New Jersey is one of the few states that lets drivers buy a stripped-down auto policy that is legal on paper and nearly useless in a serious crash. It is called the Basic policy, and the people who buy it are usually the ones who can least afford what happens when it fails.
This guide compares the Basic and Standard policies side by side, explains what each one does after a crash, and covers the “dollar-a-day” Special policy for Medicaid recipients.
The two policies, side by side
| Coverage | Basic policy (N.J.S.A. 39:6A-3.1) | Standard policy (N.J.S.A. 39:6A-3) |
|---|---|---|
| Bodily injury liability | None (optional $10,000 per accident) | $35,000 / $70,000 minimum; higher limits available |
| Property damage liability | $5,000 | $25,000 minimum |
| PIP medical expense | $15,000 (up to $250,000 for catastrophic injuries) | $15,000 to $250,000; $250,000 default |
| PIP income continuation, essential services, death/funeral | Not available | Optional |
| Uninsured / underinsured motorist | Not available | UM mandatory at minimum limits; UIM optional up to liability limits |
| Lawsuit option | Verbal threshold, mandatory | Choice of verbal threshold or zero threshold |
| Collision / comprehensive | Sometimes offered | Optional |
The Standard minimums reflect P.L. 2022, c.90, effective January 1, 2026; see what changed with New Jersey’s minimum limits.
What the Basic policy leaves out, and why it matters
No bodily injury liability
If you cause a crash and injure someone, a Basic policy without the optional $10,000 pays nothing toward their claim. You are personally exposed for the full amount. A judgment can follow you for twenty years and be renewed.
No UM/UIM coverage
If an uninsured or hit-and-run driver injures you, a Basic policy gives you $15,000 in PIP and nothing else. There is no UM/UIM coverage to fall back on.
$15,000 PIP cap
An emergency room visit with imaging can approach $15,000 on its own. After that, your medical bills shift to your health insurance, if you have it, and then to you. Our post on who pays medical bills after a NJ crash explains what happens when PIP runs out.
Mandatory verbal threshold
Basic policyholders cannot choose the No Limitation on Lawsuit option. The verbal threshold applies automatically, which means no pain-and-suffering claim against the at-fault driver unless your injury meets one of the six statutory categories.
No income continuation
If your injuries keep you out of work, a Basic policy pays no lost wages. Your only path is a claim against the at-fault driver for uncompensated economic loss, which depends on that driver having coverage.
Who the Basic policy is for
The state created it so that drivers who otherwise could not afford insurance would carry something rather than nothing. It is marketed to drivers with few assets, no health insurance alternative, and a single older vehicle. Even for that driver, the tradeoff is severe: it protects them only from the penalty for driving uninsured, not from the crash itself.
The Special ("dollar-a-day") policy
Under N.J.S.A. 39:6A-3.3, drivers enrolled in Federal Medicaid with hospitalization can buy a Special Automobile Insurance Policy for $365 per year. It covers emergency treatment immediately after a crash and treatment of serious brain and spinal cord injuries up to $250,000, plus a $10,000 death benefit. It carries no liability coverage, no PIP beyond emergency care, and no lawsuit right. It is a last resort, not an alternative to the Standard policy.
What happens to a Basic policyholder after a crash
Consider a Basic policyholder rear-ended on Route 18 who suffers a herniated disc requiring injections and six months of therapy:
- PIP pays the first $15,000 (less deductible and co-pay), then stops
- Remaining bills go to health insurance, if any, or to the injured person
- No income continuation for the weeks out of work
- Pain and suffering recoverable from the at-fault driver only if a physician certifies permanency under the verbal threshold
- If the at-fault driver is uninsured, there is no UM coverage and the case may be worth nothing
The same crash, same injury, on a Standard policy with $250,000 PIP, income continuation, UIM, and the zero threshold, is a fully compensable claim.
How Ibrahim Personal Injury Law helps Basic policyholders
A Basic policy makes a case harder, not impossible. We look for every other source of coverage: the at-fault driver’s liability policy, resident-relative policies, the vehicle owner’s policy if you were a passenger, commercial or rideshare coverage, and the Unsatisfied Claim and Judgment Fund. We also build the objective medical record needed to satisfy the verbal threshold. See how New Jersey’s no-fault rules fit together in Is New Jersey a No-Fault State?.
Free consultation, contingency fee. Call (844) 315-4878 or contact us online.
Frequently asked questions
Is the Basic policy legal in New Jersey?
Yes. It satisfies the state’s compulsory insurance law. It does not meaningfully protect you or the people you might injure.
Can I add UM/UIM to a Basic policy?
No. UM/UIM is not available on the Basic policy. You would need to upgrade to a Standard policy.
Can I choose the zero threshold on a Basic policy?
No. The verbal threshold is mandatory on Basic policies.
How much more does a Standard policy cost?
It varies by driver and carrier, but the gap is usually far smaller than the exposure the Basic policy leaves open. Get quotes for both before deciding.
