Does Fault Matter Under New Jersey’s No-Fault Insurance Laws?

New Jersey is one of a dozen states across the country that have adopted “no fault” car insurance laws. Under the New Jersey approach, every motorist is required to purchase a “personal injury protection” (PIP) policy to cover losses suffered in a motor vehicle accident. When you’re hurt in a wreck in New Jersey, you file your insurance claim with your own insurer, regardless of who caused the accident. Does fault matter, then? Do you ever need to establish who caused the accident?

What Your PIP Policy Covers

The most basic form of PIP insurance provides coverage only for medical expenses, up to your policy limit. You can, however, purchase additional types of coverage through a PIP policy, including coverage for:

• lost wages or income,
• the cost of services you would have performed yourself but must now pay for because of your injuries, and
• death benefits.

The total amount of benefits available is subject to policy limits. You can typically pay more for higher policy limits. However, if your losses exceed your policy limits, and you file a lawsuit to cover the excess, then you must show that the other party caused the accident.

Furthermore, the type of PIP policy you have determines the extent of your right to sue for losses. You can always file a legal claim to recover economic damages that exceed policy limits. However, your right to file a separate legal claim for noneconomic damages, such as loss of consortium or companionship or loss of enjoyment of life, will differ based on the type of PIP policy you have. With a Basic PIP policy, you can recover noneconomic damages only if you can show one of the following:

• significant scarring or disfigurement
• loss of a fetus
• death of a loved one
• permanent injury that has not healed to function normally
• amputation or loss of a body part
• displaced fracture

You can also purchase a Standard PIP policy, which gives you the option of choosing a limited right to sue or an unlimited right to sue. The unlimited right to sue policy generally costs more.