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I was curious what people's opinions are regarding the "Limitation on Lawsuit" option for auto insurance in NJ. Here's the gist:



<< Under the standard policy a motorist must make a choice about the legal rights they will have if they are injured in an automobile accident. They have a choice between the Limitation on Lawsuit Option or the No Limitation on Lawsuit Option.

The Limitation on Lawsuit Option allows covered persons to sue for "pain and suffering" should someone else injure them in an accident and the injuries are: serious injuries which a physician certifies are permanent in nature or resulting death, dismemberment, loss of a fetus, displaced fracture, significant disfigurement or scarring.

The No Limitation on Lawsuit Option allows covered persons to sue for "pain and suffering" regardless of the nature of the injury. Choosing the Limitation on Lawsuit Option will save them money on their auto insurance premium. If they do not make a choice, they are automatically assigned the Limitation on Lawsuit Option under state law.
>>


I currently have the No Limitation on Lawsuit option, and it's costing me an extra $750/6 months (I'm paying $2000/6 months with State Farm, I'm 25, male, unmarried, 0 points, $25K car). I looked for some opinions online, and all I found were lawyers' sites recommending the No Limitation option. Anyone have a more unbiased opinion? Thanks in advance...

I'm an attorney in NJ, and I think that all NJ auto insurance is a huge rip-off. To force a consumer to make a choice like this is pathetic -- shows how strong the insurance company lobbyists are in NJ.

Now that I'm through ranting ... the answer to your question is, it depends on your preferences. To give you an example; say you're in an automobile accident where somebody hits you, your head hits the windshield and you break your arm. Under either option, you can recover for your actual damages (medical bills for your injuries and the cost to repair your automobile). If you sue (or threaten to sue) the other driver, you can probably also get consequential damages such as loss of pay for being out of work, rental car expenses, etc. However, if you have selected "limitation on lawsuit" option, you cannot sue the other driver for pain and suffering unless your injures are "permanant" in nature -- in this case, you would have to have significant cuts on your face that would result in permanant scarring, or be unable to use your arm in the same way you did before the accident. You can only recover money to repay yourself for costs you actually incurred (ie bills you paid) as a result of the accident.

In contrast, if you have selected the "no limitation on lawsuit" option, you could sue the other driver for pain and suffering regardless of whether your injuries were permanant or not. (Pain and suffering is basically compensation for the pain you endured as a result of the accident). To put a dollar amount on this, let's say that you're in the above-mentioned accident. Your medical bills total $35K and the damage to your car is $15K. If you had LOL, you would recover $50K. However, if you had No LOL, you could also sue for the pain and suffering that you endured as a result of the accident, which, for example, a jury could find to be worth $150K, bumping your total take from $50K to $200K (this is just an estimate -- juries could find that the pain you endured could be worth $0 to infinity).

Since personal injury attorneys in NJ generally take about 33% of a damage award, you can see why they would recommend that you select No LOL -- they can take home $66K as opposed to $16.5K. It's also a way for them to justify their fees with their client -- if you suffer $50K worth of actual losses, you don't want to pay $16K to an attorney to get the cash you're owed, so you don't hire a lawyer and end up settling with the ins. co on your own for the actual expenses you incurred. On the other hand, if you can get an extra $100K by hiring an attorney (or more, depending on the jury ...), you'll most likely do that.

In sum, you're basically paying an extra $1500/yr. for the opportunity to sue an insurer for money damages above and beyond those you actually paid out as additional compensation for the pain you suffered as a result of your injuries. I personally don't think it's worth the extra $, but then again, I don't practice personal injury law in NJ, and I've never been severely injured in an automobile accident. Hope this answered your question, or at least cleared up some things for you. Feel free to ask for clarification if you need it -- I know it's a confusing subject ...

Double post ... my bad.

Why not take the $1,500/year extra you're paying for this and put it into a good stock mutual fund? When you retire in 40 years, you'll have a really nice nest egg from the compounding return. This way you don't have to bet on getting into an accident with injuries which would be about the only way you'd be able to "collect" on this cost and make it worthwhile.

Limitation or No Limitation, first thing you should do is to shop for your insurance.. IMHO, you are paying too much money.. I am with NJM and paying less than for whole year than what you are paying for six months with complete comprehensive coverage on two cars (one is 1994 accord and other is 2004 Pilot).. New Jersey auto insurance is out of whack and no administration wants to fix it whether it is republican or democrat though I must admit that current adminstration in trenton has done some good thing by stream lining DMV. Last week when I went for my registration, one DMV employee actually was at the door to receive you and she actually gave all the necessary forms to filled out.. I was out of DMV within five minutes with my registration and title. Contrast to that in 1999, I had to take a day off to register my car.. You buy insurance because something happens you are covered but if something happens your insurance goes up

MyTwoSense said:

<< Why not take the $1,500/year extra you're paying for this and put it into a good stock mutual fund? When you retire in 40 years, you'll have a really nice nest egg from the compounding return. This way you don't have to bet on getting into an accident with injuries which would be about the only way you'd be able to "collect" on this cost and make it worthwhile. >>



I can easily afford the $1500/yr, and I already have a big 401k, so I'm not worried abour retirement. I just wanted to get other people's opinions on whether or not it's worthwhile to keep the NLOL option.

