Have questions about no-fault car insurance in NJ? We’ve got the answers.
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A no-fault policy means that your insurance plan always covers your medical bills. It does not matter who is at fault for causing the crash. If you need medical treatment, your policy pays for it.
To drive in the state of New Jersey, you need car insurance. There are dozens of policies and insurance companies to choose from, but they all have to meet minimum state standards.
The state requirements change over time, but the no-fault insurance system has been part of NJ law for decades. Since 1972, all auto insurance plans sold in New Jersey must be no-fault policies.
The section of your policy that covers your medical costs is ‘personal injury protection,’ or PIP, insurance. Like other options on your plan, you can choose how much PIP coverage you want to purchase. Most drivers choose $250,000 as their PIP coverage limit, according to the official New Jersey Auto Insurance Buyer’s Guide.
Choosing a lower personal injury protection limit keeps your premium low, but you’ll have less money to cover bills when you get in an accident. This could leave you on the hook for paying thousands of dollars in medical bills, even if someone else caused the accident.
The largest benefit of no-fault insurance is that it allows you to get the medical help you need when you need it.
In the days after an accident, getting timely care is crucial for recovery. Without a no-fault policy, you might have to pay for treatment out of your own pocket until the insurance companies involved determine who’s at fault for an accident. Given the high cost of acute medical treatment, this situation could pose a real problem for car accident victims and their families.
No-fault insurance policies eliminate this need for accident victims to either wait to seek medical care until after the insurance company makes a decision on liability or pay out of pocket for initial treatment.
Importantly, NJ’s no-fault car accident insurance system does not prevent you from seeking compensation if the other driver caused the accident. You can still file a claim for damages. All this no-fault insurance system does is help streamline the process of getting you the medical care you need.
Personal injury protection helps pay for the medical and other personal costs from your car crash. You won’t use your PIP plan to pay to repair your car or cover the medical costs of your passengers or the other driver. The policy only covers your personal costs.
The primary purpose of PIP insurance is to cover your medical bills, including:
However, PIP benefits also cover other personal costs, including:
PIP coverage isn’t unlimited. You only have coverage up to the dollar amount you chose as your policy limits when you purchased auto insurance coverage.
The size of your PIP policy determines how much money you have available when you get into an accident. In New Jersey, the minimum amount of PIP coverage a standard plan can have is $15,000. However, most NJ residents carry $250,000 or more of PIP coverage.
Frugal drivers may try saving money by reducing their PIP coverage. While it’s true this can save you money on your premiums, you might not have the coverage you need if you do get into an accident.
After choosing how much PIP coverage you would like, you must decide if you would like PIP or your health insurance policy to be primary. Your insurance company may suggest you put your health insurance as primary. They’ll warn you that making PIP primary increases your premium.
Yes, having your PIP policy be primary will increase your premiums, but you should do it anyway. In the long run, this is almost always the wiser choice.
When you get in an auto accident, your medical bills first go to whatever policy you set as primary. After you use up that insurance, the other policy takes over.
This means that if you set your health insurance policy as primary, it gets billed first. Most health plans have high deductibles you have to pay before your policy kicks in. In a serious accident, you could end up owing the hospital thousands of dollars.
If you don’t have PIP set as primary, you won’t ever have access to the PIP funds that you’re paying to have. Modern health insurance plans have no spending caps, meaning that you will never exhaust your coverage and become eligible to use your PIP benefits. You may, however, have to meet a new deductible when your health insurance plan resets each year.
Not choosing PIP as primary will essentially translate into less of a financial recovery in a personal injury claim. That’s because the health insurance company has a right to seek reimbursement out of your personal injury settlement for the costs they covered related to your car accident.
If the health insurance company convinces you to set PIP as your primary coverage for medical care in exchange for a lower premium, they never have to pay for your medical costs, even though you’re paying for a policy. The car insurance company gets your money and never has to give it back. It might be good business, but it is terrible policy.
One of the reasons New Jersey enacted its no-fault insurance policies was to help manage insurance costs by limiting what you could sue an insurance company for. That’s why it’s difficult to file a personal injury claim unless you have evidence of a serious injury.
