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Automobile Insurance Basics
What's in your automobile insurance? An introduction to "PIP" and the "verbal threshold."
A. Introduction to "PIP" coverage
PIP coverage is mandatory for all drivers in New Jersey and provides benefits for medical expenses resulting from injuries sustained in an automobile accident, regardless of who was at fault. New Jersey drivers are required to carry at least $15,000 in PIP coverage pursuant to N.J.S.A. 39:6A-4.
PIP provides no-fault coverage for medical expenses incurred for any medical treatment for injuries sustained in a motor vehicle accident. "No fault" means that an insured is entitled to PIP benefits regardless of who was at fault in causing the accident, even if the injured person is ultimately found to be at fault in the accident. Likewise, even though an at-fault party caused a motor vehicle accident that results in you sustaining an injury, you claim PIP benefits for medical treatment through your own insurance policy.
The treatment provider who provides medical treatment submits bills to the PIP insurance carrier, and the PIP carrier pays for the treatment pursuant to a PIP fee schedule established by the Commissioner of Banking and Insurance, as outlined in N.J.S.A. 39:6A-4.6.
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When purchasing automobile insurance, you should pay attention to the PIP coverage limit. The maximum PIP coverage limit in New Jersey is $250,000. N.J.S.A. 39:6A-4(a). If you choose a lesser policy limit, you should be mindful that if you obtain medical treatment that exceeds the policy limit, you would then be responsible for paying for your own medical treatment through your personal health insurance.
If you are in a motor vehicle accident that is caused by the fault of another party, and file a personal injury lawsuit against another party for damages, you cannot present medical expenses to the jury for any treatment that was paid pursuant to PIP coverage, even if the medical expenses are substantial. N.J.S.A. 39:6A-12. However, if the treatment exceeds the PIP policy limit, then the expenses for any treatment beyond the policy limit can be presented to a jury, but they must be presented subject to the reduced PIP fee schedule. N.J.S.A. 39:6A-12.
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B. Introduction to the "verbal threshold"
When you apply for automobile insurance, you will be presented with the option of selecting either the "limited tort" option or "no limited tort" option. This selection relates to the legal burden you have to meet in the event you file a lawsuit against another party for damages arising out of a motor vehicle accident. This selection will have a substantial impact on the premium you are charged by your insurance carrier.
If you select the "no limited tort" option (also called the "no limitation on lawsuit" option), it is going to substantially increase your insurance premium. However, by selecting this option, you can present your injuries to the jury even though the injuries may not be "permanent" in nature.
If you select the "limited tort" option (also called the "limitation on lawsuit" option), you will pay a lower premium. However, by selecting this option, you will have to meet an additional burden of proof when asking a jury to award damages for injuries that you sustained in an automobile accident. You will have to prove, by a preponderance of the evidence, that your injury falls within one of the categories of injury provided for by statute. This includes proving that you have sustained death, dismemberment, significant disfigurement or significant scarring, displaced fracture, loss of a fetus, or a permanent injury within a reasonable degree of medical probability. N.J.S.A. 39:6A-8(a).
As a threshold matter, you will have to obtain a certification from a qualified physician that your injury is a "permanent injury" within the meaning of the statute, in order to be permitted to proceed with a lawsuit. This requirement is set forth in N.J.S.A. 39:6A-8(a). According to the statute, an injury shall be considered "permanent" when the body part or organ, or both, has not healed to function normally and will not heal to function normally even with further medical treatment. This will generally require proof of a permanent injury that is evidenced by an x-ray, MRI, or similar type of testing, and a qualified physician must be able to testify as to the existence of a permanent injury at trial based on these types of tests.
As a practical matter, any significant injury should be able to "vault" the verbal threshold. However, in other cases it may be a closer call as to whether the injury exceeds the verbal threshold, and the lawsuit in such an instance is subject to dismissal by a judge or jury if it is not determined to constitute a "permanent injury" pursuant to the statute.
C. Conclusion
It may be worthwhile to review your current insurance policy so that you are aware of your PIP policy limit. If you choose not to select the maximum PIP coverage, you should also make sure your medical insurance is sufficient to cover your treatment in the event of an accident in which your PIP policy limit is exhausted through medical treatment.
You should also think carefully about whether to select the "limited tort" or "no limited tort" options on your policy. These selections will impact the cost of your policy and will also have major implications in the event you file a lawsuit to recover compensation for personal injuries sustained in a motor vehicle accident.
Matthew Minor, Esq.
Certified Civil Trial Attorney
