Understanding New Jersey No-Fault Car Insurance Laws: A Complete Overview

In any state, car insurance laws are bound to be confusing. But New Jersey may just hold the title of most confusing car insurance laws.

That’s because we do a little bit of everything here in the Garden State: no-fault insurance, a modified comparative fault system, a limited right to sue, and an unlimited right to sue.

All that amounts to is a big heaping pile of confusion for New Jersey drivers who are interested in filing a car accident claim. But not to worry — the team at Rosengard Law Group is here to clear up the confusion.

Here’s a comprehensive overview to help you understand New Jersey’s no-fault car insurance laws. Read on, or reach out to our team to get guidance for your unique case.

What Is No-Fault Car Insurance?

No-fault car insurance means that if you’re injured in a car accident, your own insurance company will cover your medical expenses and certain other losses, regardless of who was at fault for the accident. 

This system — which is not unique to New Jersey — aims to reduce the number of personal injury lawsuits and ensure that insurance claims are settled quickly.

Personal Injury Protection (PIP)

In New Jersey, no-fault insurance is also known as Personal Injury Protection (PIP) coverage. PIP is mandatory for all drivers and covers a range of expenses, including:

• Medical expenses. PIP covers medical costs resulting from the accident, such as hospital bills, surgeries, and rehabilitation.
• Lost wages. If your injuries prevent you from working, PIP can compensate you for your lost income.
• Essential services. PIP can cover the cost of essential services you can’t perform because of your injuries, such as childcare or house cleaning.
• Funeral expenses. In the unfortunate event of a death, PIP can help cover funeral costs.

How Much PIP Coverage Do You Need?

New Jersey law requires drivers to carry a minimum of $15,000 in PIP coverage per person, per accident. But you can opt for higher limits for better protection. 

Considering the high cost of medical care, many drivers choose to purchase additional PIP coverage. But that’s a personal choice.

Limitations of No-Fault Insurance

While no-fault insurance covers many expenses, it doesn’t cover everything. For example, it won’t compensate you for pain and suffering or emotional distress. 

Also, no-fault insurance has a monetary threshold that limits your ability to sue the at-fault driver unless your injuries meet certain criteria.

Exceptions to NJ’s No-Fault Rule

There are situations where you can step outside the no-fault system and file a lawsuit against the at-fault driver. In New Jersey, you can likely sue for non-economic damages (like pain and suffering) if your injuries meet one of the following thresholds:

• Significant or permanent loss of a body part. For instance, losing a limb or another significant body part.
• Significant disfigurement or scarring. Severe and permanent disfigurement or scarring.
• Displaced fracture. A bone fracture is where the bone is out of place.
• Permanent injury. An injury that will not heal and will affect you for the rest of your life.
• Loss of a fetus. The loss of a pregnancy due to the accident.

Choosing Between Basic and Standard Policies

New Jersey offers two types of car insurance policies: Basic and Standard.

• Basic policy. This policy provides minimal coverage and is generally less expensive. It includes $15,000 of PIP coverage and limited liability protection.
• Standard policy. This policy offers more comprehensive coverage, including higher PIP limits, and the option to choose between having a limited right to sue or an unlimited right to sue. This is why New Jersey’s no-fault laws are often referred to as “choice” no-fault.

Let’s take a closer look at the limited vs. unlimited right to sue within New Jersey no-fault insurance policies.

Limited Right to Sue (Verbal Threshold)

Under the limited right-to-sue option, you can only sue for non-economic damages (like pain and suffering) if your injuries meet certain criteria. These criteria include significant or permanent loss of a body part, significant disfigurement or scarring, displaced fractures, permanent injury, or loss of a fetus.

This option usually results in lower insurance premiums because it limits the situations where you can sue for non-economic damages.

Many drivers choose this option to save on insurance costs, especially if they believe the risk of severe injury is low.

Unlimited Right to Sue (No Threshold)

Under the unlimited right to sue option, you can sue for non-economic damages (like pain and suffering) for any injury resulting from a car accident, regardless of how severe it is.

This option typically results in higher insurance premiums because it allows more freedom to seek compensation through lawsuits.

So, if you’re a driver who wants the ability to pursue compensation for any injury, no matter how minor, you might choose this option for the broader legal rights it provides.

Consult with Rosengard Law Group

Navigating New Jersey’s no-fault car insurance laws can be a challenge, especially if you’ve already been injured in an accident. But the experienced attorneys at Rosengard Law Group are here to help. 

We can help you understand the full extent of our rights under your current insurance policy. And then we can help you pursue every penny.

Have questions about your coverage or need assistance with a claim? Contact Rosengard Law Group today to schedule your free consultation. Call us at 856-284-6446 or reach out online.