However, lawmakers wanted to make sure that you’d have the ability to get treatment for your injuries even if they weren’t considered serious enough to sue. They solved this problem by requiring personal injury protection coverage as part of NJ auto insurance policies.
You didn’t cause the crash, so it does seem weird that you have to use your insurance plan to pay. But this is a good thing. When you’re in an accident, you know you have insurance to cover the cost because you’re the one who purchased it.
After the police determine who’s at fault for your injury, you have the ability to file a claim and get compensation from the at-fault driver’s insurance company.
No, PIP does not cover all of your medical bills that result from an accident. You would be responsible for paying:
One option you select when you purchase a car insurance policy is how large you want your deductible to be. Your deductible is the amount of money you have to pay out of pocket when you’re in an accident before your insurance policy pays anything.
After your deductible, most PIP policies say you’re responsible for 20% of the first $5,000 of medical bills that result from your accident, minus your deductible.
Once you hit this out-of-pocket amount, you are no longer responsible for additional medical bills related to the accident up to the level of personal injury protection you selected on your policy. The auto insurance company pays the remaining medical bills.
If you chose to purchase low levels of PIP to save money on insurance, you will have to pay any bills that remain once the costs exceed your PIP coverage limits. In this case, a health insurance policy may be responsible for some of the medical costs. However, you would have to meet your health insurer’s deductible, pay your copayment and coinsurance obligations, and get care from providers who are in your coverage network.
No, your rates won’t go up after an accident if you’re not at fault. Remember, the “no-fault” part of your policy is about who pays your medical bills, not who is responsible for the accident.
Like any health insurance policy, each plan has a list of procedures they will and will not cover. If you want to seek treatment the insurance company doesn’t see as necessary, the insurer will not cover it.
If you are drunk or under the influence of illegal drugs during the accident, the insurance company may be able to deny your claim. Companies can also try to deny your claim if you own an uninsured vehicle.
Finally, insurance companies can deny your claim if you wait too long to seek treatment. This is why experienced car accident lawyers recommend seeing a doctor even if you feel fine after your accident. If your injuries don’t show symptoms right away, you might not seek treatment until it’s too late, and there won’t be any medical records to document that the injuries began with the collision.
PIP will still pay for your injuries even if you don’t have health insurance. However, we recommend that you always make sure you have health insurance because medical bills pile up quickly.
Once you use up your PIP policy, you’re responsible for your medical bills if you don’t have health insurance. Filing a personal injury claim can help recover those costs, but reaching a settlement takes time. Until then, you need to pay these expenses out of pocket. Recovering from a serious injury can cost hundreds of thousands, or even millions, of dollars.
In 1998, New Jersey lawmakers passed the Automobile Insurance Cost Reduction Act (AICRA), hoping to reduce insurance premiums. In the process, however, they limited your options to get the care you needed in the event of an accident.
The AICRA created limits on the damages you could seek in a personal injury claim. The bill also allowed insurers to create “limited plans” that offered small premiums in exchange for underwhelming coverage.
Your NJ car insurance plan gives you the option of choosing between “limited” or “full” tort. This is also called your “limitation on lawsuit” selection.
If you or a loved one have serious injuries from an automobile accident, seek medical attention. Then speak to a New Jersey car crash attorney.
With all the loopholes and coverage options in a New Jersey auto insurance policy, filing a claim can be confusing. You’re left wondering what to do next and how your injuries will impact you in the long run.
You just want to get your life back on track, but you’re not sure where to start. That’s why you want an experienced NJ car accident lawyer who can advocate and fight for you. Recovery can be a long, difficult journey, but with the help of a dedicated attorney, you will get your life back on track.
This article was professionally reviewed by Richard P Console Jr, an attorney licensed to practice in New Jersey, New York, and Pennsylvania.
Mr. Console has more than twenty-five years of experience practicing personal injury law and successfully resolving vehicle accident claims on behalf of his clients.
Learn more About Richard P Console Jr.
While this information was reviewed for accuracy, it should not be considered legal advice. Every claim is different. If you are thinking of pursuing a personal injury claim and have a question, contact us directly.