I'm not really looking to "collect", nor am I betting on getting into an accident, but I do want to make sure that I am fairly compensated in case something happens. For example, with LOL, I'm injured in such a way that I can't work (I have a job in IT), and the insurance company's doctor classifies the injury as non-serious or non-permanent, then I'm screwed. In that case, would a judge just dismiss any "pain and suffering" lawsuit right away after seeing that I chose LOL?

bapu said:

<< Limitation or No Limitation, first thing you should do is to shop for your insurance.. IMHO, you are paying too much money.. I am with NJM and paying less than for whole year than what you are paying for six months with complete comprehensive coverage on two cars (one is 1994 accord and other is 2004 Pilot).. New Jersey auto insurance is out of whack and no administration wants to fix it whether it is republican or democrat though I must admit that current adminstration in trenton has done some good thing by stream lining DMV. Last week when I went for my registration, one DMV employee actually was at the door to receive you and she actually gave all the necessary forms to filled out.. I was out of DMV within five minutes with my registration and title. Contrast to that in 1999, I had to take a day off to register my car.. You buy insurance because something happens you are covered but if something happens your insurance goes up >>



I realize I'm paying too much...I actually applied to NJM last year, but I didn't qualify because I had a no-points moving violation in the prior 3 years. I'm going to try again this August, since by then it will be more than three years since the ticket. It doesn't really bother me that much, I just look at it as part of the higher cost of living.

I agree with you about the improvements in the DMV...it took me about 30 minutes to renew my license last month, which is very quick. Although I think I was the only customer there who wasn't confused by the new "6 points" proof of identity requirement. <img src="i/expressions/face-icon-small-tongue.gif"border=0>

I had state farm before and they overcharge like crazy if you are underage or about 25

Don't know about "limitation vs. not limitation"
but you are definitely paying too much

4000 a year!!!
I am in NJ and pay about $2500 for 03 Honda Accord EX V6 and my wife got NJ DL recently (i.e. premium is higher because she is a "new" driver).
Insurance company: First Trenton Indemnity
from what I know First Trendton Indemnity can be purchased through the insurance broker only(i.e. they don't sell insurance directly. Insurance broker may be a good idea anyway since this way you can get quotes from multiple companies)
The best thin about them is that you get 10% off your auto insurance if you have homeowners insurance with them... So, even if you already have homeowner's and don't want to switch the company, can get a cheap one for about $150 and the discount you'll get will be about $200<img src="i/expressions/face-icon-small-happy.gif"border=0>

Also check out Liberty Mutual... they are a bit higher than First Trenton Indemnity, but still cheaper than statefarm.


jayK said:

<<
I currently have the No Limitation on Lawsuit option, and it's costing me an extra $750/6 months (I'm paying $2000/6 months with State Farm, I'm 25, male, unmarried, 0 points, $25K car). I looked for some opinions online, and all I found were lawyers' sites recommending the No Limitation option. Anyone have a more unbiased opinion? Thanks in advance...
>>


fotomaniak said:

<< I had state farm before and they overcharge like crazy if you are underage or about 25

Don't know about "limitation vs. not limitation"
but you are definitely paying too much

4000 a year!!!
I am in NJ and pay about $2500 for 03 Honda Accord EX V6 and my wife got NJ DL recently (i.e. premium is higher because she is a "new" driver).
>>



If you don't know about "limitation vs. not limitation", then chances are you have the limitation option on your insurance, since that's the default. If I chose the limitation option, I would also be paying $2500/year.

bapu said:

<< Last week when I went for my registration, one DMV employee actually was at the door to receive you and she actually gave all the necessary forms to filled out.. I was out of DMV within five minutes with my registration and title. Contrast to that in 1999, I had to take a day off to register my car.. >>



Takes under a minute to do it online with a credit card <img src="i/expressions/face-icon-small-smile.gif"border=0> The URL is on your renewal notice. It did take me about 15 minutes to renew my driver's license at the agency though, which is a mucho improvement!

vitaliyf said:

<< bapu said:

<< Last week when I went for my registration, one DMV employee actually was at the door to receive you and she actually gave all the necessary forms to filled out.. I was out of DMV within five minutes with my registration and title. Contrast to that in 1999, I had to take a day off to register my car.. >>



Takes under a minute to do it online with a credit card <img src="i/expressions/face-icon-small-smile.gif"border=0> The URL is on your renewal notice. It did take me about 15 minutes to renew my driver's license at the agency though, which is a mucho improvement!
>>


You can do yearly registration on-line.. If you are buying a new or used car, you need to go to DMV to pay sales tax as well as to get title in addition to registration.. Also surprizingly came to know that new cars do not need inspection upto four years..

jayK said:

<< I can easily afford the $1500/yr, and I already have a big 401k, so I'm not worried abour retirement. I just wanted to get other people's opinions on whether or not it's worthwhile to keep the NLOL option. I'm not really looking to "collect", nor am I betting on getting into an accident, but I do want to make sure that I am fairly compensated in case something happens. For example, with LOL, I'm injured in such a way that I can't work (I have a job in IT), and the insurance company's doctor classifies the injury as non-serious or non-permanent, then I'm screwed. In that case, would a judge just dismiss any "pain and suffering" lawsuit right away after seeing that I chose LOL? >>



My reply wasn't as off-topic as it might have appeared. In essence, you're debating whether to pay a lot of extra money for a possible future payoff. Maybe that sounds strange, but that's what it is. As far as becoming disabled, disability insurance is a far cheaper option, no? If it helps to put things in perspective, I used to have LOL, but dropped it a few years ago when I couldn't justify paying the extra expense.

I think I'm going to drop the No Limitation on Lawsuit option to save some money...the company I work for has a pretty good long-term disability plan, so I think I can rely on that if anything happens.

Thanks to all for your input!

The screwy thing about insurance in New Jersey is that if you do not have any insurance you automatically have the NO LIMITATION ON LIABILITY. So theoretically you could be driving around without insurance and get into an accident and make out MUCH better off than someone driving around legally with insurance who elected for the LOL policy.

TJ



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