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Law Offices of John Morelli
A Personal Injury Firm Serving All Of South Jersey

What is No-Fault in New Jersey

The State of New Jersey adopted the No-Fault Act in 1972. The Act provided that every automobile insurance policy contain a provision to pay for medical expenses regardless of who was at fault in the accident. This is known as Personal Injury Protection (PIP). Initially, medical expenses were unlimited, however in 1998 this amount was reduced to $250,000 for medical expenses, and income continuation benefits of $5200, essential services benefits of $4380, death benefits of $9580 and funeral expenses up to $1000.

"No-Fault" Pitfalls

Currently, New Jersey law allows insurance companies to sell benefits much lower than the $250,000 limit. For example, one very large insurance company promises to save you 15% of your automobile insurance bill in only 15 minutes. The way that this insurance company does this is by drastically reducing the benefits that you are entitled to. An insurance company is now allowed to sell you as little as $10,000 in medical coverage or to have you name your health insurance company as the primary source of medical benefits.

Automobile Insurance Cost Reduction Act (AICRA)

In 1998, the State passed the Automobile Insurance Cost Reduction Act (AICRA). This replaced the old limitation on the right to sue with a new verbal threshold, called the limitation on lawsuit option. The six types of injury that satisfy the new verbal threshold include: 1) death; 2) dismemberment; 3) significant disfigurement or scarring; 4) a displaced fracture; 5) loss of a fetus; 6) a permanent injury. When you purchase automobile insurance policy in the state of New Jersey, you select whether you want the zero threshold option, meaning no limitation on the right to sue, or the verbal threshold meaning a limitation on the right to sue. Your premium will be adjusted based on the option that you select. If you choose the limitation on the right to sue, you must satisfy one of those six types of injuries in order to make a claim when you are injured in an automobile accident. Most claims fall into the last category a permanent injury.

"Permanent" and "Non-Permanent" Injuries

The law defines a permanent injury as a body function organ or system that has not healed to function normally and will not healed to function normally with further treatment. The burden is on an injured person to produce medical evidence from a doctor that you have suffered an injury that is permanent in nature. Insurance companies will frequently hire their own doctors who will testify that the injury is not permanent or if there actually is a permanent injury that it was not caused by this particular accident. A favorite defense of the insurance industry is that any problems that you are experiencing are the result of the degenerative process or natural aging and is not the result of the trauma from a motor vehicle accident.

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