Is NJ a No-Fault State for Car Accidents?

by | Apr 7, 2022

Yes, NJ is a no-fault state for car accidents. New Jersey laws technically follow a no-fault insurance system.

Under a no-fault system, you file an accident claim against your own personal injury protection (PIP) policy for reimbursement, regardless of who’s at fault. However, you could seek additional compensation through health insurance, federal disability, or a civil suit against the at-fault party if your claim exceeds the serious injury threshold.

In This Article

A South Jersey car accident lawyer discusses the state’s no-fault rules, damages liability, filing a claim, and when to seek legal advice. We wrote this post to help injury victims or surviving family members get more legal information about their situation.

What Is the New Jersey No-Fault Law?

NJ enacted a no-fault insurance system to keep minor car accident claims out of the courts and expedite reimbursement for medical expenses and lost wages. Under this rule, your primary source of compensation after an accident is through your PIP benefits. It does not matter who is at fault to receive an insurance settlement.

NJ coverage requirements start at the following statutory minimums:

  • $5,000 for property damage, per accident
  • $15,000 liability per person, per accident
  • $30,000 liability total, per accident
  • $15,000 to $250,000 for PIP

PIP policy benefits will pay for damages or financial losses related to:

  • Ambulatory services
  • Diagnostic services
  • Hospital expenses
  • Medical services
  • Prescription drug costs
  • Rehabilitative costs
  • Surgical services
  • Death benefits
  • Funeral expenses

You likely noticed that your own insurance’s PIP benefits do not pay for pain and suffering damages, but they just pay for reasonable and necessary medical care for your injuries. If you seek pain and suffering damages, you must go after the person who is at fault for the accident, and either have no lawsuit limitation on your policy or suffer serious bodily injuries.

The lawsuit limitation on a NJ auto policy is also sometimes called “verbal threshold.” If you have a lawsuit limitation on your policy, then you must have suffered serious bodily injuries in the accident.

If you suffered serious bodily injuries, then you meet the threshold. If you meet the threshold, then you can file a lawsuit against the negligent party to obtain additional compensation that a no-fault claim against your insurer does not cover.

What Is the Purpose of No-Fault Laws?

No-fault reduces the cost of auto insurance by removing minor claims from the civil court system. Policyholders benefit from a speedy resolution of their claim, promptness, and less strain on the court system.

On the downside, no-fault laws impose restrictions on the legal rights of drivers and passengers injured in automobile accidents. PIP insurance only covers a portion of the damages you may sustain, regardless of who’s at fault.

Fortunately, the New Jersey no-fault law contains certain exceptions that allow for third-party claims for pain an suffering.

What Is the Serious Injury Threshold in New Jersey?

The ability to file a claim is contingent upon your insurance being classified as “Limitation on Lawsuit” or “No Limitation on Lawsuit.” If you have comprehensive insurance, you can file a claim for any injuries in a car accident, regardless of their severity.

When the limitation option is enabled, one of the following six injuries must be established before any claim will be accepted per NJSA § 39:6A-8:

  • Death
  • Dismemberment
  • Significant disfigurement
  • Significant scarring
  • Bone fractures
  • Pregnancy loss
  • Loss of use of an organ, member, or system
  • Serious limitation of organ, member, or system

If your injuries fall under this definition, the law does not limit you to just filing a no-fault claim against your PIP policy or seeking economic damages against the at-fault party. Instead, you can pursue compensation for all categories of losses, including pain and suffering and other non-economic damages that are traditionally unavailable in a no-fault claim.

Can I Retain the Right to Sue for Pain and Suffering?

If a policy has a limited right to sue, drivers and household members covered by the policy may sue only if they sustain one of the statutorily recognized serious injuries (see above). If an injured person has met the serious injury threshold, they then have an unlimited right to sue for non-economic damages regardless of whether their injuries qualify as serious or permanent.

Retaining your right to sue following a car accident entitles you to seek compensation for pain and suffering from the at-fault driver.

Additionally, the basic policy includes an option to purchase uninsured/underinsured motorist (UI/UM) coverage. If you or a family member is injured in an accident caused by a UI/UM driver, your insurer will cover any losses not covered by the at-fault driver’s non-existent or inadequate insurance policy. To receive UI/UM insurance benefits, you must demonstrate that the other driver was at fault for the accident.

What Insurance Should I Get in NJ?

Whenever you purchase automobile insurance in NJ, make sure that you do two things.

First, make sure you purchase a policy that has no lawsuit limitation (no verbal threshold). This way, you don’t have to prove that you suffered serious bodily injury just to get the compensation you deserve from a driver that caused the accident.

Second, always purchase uninsured/underinsured motorist (UI/UM) coverage. All too often, someone who doesn’t have insurance or who has insufficient coverage causes an accident. What that happens, you will likely never be properly compensated unless you have UI/UM insurance coverage.

When Should You Contact a Car Accident Lawyer in New Jersey?

You should contact a car accident injury lawyer in New Jersey when you want legal advice. It is generally a good idea to reach out when you have suffered from severe injuries, lost the life of a family member, or generally feel unsure about your situation but before filing your claim. Reaching out to an attorney could at least offer reassurance that you are doing everything possible, even if you do not end up needing legal representation.

Related Article: Is There a Time Limit on Personal Injury Claims in Pennsylvania?

Hire a South Jersey Car Accident Lawyer

Determining whether an injury meets the serious injury threshold can be challenging. If the accident occurs in another state, the variables for meeting the injury threshold, as well as the amount of damages that can be recovered, can vary significantly.

This is where the services of a qualified and experienced car accident attorney can help.

We can assist you in determining whether the damages received meet the requirements for the threshold and in determining the best course of action for legal representation.

Call For a Free Case Evaluation Now

Shuttleworth Law PC has been representing auto accident injury victims throughout South Jersey and Pennsylvania to recover the compensation they deserve. Get a Free Case Evaluation at (215) 774-1371 or message us here. There are no attorneys’ fees until we win your injury claim.

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