From the Atlantic City boardwalk to the Lambert Castle Museum spoon collection, New Jersey is full of unique things. New Jersey’s no-fault system is just another of its quirks. But unless you know your way around car insurance, no-fault laws can cause you more indigestion than a pork roll with extra cheese. Here’s what you need to know to choose the right policy for personal injury protection, a.k.a. PIP, in the Garden State.

Understanding NJ no-fault rules

In a “no-fault state” like New Jersey, car insurance companies don’t require claimants to prove that an accident was one driver’s fault. Instead, any drivers who were in the accident, plus any non-drivers who were injured, file claims with their own insurance providers. Their personal injury protection (PIP) coverage pays for injury-related expenses like medical care and lost income after an accident.

Eleven other states have no-fault insurance systems, but New Jersey’s is unique in two ways. One, it lets drivers use their health insurance for PIP coverage. Two, it lets injured parties sue a driver who caused an accident. Before we get into that, let’s look at the basics of PIP.

What is covered by PIP in NJ?

PIP covers three consequences of car accident injuries for you and your next of kin.

1. Work-loss costs. A hospital stay after an accident can cause you to miss weeks of work. So can an injury that keeps you from doing your job, like a concussion or broken hand. If car accident injuries stop you from working, you can post a PIP claim for your lost wages. PIP can also pay for “essential services” like laundry, cleaning, or raking leaves if your injury keeps you from doing chores.
2. Medical costs. PIP coverage applies to a range of medical expenses. Imagine that you broke your leg in a car accident. If you took the ambulance to the hospital, got an X-ray and a cast, filled a prescription for pain medication, and went to physical therapy, PIP would help pay those bills.
3. Death benefits. If you die in a car accident, your PIP coverage can give your next of kin the maximum payout for work-loss costs and essential services. Depending on the plan, PIP also covers up to $1,000 in funeral expenses.

If you or someone else on your plan gets hurt in a car accident, including as a pedestrian, let your insurance company know and start filing a PIP claim as soon as you can. If you wait too long, your insurer can reduce or even cancel your payout.

Is no fault insurance required in NJ?

Yes! New Jersey legally requires drivers to meet a minimum required amount of auto insurance to register and drive their car, and all auto insurance in the state is no-fault. The state requires three types of insurance coverage.

1. PIP coverage, which pays for medical costs. New Jersey requires you to have at least $15,000 in PIP coverage, but many New Jerseyans raise their coverage to at least $250,000.
2. Uninsured motorist coverage, which pays for your accident expenses if you’re in an accident with someone whose insurance doesn’t meet New Jersey’s minimums. Liability coverage, which pays for injuries or damage you cause to someone else’s property in an accident.

NJ’s special no-fault rules

Using your health insurance for PIP coverage

You can’t fully replace PIP coverage with health insurance, but you could save some money by using your health insurance policy for medical coverage and saving PIP for death and work-loss benefits. However, not all health insurance meets New Jersey’s PIP requirements for medical coverage. For example, the state won’t let you use Medicare and Medicaid to meet PIP requirements. Plus, some health insurance policies have limits which exclude car accidents. If you want to set up your health insurance to cover medical PIP claims, call your insurance provider for more information before you get started.

Suing a driver who caused a car accident

Though New Jersey is a no-fault state, if you want to successfully sue a driver after an accident, you have to prove the accident was their fault. Depending on the PIP coverage you choose, New Jersey gives you different rights to sue for car accident injuries. You have two choices.

1. Full tort/unlimited right to sue. This option gives you the right to sue a driver who harms you in an accident for both medical costs and for pain-and-suffering damages. This option is usually about $276 more expensive than limited tort coverage.
2. Limited tort/limited right to sue. With this option, you only can sue a driver who harms you in an accident for your medical costs. You may still be able to sue for pain and suffering if your car accident injuries are severe or disabling.

How much does PIP cost in NJ?

The cost of PIP coverage in New Jersey vary depending on the type of coverage you get, the amount of coverage you choose, and whether you pick full tort or limited tort. PIP coverage by itself usually adds $84 to $149 to your premium. Depending on your financial situation and preferences, you might choose different PIP coverage options. For expert advice and quotes, contact one of Surround Insurance’s agents.