In 1972, the State of New Jersey adopted a comprehensive system of laws with respect to automobile insurance. The statutes require the owners of every automobile registered in the state to purchase an insurance policy that includes bodily injury and property damage liability coverage if someone makes a claim against them; uninsured motorist coverage if they are involved in an accident with an uninsured driver; and personal injury protection coverage if they incur medical expenses, loss of income or loss of essential services.
The primary purpose of compulsory insurance is to provide prompt compensation to persons injured in automobile accidents and to ensure the existence of financially responsible persons to satisfy those claims. Thus, the law permits the owners and operators of automobiles to purchase insurance to protect their own assets if they are sued by a person who is injured because of the negligent operation of their automobile (a “third party” liability claim). In addition, the law permits insureds to purchase insurance that will provide coverage to them, to resident family members and to occupants of their automobiles if they are injured in an accident caused by a person who is uninsured or underinsured (a “first party” UM/UIM claim).
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