The State of New Jersey has a comprehensive system of laws with respect to compulsory automobile insurance. The statutes require the owners of every automobile registered in this state to purchase an insurance policy that includes bodily injury liability coverage in case someone makes a claim against them; uninsured motorist coverage in case they are involved in an accident with an uninsured driver; and personal injury protection (PIP) coverage in case they incur medical expenses, loss of income or loss of essential services.
The two primary purposes of compulsory insurance are 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 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 policyholders 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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