Tort Choice In New Jersey Auto Insurance

In the US, 38 states follow the tort system for auto insurance, which allows injured parties to sue for damages. The remaining 12 states, including Washington, D.C., are no-fault states, where drivers must purchase personal injury protection (PIP) insurance to cover their own medical costs and those of their passengers, regardless of who is at fault for the accident. However, three states—Kentucky, New Jersey, and Pennsylvania—are considered choice no-fault states, where drivers can opt for tort insurance instead of PIP coverage. In these states, drivers can choose between full tort and limited tort insurance.

Full tort insurance allows drivers to sue the at-fault driver for pain and suffering, in addition to medical costs. This type of insurance is more expensive than limited tort but provides more comprehensive coverage in the event of an accident. On the other hand, limited tort insurance restricts the policyholder's ability to sue for non-economic damages, such as pain and suffering, unless the injury is severe. This option is more affordable but may result in higher out-of-pocket expenses if the policyholder is involved in a serious accident.

Full tort insurance vs. limited tort insurance

Tort insurance is a system of auto insurance that allows drivers to recover damages from other parties at fault in an accident. In the US, 38 states follow the tort system, while 12 states, plus Washington, D.C., are "no-fault" states. In no-fault states, drivers must purchase personal injury protection (PIP) to cover their medical bills, regardless of who caused the accident.

Three states—Pennsylvania, Kentucky, and New Jersey—are considered “choice” no-fault states, where drivers can choose between full tort insurance, limited tort insurance, or no-fault insurance coverage.

Full Tort Insurance

Full tort insurance allows you to sue the at-fault driver for pain and suffering, in addition to medical costs. It offers a broader scope of protection compared to limited tort insurance. However, this extensive coverage comes at a higher premium, making full tort insurance more expensive than limited tort insurance.

Limited Tort Insurance

Limited tort insurance restricts your right to sue for pain and suffering unless your injuries are severe. Limited tort insurance is typically about 15% cheaper than full tort insurance. However, if you're severely injured in an accident and unable to claim pain and suffering damages, opting for limited tort insurance may result in more out-of-pocket expenses.

Tort insurance vs. no-fault insurance

Overview

The United States has two primary auto insurance systems: "no-fault" and "at-fault" (also known as tort liability auto insurance). The distinction between the two is that in no-fault states, drivers are accountable for damages to their own vehicles and sometimes their own medical bills, regardless of who caused the accident. In contrast, tort states hold drivers responsible for the damage and injuries they cause to others.

No-Fault Insurance

No-fault insurance is mandatory in 12 states: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and the District of Columbia. In these states, drivers must purchase personal injury protection (PIP), which covers their and their passengers' medical expenses and property damage, regardless of who is at fault. No-fault insurance typically covers medical expenses, loss of income, and wages for the driver and passengers.

One common misconception about no-fault states is that each driver pays for all their damages, including injuries, vehicle damage, and rental car expenses, regardless of fault. However, this is not the case. In no-fault states, each driver uses their own PIP insurance to cover their injuries, and at-fault drivers are still liable for property damage.

Tort Insurance

Tort insurance allows auto insurance companies to recover damages from the party responsible for an accident. It is available in 38 states and gives injured parties more leeway to sue for damages. In tort states, drivers are required to carry liability insurance to cover the injuries and property damage they may cause to others in an accident. Tort insurance typically includes two variations: full tort and limited tort.

Full Tort Insurance

Full tort insurance provides the broadest ability to sue an at-fault driver for medical expenses, including non-monetary damages related to pain and suffering. It is generally more expensive than limited tort insurance due to the increased ability to sue. Full tort insurance is the default option in Pennsylvania.

Limited Tort Insurance

Limited tort insurance restricts the ability to sue an at-fault driver for damages. It typically prohibits suing for pain and suffering unless the accident is deemed "serious" as defined by the state. Limited tort insurance is generally more affordable but may not provide adequate protection in the event of a major accident. Limited tort is the default option in Kentucky and New Jersey.

Choosing Between Full and Limited Tort

When deciding between full and limited tort insurance, several factors should be considered:

• Budget: Limited tort insurance is usually more affordable but may not provide sufficient coverage.
• Number of drivers in the household: Choosing limited tort may limit the ability of all drivers on the policy to sue for pain and suffering.
• Source of income: If you are the primary breadwinner, consider if you could face financial hardship if unable to sue for lost wages or pain and suffering after an accident.

Full tort insurance cost

The cost of full tort insurance varies depending on factors such as your location, driving history, and the insurance company you choose. To get an accurate quote for full tort insurance, you will need to contact insurance providers in your state and provide them with the necessary information.

It's important to note that full tort insurance provides more protection in the short and long term, and it's generally recommended if you live in a state where it's optional and you can afford it. However, if you're on a tight budget, limited tort insurance might be a more affordable option.

In New Jersey, limited tort insurance is the default option and is known as the "limitation on lawsuit" option. It's important to carefully consider your needs and budget when choosing between full and limited tort insurance. Consulting a licensed agent or an NJ personal injury lawyer can help you understand your options and make an informed decision.

Full tort insurance vs. full coverage

Full tort insurance and full coverage insurance are two different things. Full tort insurance allows the policyholder to sue for a wider range of damages in the event of an at-fault accident. Full tort coverage has no restrictions on the compensation you can get after a car accident caused by another driver. It also allows you to sue the at-fault driver for pain and suffering, with no restrictions.

On the other hand, full coverage insurance generally means the minimum coverage required by law. It is a combination of liability coverage, which pays for damages to third parties, and collision and comprehensive coverage, which add financial protection for damage to your vehicle. Full coverage means you have the minimum auto coverage required by the state to protect someone else. This covers the costs of the other person's damages for which you are found liable.

Full tort insurance is typically more expensive than limited tort insurance. This is because full tort insurance has no limit on suing for pain and suffering, whereas limited tort insurance only allows you to sue for monetary damages in most cases.

In the US, only Kentucky, New Jersey, and Pennsylvania allow drivers to choose between limited tort and full tort options.

Limited tort insurance and serious injuries

Limited tort insurance is a coverage option that allows individuals to sue an at-fault driver for medical expenses and pain and suffering, essentially opting out of their state's no-fault laws. In the states of New Jersey and Pennsylvania, limited tort insurance is the default option.

Limited tort insurance restricts an individual's ability to sue an at-fault driver. Under this policy, individuals can only file a car accident lawsuit if they meet the legal threshold for a "serious injury". In New Jersey, a serious injury is defined as serious scarring or disfigurement, or a permanent injury other than scarring or disfigurement. In Pennsylvania, a serious injury is defined as "death, significant deformity or impairment of body function".

If an individual has limited tort insurance and suffers a serious injury, they can still sue for pain and suffering. Serious injuries include:

• Permanent disfigurement
• Serious impairment or injury that prevents the individual from working again
• Serious disability
• Loss of limb or permanent deformity
• The at-fault driver was under the influence of drugs or alcohol
• The at-fault driver's car was registered out of state
• The at-fault driver did not have insurance
• The at-fault driver intended to cause harm

Limited tort insurance is generally less expensive than full tort insurance, saving individuals approximately 15% in premiums annually. However, by choosing limited tort insurance, individuals give up their right to sue for pain and suffering unless their injuries are considered serious.

Frequently asked questions