If you’ve looked over your New Jersey auto insurance bill, you’ve probably seen that line item marked NJ PLIGA. If you’re wondering what the NJ PLIGA surcharge is, we’ll explain why it’s there and what it’s used for.
What is NJ PLIGA?
Imagine that your colleague Mary gets into a car accident. A week later, her insurance carrier goes bankrupt. Through no fault of her own, she is left without the coverage she purchased. This is where NJ PLIGA comes in.
The New Jersey Property-Liability Insurance Guaranty Association, or NJ PLIGA, is a safety net that protects policyholders and claimants of insolvent property-casualty insurance companies.
All car insurance companies in New Jersey are required by law to be members of this association. As such, they must collect funds for its operations. The NJ PLIGA surcharge on your bill supplies a pool of money to pay claims to policyholders and claimants if the insurance company becomes insolvent. NJ PLIGA also helps provide benefits to pedestrians and passengers involved in an accident when no other coverage is available.
It’s important to note that while NJ PLIGA helps people who are uninsured, it does so only for those who are uninsured through no fault of their own. Car insurance is mandatory for anyone who drives a car in New Jersey, and NJ PLIGA does not help drivers who are choosing to drive uninsured.
The uninsured or underinsured liable driver receives no benefit from the victim’s uninsured/underinsured coverage. However, if the liable driver is uninsured due to his/her insurance company becoming insolvent, NJ PLIGA kicks in.