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No fault insurance and comparative fault in NJ—how do they relate?

In our previous post, we briefly discussed the issue of comparative negligence as it impacts pedestrian accidents. In this and the next post, we want to discuss comparative negligence as it impacts those who are involved in auto accidents in New Jersey.

The first thing to point out in this discussion is that New Jersey is a no-fault state when it comes to auto accidents, meaning that motorists are required to carry personal injury protection. Personal injury protection refers to coverage for medical costs and, if a motorist so chooses, other economic losses one suffers in an auto accident. These expenses are paid by insurance companies regardless of who causes the accident, which is where the term no-fault comes from. 

Two common types of policies seen in New Jersey are a basic policy and a standard policy. A basic policy is cheaper than a standard policy, but has fewer benefits while still meeting state standards for coverage. Because different degrees of coverage are available for purchase, New Jersey motorists have to make decisions about the extent of coverage they desire. This decision impacts the amount of personal injury protection they have for coverage of economic damages, as well as their ability to sue an at-fault party for non-economic damages.

With respect to economic damages, New Jersey motorists are only able to obtain compensation through their insurance company, specifically through personal injury protection coverage. Motorists have the option of purchasing personal injury protection to cover not only medical expenses, but also lost wages and other expenses associated with an accident. Again, the amount of such coverage available varies according to the policy.

With respect to non-economic damages, the only possibility of obtaining them is by suing an at-fault party, which means that the issue of comparative fault only comes up in cases involving non-economic damages. Under a basic policy, motorists have a limited right to sue an at-fault party for non-economic damages, while standard policies allow an unlimited right to sue. In our next post, we’ll pick up on this point and tie in the topic of comparative fault.

Source: New Jersey Department of Banking and Insurance, “Everything you wanted to know about auto insurance but were afraid to ask?,” Governor Chris Christie, Lt. Governor Kim Guadagna, Commissioner Ken Kobylowski, Accessed Jan. 8, 2015. 

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