April 2018 - Understanding PIP (a.k.a. ‘No-Fault’) Insurance

Because many people have questions about Personal Injury Protection (PIP) Insurance, a.k.a. “no-fault” insurance, we thought we’d address some of them here.

What is PIP insurance? PIP covers medical and related expenses incurred from injuries sustained in a motor vehicle accident regardless of who was responsible for the accident. Eligible claims include medical and rehabilitative treatments, lost wages, essential services you can no longer perform due to injury, funeral expenses, and death benefits.

Am I required to carry PIP insurance? New Jersey, as a no-fault state, requires all drivers to carry PIP coverage as part of their automobile insurance.

How much coverage do I need? In New Jersey you need a minimum of $15,000 in PIP coverage; options allow for additional coverage up to $250,000.

Can I use my healthcare insurance instead? Some healthcare policies exclude accident-related injuries or provide lower payouts for these claims. If your policy allows, you may claim medical expenses against your healthcare insurance and other related expenses (i.e., lost wages, essential services reimbursements) against your PIP insurance. Compare the lifetime benefit limits, deductibles and co-pays of each policy when deciding. Health care deductibles can be higher, but PIP coverage is capped at the level you chose at the time of purchase.

• For treatments outside of a hospital, a Commencement of Treatment notice must be filed within 21 days of your initial visit or you risk receiving lower payouts.
• PIP doesn’t preclude your right to sue. Select Full Tort (Unlimited Right to Sue), which allows you to sue for medical expenses and pain and suffering, or Limited Tort (Limited Right to Sue), which allows you to sue for medical expenses only. Full Tort rights carry significantly higher premiums.
• Your PIP deductible is a per-incident, out-of-pocket amount specified in your policy.
• Your PIP co-pay is equal to 20% of covered medical expenses up to the first $5,000; expenses exceeding this threshold up to your policy limit are covered by insurance.

When selecting your PIP coverage, review the terms of all your policies to make the best choice for your specific situation.