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Benefits of the Bargain?

Apr 13, 2019 | Individual Clients, Personal Injury

The New Jersey Supreme Court decision in Haines v. Taft (A-13/14-17) (079600) has now completely limited New Jersey residents’ ability to recover medical expenses that exceed what is indicated in their available Personal Injury Protection (PIP) coverage.  In New Jersey, PIP covers your medical bills if you are injured in an accident. It is important to know that PIP pays your own medical expenses no matter who is at fault for the accident.  That is why it is sometimes called ‘no-fault’ coverage.

PIP provides the following: 1) coverage for medical treatment received from doctors, hospitals and other healthcare providers and medical equipment, and 2) reimbursement for lost wages or money spent on paying someone to care for your home or family while you were incapacitated.  

Essentially, as we have written before, insurance consumers in New Jersey must be extremely careful with regard to falling for the advertisements of insurance companies with regard to cheaper premiums. Yes, the insurance commercials are funny; however, the consequences of falling for these advertisements in place of understanding the full ramifications of certain policy and coverage provisions, is simply no laughing matter.

New Jersey’ no-fault law, formally known as “Automobile Insurance Cost Reduction Act” or “AICRA” N.J.S.A. 39:6A-1, et. seq., allows for New Jersey residents to choose such no fault/PIP coverage. However, the standard selection of $250,000 per accident may be lowered so that the insured customer realizes the benefit in a cheaper premium.

This brings us to the recent New Jersey Supreme Court decision which has found that if you make such a selection you do so at your own peril because you are now going to be limited by the benefit of your bargain. Essentially, what that means is that if you realize the benefit of the cheaper premium and select minimal PIP coverage such as $15,000, you will never be able to recover from the at-fault party any amounts over that amount if you are involved in accident and require significant treatment.  In other words, if you are unfortunate enough to get into a horrific accident – that is not your fault – and you choose a minimal PIP policy, you will no longer have any recourse to attempt to recover those excess medical bills against the person at fault for the accident. For example, if you choose minimal $15,000 PIP coverage and you receive treatment, such as surgery that costs $40,000, you will no longer be able to sue the other party for that amount and it will be your responsibility. Ultimately, the New Jersey Supreme Court has indicated that allowing people to sue for any amounts over their selected PIP coverage eliminates the purpose of the law in the first place, which is to keep people from suing for medical bills. 

Therefore, it is important to know what you are buying.

[*All materials have been prepared for general information purposes only to permit you to learn more about our firm, our services and the experience of our attorneys. The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.]

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