No-Fault Auto Insurance In New Jersey: What You Need To Know

New Jersey is one of a dozen or so states that follow a no-fault car insurance system. This means that, in the event of a car accident, your own car insurance coverage pays for medical treatment and other out-of-pocket losses incurred, regardless of who caused the accident. However, this does not apply to vehicle damage claims, where the at-fault driver is held responsible for repairs.

New Jersey's choice no-fault insurance laws

New Jersey is one of a dozen or so states that follow some form of a no-fault car insurance system. In 1972, the New Jersey Legislature passed and enacted no-fault insurance laws in response to rising automobile insurance premiums.

Under the no-fault laws in New Jersey, your own insurance company will cover the cost of your medical treatment and any medical equipment necessary to treat your car accident injuries, regardless of who is at fault for the accident. This is known as personal injury protection (PIP) coverage. PIP coverage also extends to certain passengers who travel with the driver, eligible family members, and members of the policyholder's household.

New Jersey's car insurance system is often referred to as "choice" no-fault because drivers can choose between the "limited" and "unlimited" right to sue after a car accident. With a "Basic Policy", the claimant is automatically bound by what's called a "limited right to sue". The injured person can only pursue legal action against the at-fault driver if the accident caused significant disfigurement, scarring, a displaced fracture, permanent injury, or the death of an individual.

With an "Unlimited Right to Sue" option, the victim can file a claim against the at-fault party for any level of injury or damage, and recover pain and suffering damages, which are not always available with the limited right to sue option. The trade-off is that this insurance costs more money, and the victim must prove that the third party is at fault for the accident.

In addition to PIP coverage, New Jersey law requires two other types of no-fault car insurance: liability insurance and uninsured motorist insurance. Liability insurance pays for the damages suffered by others in an auto accident caused by the policyholder. The only liability insurance that is required in New Jersey is property damage liability coverage ($5,000). Uninsured motorist insurance protects the policyholder financially if they are involved in an accident with a driver who is unlawfully driving without the proper insurance coverage.

Personal injury protection (PIP) insurance

PIP insurance in New Jersey offers comprehensive coverage for various expenses that may arise after a car accident. It covers medical costs, including treatment, medication, surgical services, hospital expenses, and rehabilitative costs. Additionally, it provides reimbursement for lost wages if the insured is unable to work due to their injuries. It also includes essential services benefits, reimbursing expenses for necessary services that the injured person would typically perform for themselves, their family, or household members. These may include chores such as laundry, snow removal, and house cleaning, with a daily payout of up to $12 per day and a maximum limit of $4,380 for the total period of disability.

In the unfortunate event of a death resulting from a car accident, PIP provides death benefits and funeral benefits. The next of kin may receive the maximum payout for lost income and essential services, and funeral expenses of up to $1,000 may be covered.

The minimum amount of PIP coverage required in New Jersey is $15,000 per person or $30,000 per accident. However, it is recommended to purchase higher limits, especially for serious or catastrophic injuries. The maximum coverage available is $250,000 or more for certain injuries, such as permanent or significant brain injuries, spinal cord injuries, and disfigurement.

It is important to note that PIP insurance does not cover all costs associated with a car accident. It does not include trips to the emergency room or hospitalization for other drivers or their passengers, damage to vehicles involved, or damage to another person's property.

Liability insurance

New Jersey is one of a dozen or so states that follow some form of a no-fault car insurance system. In a no-fault system, your own insurance coverage pays for your injuries and losses incurred in a car accident, regardless of who caused the accident.

In New Jersey, all vehicles registered in the state are required to have three types of mandatory insurance: liability insurance, personal injury protection (PIP), and uninsured motorist coverage.

With a Standard car insurance policy, drivers in New Jersey can choose between "limited" and "unlimited" right to sue coverage. The "limited" option restricts the policyholder's right to sue an at-fault driver for non-economic damages like pain and suffering unless the injury is permanent or involves disfigurement. The "unlimited" option allows the policyholder to sue for all damages, including pain and suffering, regardless of the severity of the injury.

It is important to note that driving without insurance in New Jersey can result in hefty fines, suspension of your driver's license, and even jail time.

Uninsured motorist insurance

New Jersey is a no-fault car insurance state, which means that your insurance company will pay for your medical treatment and other out-of-pocket losses incurred by anyone covered under your policy, regardless of who caused the car accident. However, with a no-fault/PIP claim, you cannot claim for vehicle damage. This must be claimed against the at-fault driver.

In New Jersey, every vehicle owner must purchase and maintain the minimum required amounts of automobile insurance before registering their vehicle and driving on public roads. One of the three types of no-fault car insurance required is uninsured motorist insurance. This protects you financially if you are involved in an accident with a driver who is unlawfully driving without the proper insurance coverage.

Uninsured motorist coverage is a requirement for a Standard car insurance policy in New Jersey, but not for a Basic policy. It will help pay for your car repair bills if you are in an accident caused by a driver who has no insurance or flees the scene. This includes accidents where an uninsured vehicle strikes your parked or moving car, your property (such as a mailbox or fence), or you as a pedestrian or cyclist. It also covers hit-and-run accidents.

There are two types of uninsured motorist coverage in New Jersey: bodily injury and property damage. Both are required. Bodily injury coverage pays for medical expenses, while property damage coverage pays for physical damage to your vehicle. However, property damage coverage can only be used if the other driver is identified. If they cannot be identified, as in a hit-and-run, collision coverage will help pay for damages to your vehicle.

The minimum limit for uninsured motorist property damage coverage is $5,000, but you can buy higher limits. However, your uninsured motorist coverage limits cannot be higher than your own liability coverage limits. When filing an uninsured motorist claim, it's important to remember that your insurance company will only pay your claim if the other driver was legally responsible for your damages, or in other words, at fault for the accident.

The right to sue

New Jersey's car insurance system is often referred to as "choice no-fault" because drivers can choose between a "limited right to sue" and an "unlimited right to sue" after a car accident.

Limited Right to Sue

If you choose a "Basic" car insurance policy, you will automatically be bound by a "limited right to sue". This means that you can only pursue legal action against the at-fault driver outside of the no-fault provisions of your personal injury protection (PIP) coverage if the accident caused you to suffer:

• Significant disfigurement
• Significant scarring
• A displaced fracture
• Permanent injury
• The loss of a fetus
• The death of an individual

If the impact of the accident meets this threshold, you gain the right to file a third-party car insurance claim or personal injury lawsuit against the at-fault driver, allowing you to recover "pain and suffering" damages and other non-economic losses that are not available via a no-fault or PIP claim.

Limited right to sue costs less for the vehicle owner. However, it restricts your right to sue an at-fault driver for non-economic damages like pain and suffering unless the injury is permanent or involves disfigurement.

Unlimited Right to Sue

If you choose a "Standard" car insurance policy, you have the option of selecting the "unlimited right to sue". This puts all options on the table after a car accident, regardless of the extent of the resulting injuries. With this option, you can file a lawsuit against the at-fault driver and recover the full spectrum of compensation, including all economic and non-economic losses stemming from the accident.

The trade-off is that this insurance costs more money, and the victim must prove that the third party is at fault for causing the car accident to qualify for coverage.

Frequently asked questions