Back in 1972, in response to rising automobile insurance premiums, the New Jersey Legislature passed and enacted no-fault insurance laws. Auto insurance was also made compulsory for all motor vehicles with minimum liability coverage of $15,000. That amount has never been increased despite inflation. For example, the cost of an average U.S. home in 1972 was under $30,000, including land.
The original no-fault insurance system of 1972 is radically different than the current system. The earlier form of no-fault insurance provided unrestricted medical treatment with unlimited coverage regardless of who caused the accident. Additional benefits included income continuation, money for assorted services and funeral expenses, if necessary. An injured person was permitted to file a claim or lawsuit provided that their medical bills were over $200.
The benefits an injured car accident victim received were called “PIP benefits,” which is short for personal injury protection. In exchange for PIP benefits, no lawsuit for medical bills and basic wages paid by PIP could be claimed. A lawsuit could only be brought for pain and suffering and unreimbursed lost wages.
Through the decades, the system has undergone several radical overhauls so that our current system in 2013 is a burdensome, costly and ineffective system. The cost savings of no-fault insurance have never materialized and, in fact, the system is more inefficient than ever.
To learn more about no-fault insurance coverage, including how it relates to your car accident, please call Davis, Saperstein & Salomon, P.C., today at (800) LAW-2000 or complete our online form. You will not pay for our service unless you recover the funds you need and deserve.
What is No-Fault Insurance/PIP?
Auto insurance in New Jersey or New York is known as “no-fault insurance” simply because no matter who or what causes an automobile accident, it is your own insurance company that is responsible for your medical treatment bills.
No-fault insurance or personal injury protection (PIP) is a type of insurance that a driver purchases for himself. The policy covers the driver, eligible family members and certain passengers who travel with the driver. The purpose of PIP coverage is to make sure every driver can have certain expenses paid by insurance after an accident, regardless of who was at fault.
In its current form, no-fault or PIP insurance provides a poor alternative to a standard fault system. A fault system makes a driver who causes an accident pay for resulting costs to accident victims, no matter how minor their injuries. A driver who causes an accident in a fault state may be left on his own to face his accident-related expenses. Further, even drivers who are victims of accidents may have to wait months or years to recover monetary damages from the responsible driver.
PIP or no-fault insurance ensures that every driver has certain losses covered, including medical expenses. If you have been injured in a New Jersey accident, even if you caused the accident, you are entitled to make a no-fault claim.
What Does No-Fault Insurance Cover?
In New Jersey, the Automobile Insurance Cost Reduction Act establishes auto insurance requirements. According to the New Jersey Department of Banking and Insurance, this Act gives drivers the choice between a standard auto insurance policy and a basic policy. Under both types of insurance, personal injury protection (PIP) must be purchased. However, the coverage differs.
Under the standard policy, both liability coverage and PIP coverage may be as low as $15,000 per person/accident. However, PIP coverage may also be as high as $250,000 or more. In some cases, it can go up to $250,000 regardless of the limit selected. The default option for standard coverage is $250,000, and drivers have to elect to carry less if they choose to.
Under the basic policy, drivers still must have $15,000 minimum per person/accident in PIP coverage and may be covered for up to $250,000 for certain injuries, but they need not have any liability coverage. Sometimes, this type of policy has been called the “dollar-a-day” policy.
What Types of Expenses Are Covered?
Generally speaking, PIP protection will pay for a variety of costs and expenses up to policy limits. Coverage is available under PIP for:
- Eligible medical expenses, including diagnostic services, treatment, rehabilitation and other expenses that are medically necessary.
- Lost wages if the accident victim cannot work due to accident injuries. Lost wages benefits are capped at $100/week and $5,200 per person per accident under standard coverage defaults.
- Essential service benefits, which refer to work or services that would have been performed by the injured victim if the accident hadn’t occurred. There is a cap of $12/day and $4,380 for these benefits.
- Death benefits, which can be paid in a lump sum and may equal a maximum of $5,200 for lost income and $4,380 for lost services from the deceased.
- Funeral expenses up to $1,000 to cover burial, cremation and other costs.
PIP will pay these benefits to insured drivers, certain resident relatives in the household of insured drivers or passengers injured in the car with an insured driver. The benefits are available only if the injured victim is “occupying, entering into, alighting from or using” an automobile or is a pedestrian hit by a car or who either owns an insured car or lives with a relative that owns and insures a car. In cases of serious injury, where damages exceed PIP coverage, injured victims may be able to sue the driver responsible for an accident despite the no-fault rules.
Because PIP benefits are provided by your insurer, you should make a claim with your own insurance company as soon as possible after an auto accident occurs. An experienced New Jersey auto accident lawyer can help to notify your insurer of your injury, prove your eligibility, prove the extent of your losses and recover the full compensation available to you under the policy’s terms.
One final note on compulsory auto insurance: Never let your insurance lapse. In New Jersey, all vehicles must be insured. Driving an uninsured vehicle has dire consequences. If the driver is injured while driving a vehicle, he or she will not be allowed to make a claim, no matter how badly injured.
To learn more and speak with a New Jersey no-fault insurance lawyer with years of experience, contact Davis, Saperstein & Salomon, P.C., today at (800) LAW-2000 or complete our online form.