Legal Guide

Auto Insurance and the Verbal Threshold

If You Don't Decide, Your Insurer Decides for You

by: Steve Blader, Esq.

Recently in this column, I focused on the dangers of driving without enough coverage to protect yourself from underinsured and uninsured drivers. Because of the sky-high cost of insurance in New Jersey, there are far too many underinsured drivers on our roads.

A related danger is the so-called verbal threshold (sometimes known as the tort threshold). Unfortunately, this is a pitfall that many drivers are completely unaware of until it is too late. Because, unless you specifically ask your insurance agent for a no-threshold policy, the verbal threshold policy is what you get.

The verbal threshold on your policy means that you restrict your own ability to sue or otherwise receive compensation from someone who causes a motor vehicle accident -- unless you have sustained serious injuries.

The law spells out examples of serious injuries -- those which prevent you from working for a period of ninety days or more, a fracture, or a permanent injury such as a herniated disk or nerve damage.

When you are buying insurance, you should make a conscious decision about whether to select the verbal threshold. Be aware that if you have an accident in which you do not sustain a serious injury as defined by law, the verbal threshold makes you responsible for the co-payments and deductible for any medical care that you need. You will receive no compensation for any wage loss unless it extends to ninety days. You will receive no compensation for pain and suffering.

You will save approximately $130 per car on your auto insurance bill if you select the verbal threshold. But as many drivers have found to their dismay, it is a dangerous way to save.

I urge you to find out whether you have the verbal threshold on your automobile insurance policy. If you do, ask your agent what it will cost to drop the threshold. Chances are there are safer ways to save that money.

Szaferman, Lakind, Blumstein, & Blader, P.C.
Committed to Excellence