“No-Fault” and “PIP” Coverage in New Jersey

Man in recent car accident with neck pain

New Jersey is a “no-fault” state. This means that an individual’s medical bills arising from an automobile accident are paid by the injured party’s own automobile insurance company regardless of who is at fault for the underlying accident; hence the term “no-fault.”

The section of your NJ auto insurance policy which provides for payment of medical bills is known as Personal Injury Protection, or “PIP” coverage. This PIP section of the car insurance policy provides medical payments coverage for the insured and family members residing with the insured who are injured in an automobile accident.

How PIP Coverage Works With Your Insurance

The default amount of PIP coverage in NJ is $250,000 per person, per accident, although the insured can select coverage as low as $15,000 per person, per accident. I strongly recommend that my clients accept the default PIP coverage of $250,000 because medical costs in New Jersey can very easily exceed the $15,000 minimum coverage that automobile insurance companies offer. If you are unable to afford to carry the default coverage of $250,000, then I would recommend having PIP coverage of at least $100,000 per person, per accident. 

NJ automobile insurance companies are also permitted to allow the insured to select their major health insurance as primary coverage for medical bills incurred in an auto accident, such as Blue Cross/Blue Shield, Aetna, Cigna, or United Healthcare.  Before making a “Medical Insurance Primary” selection on their auto policy, the insured should first check with their major medical carrier to determine if they will cover medical expenses and accept primary responsibility for injuries arising out of an automobile accident, as some major medical carriers will not accept primary responsibility for medical costs arising from a motor vehicle accident. 

Even if the major medical carrier would accept primary responsibility for medical costs arising out of a car accident, many major medical insurance companies will impose a lien for medical costs the insurance company pays. Such a lien will be imposed against the injured party’s recovery in the personal injury case, which could significantly reduce the net recovery to the injured person.  

On the other hand, auto insurance companies, unlike major medical insurance companies, are not permitted to impose a lien for medical costs paid through the PIP coverage, so the insured, by selecting auto insurance as primary coverage for medical expenses, will benefit by avoiding the imposition of a lien for medical expenses paid by their auto insurance company.

The Key Takeaway

If you can afford to do so, accept the default PIP coverage of $250,000 per person, per accident from your automobile insurance company. If you cannot afford this level of coverage, then choose the highest level of PIP coverage you can afford, which hopefully will be higher than the minimum available coverage of $15,000.

If you are seeking compensation from uncovered medical expenses, or are seeking out a personal injury lawyer after an accident, give the Law Offices of Edward P. Shamy, Jr., a call today. I can help you file a claim for your injuries and do everything within my power to handle your case.