Personal Injury Protection (Pip) in New Jersey: How Does It Work?

Personal Injury Protection (PIP), also known as no-fault insurance, covers medical expenses and lost wages if you’re injured in a car accident. PIP is either part of your auto insurance or your healthcare coverage in New Jersey.

You will learn all about New Jersey PIP in this article, which answers important questions like:

• What does PIP cover in NJ?
• Is PIP mandatory in NJ?
• Should I choose PIP or health insurance?

What does PIP cover in New Jersey?

PIP covers various expenses if you’re injured in a car accident. Specifically, PIP covers medical bills, lost wages, child care expenses and funeral costs.

Also, because New Jersey has a no-fault law, PIP pays out no matter who caused the crash — even if it was your fault.

Medical costs covered by PIP

New Jersey PIP covers medical bills up to your policy’s limits that are tied to injuries that the driver or passengers sustain in a crash. These medical expenses are eligible for a PIP claim:

• Medications and prescriptions
• Rehabilitative and diagnostic services
• Hospital and ambulance expenses
• Surgical services
• Treatment in accordance with religious methods of healing

Lost wages and essential services

Your New Jersey auto insurance pays for some lost wages due to injury or disability caused by a car accident. PIP only offers limited reimbursement for that lost income, though. A basic policy provides $100 per week for a maximum of $5,200, or 52 weeks.

PIP reimburses costs for necessary services that you could normally do yourself, too. This includes mowing the lawn, doing laundry or shoveling snow. If your injuries prevent you from doing tasks like these, PIP will pay for those necessary services up to $12 per day, with a limit of $4,380.

Death and funeral benefits

Also included in New Jersey PIP are death and funeral expense benefits. If the eligible person dies in the accident, the next of kin are entitled to the person’s maximum lost income benefits and essential service benefits. The next of kin are also entitled to funeral expenses, up to $1,000.

Is PIP mandatory in New Jersey?

New Jersey law requires that your car insurance includes Personal Injury Protection.

Required PIP minimum and standard coverage amounts in NJ

The current legal minimum for PIP coverage in New Jersey is $15,000.

There are two common types of car insurance policies you can buy in New Jersey: a basic policy and a standard policy. Both provide at least state minimum PIP coverage, though you can increase that amount if you get a standard policy.

A standard policy provides several coverage options and the opportunity to buy more PIP protection. It is the most common policy choice for New Jersey drivers. A basic policy is a lot cheaper than a standard policy but offers coverage with strict limits. It provides the minimum legal PIP insurance requirements in New Jersey.

Although $250,000 in medical expense benefits is the standard coverage for NJ drivers, you can opt for lower coverage limits of $15,000, $50,000, $75,000 and $150,000 as well. Choosing lower coverage limits may reduce your car insurance premium, but if you’re in a serious accident your medical expenses could exceed those lower limits. If a driver chooses basic PIP coverage, the medical expense benefit is $15,000 per person per accident.

You can also get cheaper PIP rates by choosing a higher car insurance deductible. This reduces your monthly premium, but you’ll have to pay more out of pocket if you are injured in a car crash.

No matter what deductible you choose, you’ll have to pay a 20% co-payment for medical expenses between your deductible and $5,000. You pay 20% and your insurer pays 80%. Here’s an example:

Josh has an accident that results in $10,000 in medical expenses. He has the state’s minimum $250 deductible. Josh pays the $250 deductible plus $950 (20% of the $4,750 from the first $5,000). So, his total out-of-pocket payment is $1,200. The insurer pays the remaining $8,800.

Cheap PIP auto insurance carriers

Because Personal Injury Protection is required by law in New Jersey, major auto insurance carriers like GEICO, Progressive and State Farm offer several PIP coverage options. To get the cheapest PIP rates, compare quotes from several insurance carriers.

How to file a PIP claim in New Jersey

If you’re in an auto accident that injures you or your family, you can receive PIP benefits. This is also the case if you’re hit by a car. If this happens, you need to immediately file a claim with your insurance carrier. This can be filed with either your auto or health insurance carrier, depending which one provides your PIP coverage.

When you’re able to do so, submit the medical bills for you and anyone else injured in the crash who are covered by your PIP. You then file a Personal Injury Protection form. This form requires you to detail:

• When the accident occurred.
• What injuries were sustained.
• The details of any medical procedures you’ve already undergone.

Remember, your PIP covers an array of medical treatments. If you’re not getting treatment solely at a hospital, you have 21 days to file a claim from the first specialist visit. Your payment will be reduced if you don’t adhere to your insurer’s timeline.

Personal Injury Protection vs. health insurance in New Jersey

You have the option to make your New Jersey health insurer your primary coverage source for PIP. In this situation, your health insurance company pays first if you’re injured in an accident, and your auto insurer provides secondary coverage. This could save you money because your auto insurance company will lower your rates if you designate your health insurer as the primary source for this kind of coverage.

If you’re thinking of using your health insurance provider as your primary PIP care path, the first step is to make sure your insurer covers injuries from car accidents. If it does, your deductibles, co-payments and coverage limits would apply to medical expenses from an auto accident.

Medicare and Medicaid can’t be used for the Health Care Primary Option, but could be used in situations like when medical expenses exceed your auto policy’s PIP limits. If you lose your health coverage and you’re in an accident, your auto insurer will offer PIP coverage, but there is an additional $750 deductible.

Full tort and limited tort options in NJ

In NJ, drivers can sue another party in the case of an auto accident. When you choose your PIP policy standards, you also choose full tort or limited tort.

The choice you make here affects your right to sue, how much your insurance will cost and what claims will be paid out after an accident. Your right to sue applies to you, your spouse and any children and relatives living with you who aren’t covered under another auto insurance policy.

• Full tort: you can sue any driver who causes an accident for pain and suffering as well as medical expenses caused by the crash.
• Limited tort: you have a limited right to sue, so you can sue the other driver for medical damages, but not for pain and suffering. There are some exceptions for this, including loss of a body part, loss of a fetus and a permanent injury. Choosing limited tort is a significantly less expensive option, but it limits your ability to sue for pain and suffering.

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