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What are Limits and Deductibles?
In addition to choosing coverage options, you must choose the amount of coverage you want to buy and the amount you are willing to pay out of pocket in the event of an accident.
What is a Deductible?
John has a car accident. His repair shop estimates the cost of repairs at $2,000. John pays $750 of the bill (his deductible) and his insurance company pays the remainder.
Limits — The maximum dollar amount the insurer will pay following an auto accident. Limits vary with each coverage within the policy. (See chart on page 7.)
Deductibles — Payments you have to make before the insurer pays for a covered loss. For example, a $750 deductible means that you pay the first $750 of each claim. Deductibles vary by company and type of coverage. In addition to any savings you may realize from how much coverage you buy, you can also save money by choosing higher deductibles. The amount you save by selecting a higher deductible will vary by company.
(Below you’ll find limit and/or deductible information for the coverages discussed on pages 2 and 3.)
Bodily Injury and Property Damage Liability Coverage
Limit — Coverages can sometimes be purchased as a combined single limit, which offers a maximum limit of protection per accident.
Personal Injury Protection (PIP)
Deductible Options — If you feel you need a high level of PIP coverage but want to reduce your premium, you can save money by agreeing to pay more out of pocket through a higher deductible if you are injured in an auto accident. Your insurer will pay the medical bills over the deductible amount you choose. However, for the first $5,000 in medical expenses, there is a 20 percent co-payment in addition to your deductible. That means you pay your deductible plus 20 percent of the first $5,000 in medical expenses, and your insurer pays any remaining costs.
Health Care Primary — Cost savings can also be achieved by using your own health insurance as a primary source of coverage in the case of injury related to an auto accident. Before selecting this option, you need to find out if your health insurance will cover auto accident injuries and how much coverage is provided. Medicare and Medicaid do not offer the Health Care Primary option, but may provide coverage on a secondary basis, such as when the costs of your care exceed the PIP limits in your auto policy.New Jersey Lawyers - New Jersey attorneys