Court Rules That Personal Injury Protection Is Only Recourse for Claims under $250,000
In March, 2019, the New Jersey Supreme Court handed down its decision in two consolidated cases (Haines and Little), overturning a lower court ruling addressing the rights of injured parties to seek compensation from at-fault parties after a motor vehicle accident. Here’s an overview of the court’s ruling and how it affects drivers in New Jersey.
Under New Jersey’s personal injury protection (PIP) laws, which have a default amount of $250,000 (among the highest in the nation), any expenses resulting from a motor vehicle accident that are “medically necessary” and proven to be caused by an accident are paid, regardless of fault. In exchange, any such expenses paid are not admissible and cannot be recovered in a personal injury lawsuit.
However, the state of New Jersey modified the law to allow residents to choose lower PIP coverage and thereby pay smaller premiums. A person may choose PIP coverage as low as $15,000. After the changes in the law, individuals who obtained the $15,000 coverage, but suffered damages in excess of that amount, would seek to introduce evidence of those losses at a personal injury trial.
In one of the first rulings, a Bergen County court held that evidence of medical expenses in a motor vehicle accident lawsuit are admissible only to the extent they exceed the $250,000 ceiling set forth in the law. In other words, by opting for lower PIP coverage, policyholders have waived the right to recover any damages between the policy amount and the statutory PIP amount of $250,000. Another court, in Union County, came to the opposite conclusion.
In 2017, a New Jersey appellate court cleared up the differing opinions, agreeing that injured parties could directly sue an at-fault party for damages between the amount of their PIP coverage and the statutory amount. The March decision by the New Jersey Supreme Court overturns that decision. The court reasoned that the legislative intent was to contain costs, and concluded that allowing parties to seek recovery of damages above their PIP coverage, but below statutory amounts, would contradict that intent.
For now, then, there’s a bit of a risk in choosing a lower PIP amount. You’ll be able to save some dollars on your premium, but you could have tens or hundreds of thousands of dollars of unrecoverable losses if you are in an accident.
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