Understanding No-Fault Insurance In New Jersey
No-Fault Doesn’t Mean No One Is At Fault: New Jersey requires no-fault policies so that there’s never any question who covers your medical bills.
You Can Still File A Personal Injury Claim: If you were seriously injured in a car accident and the other driver was at fault, a no-fault policy doesn’t mean you can’t file a claim.
When a car accident turns your life upside down, we can help you get your life back
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 since 1972, all auto insurance plans sold in New Jersey must be no-fault policies.
What Is No-Fault Insurance?
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.
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. Choosing a smaller policy keeps your premium low, but you’ll have less money to cover bills when you get in an accident.
What Is PIP Insurance?
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.
What Expenses Will PIP Cover?
The primary purpose of PIP insurance is to cover your medical bills, including doctor visits, medication, and recovery. However, the policy covers other personal costs, including:
- Lost Wages: A serious injury might prevent you from returning to work. PIP coverage helps make up for not having that salary. Depending on your coverage, this can be between $100 and $5,200 a week. If the accident is fatal, PIP insurance pays out a portion of your lost wages to your family. However, the amount of lost wages compensation available through your PIP coverage is often not enough to fully make up for the income you will lose. Even in states with no-fault auto insurance, many accident victims must pursue a personal injury claim to recover the full amount of income they lose due to an injury.
- Essential Service Benefit: This benefit helps make up for the cost of hiring someone to perform a task you would do if you weren’t injured, such as hiring someone to mow the lawn or wash your laundry. PIP caps this coverage at $12 a day.
- Death Benefits: If you die in a car accident, your PIP plan will pay your next of kin. Unlike your lost wages, the only thing required for the death benefit is proof of death. Most plans offer a flat $1,000.
- Funeral Benefits: PIP plans offer up to $1,000 towards funeral costs in the event of death.
The size of your PIP policy determines what money you have available when you get in an accident. In New Jersey, the minimum amount of PIP coverage a plan can have is $15,000, though most residents carry $250,000 or more.
Many frugal drivers try saving money by reducing their PIP coverage. While it’s true this can save you money on your premiums, it means you might not have the coverage you need if you do get in an accident.
Always Set PIP As Primary
After choosing how much PIP coverage you would like, you’re asked if you would like PIP or your health insurance policy be primary. It is likely that your insurance company will recommend or suggest you put your health insurance as primary. They’ll warn 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.
What does setting a policy as primary mean?
When you get in an accident, your 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’ll exceed your out of pocket maximum, meaning you’ll owe the hospital thousands of dollars.
More importantly, if you don’t have PIP set as primary, you won’t have access to those funds. Ever. Modern health insurance plans have no spending caps, meaning you never exhaust your coverage. If you choose to pursue a personal injury claim, your insurance company may get reimbursed out of your settlement.
So, not choosing PIP as primary will essentially translate into less of a recovery in a personal injury claim because the health insurance company has a right to seek reimbursement for the costs they covered.
That’s why your car insurance company discourages you from setting PIP as your primary. If they convince you to take the lower premium, they never have to pay for your medical costs, even though you’re paying for a policy. They get your money and don’t have to give it back. It might be good business, but it is terrible policy.
Common Questions About No-Fault Plans
New Jersey Auto Accident Injury Lawyers
With all of the loopholes and coverage options in a New Jersey auto insurance policy, filing a claim can be very 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 advocate like Console and Associates fighting for you. We have more than 25 years of experience helping thousands of clients. We understand New Jersey auto accident law, and we’re committed to helping you.
When you work with us, we treat you like we’d want someone to treat our own family. You will get better. You will get your life back on track. Your well-being is our top priority
Our no-win, no-fee promise means that you’ll pay nothing for our help unless and until we successfully settle your claim.
Call us now and let us help with a free consultation!