Motor Vehicle Accidents Information Center
New Jersey No-Fault Insurance Explained
As the name suggests, no-fault automobile insurance provides coverage if you are involved in a motor vehicle accident regardless of who was at fault. You might be surprised to discover that statement may be the only simple thing about no-fault insurance. New Jersey is a "no-fault" jurisdiction which means that it has specific statutory and regulatory requirements and limits regarding when, how much and for how long an individual injured in a motor vehicle accident (MVA) may be entitled to benefits resulting from that accident. Many of those limits are imposed by your own choices when you bought coverage in the first place - like how much you insurance carrier has to pay in medical bills and / or lost wages, and whether your insurance carrier has to pay to take care of collision damage to your vehicle.
Under a no-fault scheme, your insurer covers your economic losses, even if you're at fault. As a driver under such a no-fault policy, you will be looking to your own insurance company to pay your medical bills even if another driver was at fault. We have had this kind of insurance in New Jersey since the early 1970's, yet many people who call me about motor vehicle accidents still think that if the accident was the other driver's fault, (that is, due to the other driver's negligence) the other driver's insurance company should pay the medical bills generated as a result of the accident. Not so. A no-fault system is, of course, in some ways preferable to a system that requires investigation, a claim and then litigation in order to identify who was at fault- negligent - (or most at fault) prior to determining which insurer will bear the brunt of compensating for economic damages.
You can guess that insurance companies, whenever possible, deny, deny and deny. They can't help themselves, it’s what they do. This used to result in tons of litigation over who should pay the bills. That's why the legislature chose a no-fault system of insurance to get bills paid. It makes a lot of sense, right? Not so fast. You still have to keep a close eye on any insurance carrier - especially your own. While somewhat streamlined, the no-fault process of payments of medical bills and the like is anything but free from obstacles and challenges.
Many accident victims cannot understand why their own insurance carrier would give them a hard time about medical bills. There is any number of ways that an insurer can engineer a denial of medical bills. The favorite of the industry is to send you to a doctor of their choice (think, in many cases, "bought and paid for") who will write a letter giving the opinion that you don't need any more treatment as a result of the accident - or stating that a test ordered by your doctor is not medically appropriate.
You can see that failing to properly handle a no-fault claim well may place you in a worse position than if the accident occurred in an at-fault jurisdiction. That's because your own insurance company can drastically affect your right to bring a claim for NON-ECONOMIC damages (like pain and suffering damages) later. Many attorneys who work in this field believe that insurance companies act together to limit 1) your no-fault benefits as much as possible and 2) limit your ability to bring a third party case against the other (at fault) driver later by limiting treatment and what you'll be able to prove through a treating doctor' records, testing prescribed, and treatment.
"Wait a minute" you say, "doesn't no-fault insurance pretty much eliminate the need for a lawyer or legal action? After all, my insurance company is my insurance company and works for me, so I have nothing to worry about, right?" Short answers: No and no.
Remember that no-fault insurance, while it pays benefits for you in the event of a motor vehicle accident, does not do so automatically or without limitations or restrictions. There are steps to follow, factors to consider and decisions to be made after a motor vehicle accident that will determine the amount and form of your monetary recovery for non-economic damages, like pain and suffering, loss or limitations on your previous lifestyle, wages that are not covered by your auto insurance, and the like.
In New Jersey, your no-fault insurance coverage is commonly referred to as a Personal Injury Protection Package, or PIP. This type of insurance pays for medical expenses incurred as a result of a motor vehicle accident by you, your family members, and sometimes passengers in your car (if they don't have their own auto insurance with PIP benefits) who may have been injured. Such coverage extends to medical bills, some wage loss, some essential services up to a small amount per day, and (heaven forbid) funeral expenses. It does not, however, cover pain and suffering or damage to your vehicle - unless you have collision coverage.
A very important thing to remember regarding PIP is that unless you have paid extra premiums for a No Threshold Policy, there are limitations on the compensation you may be able to recover from the other driver. If you do not have a No Threshold policy and simply have in place the Lawsuit Threshold or Verbal Threshold contained in a standard no-fault policy, then you will only be able to sue for damages if the injuries you suffered are substantial and both their existence and severity can be established via objective medical evidence. For those damages, you need to make a third party claim (and perhaps later institute litigation) against the driver of the other car and his/her insurance carrier.
A quick word about what happens if you were injured in a motor vehicle accident during the course of your employment: If this applies to you, then PIP usually does not. Workers’ Compensation coverage many times is the first level of recovery for payment of your bills; also, your worker’s compensation insurance carrier will have the power to direct you to their approved medical care providers. There are times you can avoid this, and you should seek the advice of legal counsel on this issue.
In my experience, there is a hierarchy of concerns after a motor vehicle accident: First and foremost comes the fear of having suffered a significant and permanent injury, followed closely by the fear of being out of work and inability to pay the bills. An accident can really lead to financial disaster and complete change of lifestyle, including moving to new cheaper or more accessible residence, finding a less physically demanding job, and so on.
Filing a claim for New Jersey State Disability is the first step if loss of income is an issue. Although this won't pay a lot, it will still pay something. You should also file a claim for Personal Injury Protection Income Continuation Benefits under your own policy. The amount to which you are entitled depends on your actual loss of income and the weekly benefit amount you selected under your policy. Any loss of income that exceeds the amount of coverage your policy dictates may be recoverable in a legal action for damages suffered as a result of the injuries caused by the accident.
Simply put, no-fault insurance is really not that simple. The landscape is littered with barriers, both legal and otherwise, that may impede or even preclude your recovery efforts in the event you have suffered personal injuries as a result of a motor vehicle accident. Combine these truths with the fact that the insurance company, your insurance company, is in the business of paying out as little as possible on every claim filed and you'll understand the need to be cautious. It will pay you to remember that to all insurance carriers, including your own, once you are making a claim, including a claim for benefits you have paid for, you are the enemy!!
If this all seems too much to handle or you'd rather not deal in the practical reality of the insurance claim process alone and uncounseled, contact me. It's what I do. It's what I have done for over 30 years. In theory, insurance is supposed to provide peace of mind. In reality, the mental state of many dealing with insurance, especially because of personal injury, is far from peaceful. I can help. I'll answer your questions, clear up any confusion, explain your rights and responsibilities and zealously represent your best interests to ensure that your no-fault experience goes smoothly as possible. It's no fault, right? Then you shouldn't be punished. You can call me at 888-233-1272, or email me at Frank@FrankSmithLaw.com. The no-obligation consultation is free, and there is no fee unless I recover money damages for you.
NJ Motor Vehicle Accident Information Center
- 10 of the Most Common Causes of NJ Motor Vehicle Accidents
- Compensation for NJ Car Accident Personal Injury Claims
- How to Avoid Wrecking your NJ car Insurance Claims
- NJ Uninsured and Underinsured Motorists
- New Jersey No-Fault Insurance Explained
- Car Accident Checklist - What to do After a NJ Car Accident
- Motor Vehicle Accident Frequently Asked Questions