What No-Fault Insurance Covers in New Jersey

As is the case in most states, drivers in New Jersey are required to carry basic auto insurance. If you operate a motor vehicle in the state of New Jersey, it’s important for you to be aware of what it means for this state to be a no-fault insurance state, as well as what that insurance covers and the minimum amount of insurance that drivers in this state are required to carry.

What Is No-Fault Insurance?

A no-fault system is in place in New Jersey in relation to insurance and auto accidents. What this means is that when a driver is involved in an auto accident in New Jersey, the driver must first rely on his or her own auto insurance policy for the payment of medical bills and any other expenses associated with the accident. Only in limited instances may drivers sue one another in court following an accident.

It should be noted that New Jersey drivers do have the option of being able to choose between traditional auto insurance and no-fault insurance when purchasing their insurance policy. Under traditional coverage, one driver may elect to file a liability claim against another driver for the full amount of damages following an auto accident.

Under no-fault insurance in New Jersey, regardless of who or what is responsible for an accident, the driver’s own insurance company is responsible for covering medical bills and related damages. No-fault insurance, also known as personal injury protection (PIP), is purchased by the driver and covers the driver as well as eligible family members and some passengers traveling with the driver.

Drivers who select no-fault insurance are only able to file a lawsuit in the event that the accident results in significant disfigurement, dismemberment, significant scarring, loss of a fetus, displaced fractures, or permanent injury.

Minimum Insurance Requirements in New Jersey

The Automobile Insurance Cost Reduction Act establishes auto insurance requirements in New Jersey. Under this law, drivers are required to carry a minimum amount of coverage. This coverage is known as a basic plan and includes:

  • $5,000 per accident involving property damage. This amount of insurance coverage does not include any costs associated with repairing or replacing the driver’s vehicle.
  • $15,000 per person per accident for personal injury protection.
  • $250,000 per person per accident in personal injury protection benefits for specific injuries, such as spinal cord injuries or brain injuries.

Drivers may also select optional coverage for such items as collision coverage, bodily injury, uninsured/underinsured motorist coverage, and comprehensive coverage. The state of New Jersey does not require drivers to carry these coverages, but some drivers do elect to purchase these policies to provide additional protection to cover medical expenses if they are involved in an accident with someone who has insufficient insurance or no insurance or to pay for damage to their own vehicle.

Call for an appointment to learn more about your personal injury rights regarding no-fault insurance in New Jersey.