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Clearing Up the Automobile Insurance

US 1
June 2003

As the issues concerning automobile insurance and mandatory insurance coverages continue to heat up in our legislature and court systems, the average New Jersey resident remains in the dark about the various coverage options that are available and how the failure to understand the terms and provisions of their automobile insurance policy can have lasting effects on their personal, as well as their family’s, well being.

Although a New Jersey Automobile Insurance Buyers Guide is provided to consumers by insurance companies, the provisions are often hard to understand and are unclear as to the ramifications of making certain coverage selections. Moreover, since the Buyer’s Guide is only provided to those who own automobiles and seek insurance coverage, the information concerning coverages, options and limitations remain a mystery to those who do not own automobiles and are not covered under a policy of insurance. The unfortunate result is that many New Jersey residents who are involved in automobile accidents, operate in a web of misconception which, often times, leads to endless frustration and fosters unrealistic expectations. Below are two of the biggest misconceptions regarding automobile insurance and their relationship to automobile accidents in New Jersey.

One of the most common misconceptions concerning automobiles accidents is that the party who is at fault for the accident must pay for the injured party’s medical bills. For the most part, this completely untrue. When a party is involved in an automobile accident in New Jersey, medical bills are paid for by their own automobile insurance company, not the insurance company of the other vehicle involved in the accident. N.J.S.A. 39:6A-4 makes clear that the named insured and their resident relatives are afforded Personal Injury Protection benefits, or “PIP” benefits as they are more commonly called, regardless of who is at fault for the accident. More importantly, the medical benefits offered under your automobile insurance policy are primary, which means that the provisions as outlined under your auto policy take precedence over any private health insurance coverage you may have. Of note, insurers do provide the option of having your private health insurance named the primary if you are injured in an accident.

If you own an automobile and are covered under a policy of insurance, you are bound by the coverages selected under that policy. Relatives of the named insured who reside in the same household or residence are also bound by the named insured’s selections on his automobile insurance policy. This is true, regardless of whether you were traveling in a family vehicle, a neighbors vehicle or even passengers on a New Jersey Transit bus when the accident occurred. Coverages for medical bills, depending on the insured’s selection, can range between $15,000 (“Basic Policy”) and $250,000 (“Standard Policy”).

If you do not have your own policy of insurance and are not covered under a resident relative’s policy, you can still be afforded medical coverage from the vehicle that you were operating or in which you were a passenger, more commonly called the “host” vehicle. Coverage from the host vehicle is only available when coverage is unavailable from an injured party’s own policy or a resident relative’s policy. An associated danger in relying on coverage from the host vehicle is that if the host vehicle turns out to be uninsured, an injured party can find themselves without any coverage for their medical bills.

Another common misconception about automobile accidents is that an injured party can recover pain and suffering regardless of the seriousness of the injuries. Unfortunately, for many people injured in automobile accidents, their injuries will not be “deemed” serious enough to warrant recovery or payment from the offending driver’s insurance company. The ability to recover for injuries in automobile accidents is often times contingent on whether you selected the “limitation on lawsuit” option or “no limitation on lawsuit” option on your insurance policy.

Pursuant to N.J.S.A. 39:6A-8, if the “limitation on lawsuit”option is selected, your injuries caused by the accident must fall in one of six categories: death, dismemberment, significant disfigurement or significant scarring, displaced fracture, loss of fetus, or a permanent injury, as certified by a treating physician. If you selected the “no limitation on lawsuit” option, you can recover for any injuries you sustain in an accident, regardless of their severity. More importantly, if you fail to select either option on your policy, you are automatically deemed to have selected the “limitation” option. For those who are not covered under any policy of insurance, i.e., they do not own their own policy or are not covered by a resident relative’s policy, they enjoy the benefits of the “no limitation” and can recover regardless of the injuries they sustain.

A majority of injuries sustained in automobile accidents involve injuries to the neck and back, which include injuries to disc, muscles and tendons. For these types of injuries, a treating physician must not only certify that the injuries are permanent, but also that his findings were based on objective testing which may include X-rays, MRI’s, and EMG’s. If these tests are not performed or not positive for injury, than the Court will more than likely dismiss the claim. Moreover, if the injuries do not have a serious impact on the injured party’s life, the Court may also dismiss the claim.

As auto insurance law continues to evolve, policyholders and individuals not covered by automobile insurance stand a strong chance of being left behind in the race to demystify the complexity of New Jersey auto insurance law and its effects on injured parties. The most effective way to overcome the misconceptions and frustrations of the automobile insurance industry is to become knowledgeable about the provisions and options available under automobile insurance policies and the rights that you have under the law. With this knowledge comes understanding, less frustration and a more confident approach to getting a just result.

Reprinted by permission of US 1, June 2003

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