How Does Personal Injury Protection (PIP) Work in New Jersey?
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Also known as "no-fault" insurance, personal injury protection (PIP) pays for a driver's medical, rehabilitative and living expenses following a car accident — regardless of who was at fault. New Jersey's PIP insurance is unique in two ways: You may use health insurance as your primary medical coverage, and you may be able to sue another driver.
What is covered by PIP in New Jersey?
PIP covers three things after a car accident injury: medical costs, work-loss costs and funeral costs.
Which medical costs are covered?
According to New Jersey law, the following are eligible for a PIP claim:
- Medical services and medication
- Surgical services and hospital expenses
- Rehabilitative 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 pays for wages you may lose if your injury prevents you from working.
The default coverage in New Jersey starts at $100 per week for a $15,000-per-year policy, and it can go up to $5,200 per week. The total annual payout can't surpass the injured driver's normal income. Policyholders are also entitled to a $12 daily payout for essential services they can't do because of an injury. These may include chores such as laundry, snow removal and house cleaning.
Death benefits
If a policyholder dies in a car accident, their next of kin may be entitled to the maximum payout for lost income and essential services. The relative will need to provide proof of death — though not proof of income — and is entitled to a maximum of $1,000 for funeral expenses.
How much does PIP cost in New Jersey?
Every auto insurance company in New Jersey offers PIP insurance, and we recommend comparing quotes from multiple insurers to find the best rates.
There's also a standard deductible of $750 for PIP in New Jersey, but you may increase or decrease it to curb your premium. If you list your health care policy as your primary medical provider, then your premium will decrease.
We checked sample quotes for a 30-year-old driver from New Jersey who chose a basic policy without comprehensive and collision insurance and with a limited tort.
Health care option | Policy limits | Deductible | PIP cost/Total cost |
|---|---|---|---|
|
Health provider not primary | $15,000 | $250 | $122/$580 |
| $75,000 | $250 | $167/$623 | |
| $15,000 | $1,000 | $113/$571 | |
| $75,000 | $1,000 | $149/$607 | |
|
Health provider primary | $15,000 | $250 | $89/$548 |
| $75,000 | $250 | $113/$571 | |
| $15,000 | $1,000 | $84/$542 | |
| $75,000 | $1,000 | $104/$562 |
You can get a cheaper premium if you list your health care provider as your primary coverage for medical expenses and choose a higher deductible. But keep in mind that every time you file a PIP claim, you're also on the hook for a copay. It will equal 20% of the difference between your deductible and $5,000.
($5,000 - $750) x 0.20 = $850
You would pay the $750 deductible plus the $850 copay, totaling $1,600 out of pocket. The insurance company covers the remaining $8,400.
When to file a PIP claim in New Jersey
PIP will cover your expenses if you or your family members are hurt in a car or school bus accident or as a pedestrian. But you're not covered with PIP if you were:
- Using your car for a ride-sharing service, such as Uber.
- Intoxicated or committed a felony with your vehicle at the time of the accident.
Notify your insurance company as soon as possible after the accident. You'll also need to file a PIP form that includes the basics of your injuries, the date and time of the accident, and which medical providers you've already seen.
If you're getting treatment from somewhere other than a hospital, such as a specialist, send a notice of "commencement of treatment" to your insurer within 21 days of the first office visit. The insurer may reduce your payout by 10% if you don't send the notice within 30 days or up to 100% if not received within 166 days.
Health insurance vs. PIP
New Jersey law recognizes that PIP coverage may overlap with a standard health insurance policy. That's why you may list your health care provider as your main source of medical coverage and use PIP for lost wages and death benefits. The main advantage is that it will reduce your yearly PIP premium.
In our research, a 30-year-old sample driver saved about $40 per year when opting for health insurance as the primary means of medical care.
However, make sure to consider:
- Health insurance limits: Some health insurance policies exclude coverage for car accidents, so check your policy for its limits.
- Type of health insurance: You can't list Medicare or Medicaid as your main source of medical coverage on your car insurance policy. So if you use one of these insurance providers, you'll need to get separate PIP coverage.
- Costs of both types of policies: Calculate the cost of your health insurance deductibles and copays and find your coverage limits. Compare those figures with the cost of PIP and the coverage it offers. Your health insurance policy may offer higher coverage limits for serious medical care or have special provisions for car accidents.
- Layering coverage: Deductibles are generally higher for health insurance than for PIP. And if you use both policies, you'll need to pay for both deductibles — potentially increasing your out-of-pocket expenses.
Full tort vs. limited tort
As a no-fault state, New Jersey gives drivers the right to sue other people. If you choose the "full tort" or "unlimited right to sue" option with PIP insurance, you may sue for medical costs 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 costs but not for pain and suffering. However, there are exceptions if you suffer a severe or permanent injury.
Choosing full tort will increase your premiums by about $276 per year compared to limited tort. Taking people to court also comes with its own associated fees as well. If keeping costs low is more important to you than suing for pain and suffering, we recommend you choose the limited tort option. With high PIP limits, a health insurance plan and your required bodily injury liability coverage, your medical costs will likely be covered. In the worst-case scenario, you may be able to sue the other driver.