-bones option. You get $15,000 in PIP for medical treatment only, plus $5,000 in property damage liability. That's it. You can optionally add $10,000 in bodily injury liability, but there's no uninsured/underinsured motorist coverage, no coverage for lost wages, and no death benefits. The Basic Policy also automatically includes the Limited Right to Sue option, which we'll explain below. The appeal? It's significantly cheaper than a Standard Policy.
A Standard Policy gives you much more comprehensive protection. The minimum bodily injury liability is $25,000 per person and $50,000 per accident, with $25,000 in property damage liability. Your PIP coverage still starts at $15,000, but now it includes medical treatment, lost wages reimbursement, payment for replacement services when you can't perform daily tasks, plus death and funeral benefits. Most New Jersey drivers choose Standard policies because they provide substantially better protection, and you have the option to increase limits and add coverages like uninsured motorist protection.
The Verbal Threshold: Limited vs. Unlimited Right to Sue
Here's where New Jersey's system gets really interesting. When you buy car insurance, you must choose between Limited Right to Sue and Unlimited Right to Sue. This choice determines whether you can sue an at-fault driver for pain and suffering damages.
With Limited Right to Sue—also called the verbal threshold—you can only sue for non-economic damages like pain and suffering if your injuries are serious enough. Specifically, you must have suffered death, dismemberment, significant disfigurement or scarring, displaced fractures, loss of a fetus, or permanent injury to a body part or organ. If your injuries don't meet this threshold, you can still collect economic damages like medical bills and lost wages through your PIP coverage, but you can't pursue additional compensation for pain and suffering. The upside is that premiums are lower with this option.
With Unlimited Right to Sue, you can pursue a claim for pain and suffering regardless of how severe your injuries are. A significant whiplash injury that causes chronic pain but doesn't result in permanent damage? You can sue. This option costs more because you're maintaining fuller legal rights, but it can be worth it if you're involved in a serious accident that causes ongoing suffering without meeting the technical definition of permanent injury.
Choosing Your PIP Coverage Level
Beyond choosing between Basic and Standard policies, you need to decide how much PIP coverage to carry. The minimum is $15,000, but you can increase it substantially—sometimes up to $250,000 or more depending on your insurer.
Here's what many people don't realize: medical treatment for serious car accident injuries gets expensive fast. Emergency room visits, surgery, physical therapy, follow-up care—$15,000 can disappear quickly. If you have good health insurance, you might be comfortable with lower PIP limits since your health insurance can pick up costs beyond what PIP covers. But if you don't have health insurance or have a high-deductible plan, higher PIP limits make more sense.
There's also a safety net in New Jersey's PIP system: if you suffer a severe brain or spinal cord injury, your PIP coverage automatically increases to $250,000 until you're medically stabilized, even if you only purchased minimum coverage. This provision ensures that catastrophically injured people get the immediate care they need.
Making the Right Choice for Your Situation
So which options should you choose? It depends on your financial situation, risk tolerance, and whether you have other insurance coverage. If you're on a tight budget with minimal assets, a Basic Policy with Limited Right to Sue might make sense—you'll get emergency medical coverage and meet the legal requirements at the lowest cost. But understand that you're trading comprehensive protection for affordability.
For most drivers, a Standard Policy makes more sense. The additional coverage for lost wages, replacement services, and higher liability limits provides substantially better protection for a moderate increase in premium. Whether to add Unlimited Right to Sue is a more personal decision—it costs more, but preserves your full legal rights if someone else injures you.
The best approach is to get quotes for different combinations of coverage and see what the actual price differences are. You might find that upgrading from Basic to Standard or from Limited to Unlimited Right to Sue costs less than you expected, making the additional protection worthwhile.
