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What Happens When a Car Accident Claim Exceeds Insurance Limits in New Jersey
Car accidents are an unfortunate reality of life and often result in damage to your vehicle, injury to yourself or others, or even death. When you purchase car insurance, you purchase a safety net in the event of an accident, but what happens when the cost of an accident exceeds your insurance limits? This article will explore what happens when a car accident claim exceeds insurance limits in New Jersey and what you can do to protect yourself.
Understanding Your Insurance Policy
Before we dive into what happens in the event of an accident, it’s essential to understand your insurance policy and the coverage it provides. In New Jersey, drivers must carry liability insurance, which covers the cost of damage or injury to other drivers if you are at fault for an accident. The minimum coverage required is $15,000 for injury or death to one person, $30,000 for injury or death to multiple people, and $5,000 for property damage.
What Happens When a Claim Exceeds Insurance Limits?
If an accident’s cost exceeds your insurance policy’s limits, you will be responsible for covering the additional costs out of pocket. For example, if you cause an accident that results in $50,000 in damages and your insurance policy only covers $30,000, you will be responsible for the remaining $20,000. This can be a significant financial burden, especially if you are already struggling with repairing or replacing your vehicle and covering medical expenses.
Uninsured and Underinsured Motorist Coverage
To protect yourself against the possibility of an accident claim exceeding your insurance limits, it’s essential to consider purchasing uninsured and underinsured motorist coverage. This type of coverage will pay for damages or injury if you are in an accident with someone who does not have insurance or does not have enough insurance to cover the cost of the accident.
Protecting Yourself Financially
In addition to purchasing uninsured and underinsured motorist coverage, there are several steps you can take to protect yourself financially in the event of an accident. For example, consider increasing your liability coverage to ensure that you have enough insurance to cover the cost of an accident. Additionally, you can consider purchasing additional coverage, such as collision and comprehensive coverage, which will pay for damages to your vehicle regardless of who is at fault for the accident.
What happens if the cost of an accident exceeds my insurance limits?
If car accident costs exceed your insurance limits, you will be responsible for paying the additional expenses yourself. This means that any damages or injuries that surpass the limit of your insurance policy will not be covered, and you will have to pay for them out of your own pocket.
It is important to understand that insurance policies have limits for a reason. These limits are set to protect insurance companies from having to pay out large amounts of money in the event of a catastrophic accident. However, this also means that policyholders are at risk of paying a significant amount if an accident’s cost exceeds their insurance limits.
To avoid this situation, it is recommended to have an insurance policy with higher limits. This will provide you with greater protection in a costly accident. It is also a good idea to consider purchasing additional insurance coverage, such as uninsured or underinsured motorist coverage. This type of coverage can help to protect you if the other driver does not have enough insurance to cover the cost of an accident.
It is also worth noting that some insurance policies have deductibles, which you must pay out of pocket before your insurance coverage kicks in. You can lower your insurance premium if you choose to have a higher deductible. However, this also means that you will have to pay a larger portion of the expenses in the event of an accident.
Read more about Insurance Claims
Here are answers to some frequently asked questions about insurance.
What is uninsured and underinsured motorist coverage?
Uninsured and underinsured motorist coverage is an optional type of insurance coverage that pays for damages or injury if you are in an accident with someone who does not have insurance or does not have enough insurance to cover the cost of the accident.
What is the minimum liability coverage required in New Jersey?
In New Jersey, drivers must carry liability insurance with a minimum coverage of $15,000 for injury or death to one person, $30,000 for injury or death to multiple people, and $5,000 for property damage.