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Also known as "No-Fault" Insurance, PIP pays for a driver's medical, rehabilitative and living expenses after suffering an injury in a car accident in New Jersey. PIP pays out regardless of who was at-fault in the accident. New Jersey has two unique options for how PIP operates in the state: health insurance as the primary medical coverage, and lawsuit restrictions.
Table of Contents
- What is Covered by PIP in New Jersey
- When to File a PIP Claim in New Jersey
- Health Insurance vs. PIP
- Full Tort vs. Limited Tort
- How Much Does PIP Cost in New Jersey?
There are essentially three aspects of a car injury that PIP covers: medical costs, work-loss costs and funeral costs. We go into more detail of each below:
What Medical Costs are Covered?
PIP is widely inclusive in terms of what medical related bills are reimbursed up to your limits until you recover. According to New Jersey law, the following are eligible for a PIP claim:
- Medical Services and Medication
- Surgical Services and Hopsital Expenses
- Rehab Costs
- Diagnostic Services
- Ambulatory Services
- Treatment in accordance with a recognized religion
PIP also Covers Lost Income and Essential Service Benefits
New Jersey PIP car insurance also pays for wages you may lose due to an inability to work as a result of your injury. The default coverage in New Jersey starts at $100 per week for a $15,000 per year policy, and can go up to $5,200 per week. The total limits cannot surpass the normal income of the injured driver. You are also entitled to payment for essential services that you ordinarily would do yourself, but are too injured to carry out. Chores such as doing laundry, shoveling snow, even mowing the lawn and cleaning your house are covered. You are only entitled to $12 per day however for those tasks.
If the injured in a car accidents dies from their injuries, and they were an income producer, their next of kin are entitled to the maximum payout from their lost income and essential services benefits. As well, if the driver dies immediately, the same applies. All that is required is the next of kin provide a proof of death. You do not need to prove how much income is lost. The next of kin are entitled to a maximum of $1,000 for funeral expenses with default New Jersey PIP.
The insured and all in their household receive PIP benefits when they have sustained a bodily injury as a result of occupying, entering, or using a car. They are also eligible if they are injured as a pedestrian as a result of being struck by a car, or being struck by something thrown from a car. There is also an exception for being an injured bus passenger, though not for school buses. If you use your car for a public service, such as for Uber, your PIP will not be eligible (more here). If you were intoxicated, or committed a felony with your vehicle at the time of the accident, you will also not qualify for coverage.
Your insurance company will generally want a written notice as soon as practical after the accident. This can be satisfied when the company receives a medical bill for your injuries. After getting the bill, you'll most likely be required to file a PIP form. The form will go over the basics of your injuries, when the accident occured, and what medical providers you have already seen. If you are getting treatment from somewhere other than a hospital, like your own specialist doctor, the company will need a notice of "commencement of treatment" within 21 days of the first office vist. Not complying with the 21 day grace period will result in a reduced payout. Companies can withold 10% of payment if the notice is not given within 30 days, and even 100% if not within 166 days.
PIP does admittedly overlap with a standard health insurance policy in terms of functions. New Jersey law recognizes this, and allows you to choose your health care provider as your main source of medical coverage, while still being able to use PIP for lost wages and death benefits. The main advantage to this is that it will reduce your yearly PIP premium. We found a 30 year old sample driver saved about $40 per year iwhen opting for health insurance as the primary means of medical care. There are some things you should be aware of first however.
First check if your health insurer will cover you in a car accident; some policies exclude them, or offer lower coverage for a car accident. If your provider is Medicare or Medicaid, you will not be able to pursue this option at all and have to keep your car insurance as primary.Compare also the lifetime benefit limits and deductibles and copays between your healthcare provider and the car insurer to see what you prefer. Some health insurance can pay up to higher lifetime limits for serious medical care, or have special provisions for car accidents. PIP policies are capped at the coverage limit you choose. If the limits are lower than the PIP you want or have, then it may not be worth it. One potential downside is that deductibles are generally higher for health insurance than PIP. As well, to get PIP income loss benefits you would need to pay the PIP deductible. The double deductible means a lot of out of pocket expenses. Take these all into consideration, along with the price, before making your decision.
As a No-Fault state, New Jersey gives drivers the right to choose their freedoms to sue other drivers as part of their policy. If you opt for a "Full Tort" or "Unlimited Right to Sue" option, you are free to sue any driver who causes an accident for medical and pain and suffering damages. If you choose the "Limited Tort", or "Limited Right to Sue" option, you can still sue a driver for medical damages, but you cannot sue them for pain and suffering. The exception to that rule is if you suffer a severe injury such dismemberment, disfiguration, a lost fetus, or permanent injury.
Choosing Full Tort will ultimately give you a pricier premium--significantly pricier. We found Full Tort will cost you about $276 more per year than Limited Tort. Taking people to court also comes with its own associated fees as well. If keeping costs low is more important for you than suing for pain and suffering, we would recommend you just opt for "Limited Tort". With high PIP limits, health insurance, plus the bodily injury liability New Jersey drivers are required to carry, it makes it unlikely insurance won't be able to cover your medical costs. In the worst case scenario that they can't, you are still able to sue the other driver, just not for pain and suffering.
The minimum amount of PIP coverage you need in New Jersey is $15,000. From there you may purchase more coverage up to to $250,000. If you have lower limits, and suffer a severe brain or spinal injury, your limits may automatically jump up to $250,000 until you are stabilized. There is also a deductible in New Jersey. The standard is $750, but that may be reduced or increased to curb your premium. As we mention before, your premium also decreases if you choose your healthcare policy to be your primary medical provider. In the following table we took sample quotes for a 30 year old driver from New Jersey. The policy was a basic policy without comprehensive and collision insurance, with the driver opting for Limited-Tort.
|Health Care Option||Policy Limits||Deductible||PIP Cost/Total Cost|
|Health Provider Not Primary||$15,000 (minimum)||$250||$122/$580|
|Health Provider Primary||$15,000||$250||$89/$548|
Making your health care provider the primary coverage for medical expenses, as well as opting for a higher deductible are the best ways for getting a lot of coverage, at a cheaper price. You can get 5x the PIP coverage at a lesser price when you opt for those options. Finally, in addition to paying a deductible, every time you file a PIP claim , you also need to pay a 20% co-pay of the difference between your deductible and $5,000. So if you got into an accident that caused $10,000 worth of medical damage, and had a $750 deductible. You would pay the $750, plus 20% of ($5,000 - $750), which comes out to $850. In total, you pay $1,600 out of pocket, and the insurance company covers the remaining $8,400.