New Jersey PIP explained

Personal injury protection, usually called PIP, is the part of a New Jersey auto policy that pays your medical bills after a crash. It pays “without regard to negligence, liability or fault of any kind,” so you do not have to prove the other driver caused the accident to use it.¹

PIP is often the first insurance an injured person deals with, and the rules are technical. This guide explains what PIP pays, how the choices on your policy change your coverage, and how disputes get resolved.

What PIP pays on a standard policy

A New Jersey standard auto policy must include PIP.¹ The statute sets out these benefits.

If an income producer dies from accident injuries, the remaining income benefits are paid to the surviving spouse, or if there is none, to the surviving children, or if there are none, to the estate.¹ Death benefits for essential services go to the person who pays for those services.¹

The medical benefit is the one most people use. Treatment, tests and services must follow “commonly accepted protocols and professional standards.”¹

Who PIP covers

A standard policy’s PIP covers the named insured and family members living in the household. That includes injuries while occupying, entering, leaving or using a car, and injuries as a pedestrian caused by a car or by an object thrown from one.¹ It also covers other people hurt while in or using the named insured’s car with permission.¹

Which policy pays first

When more than one policy might apply, your own household policy usually comes first. The named insured’s PIP is primary for the named insured and for any resident relative who does not have a policy of their own.⁷ No one can collect PIP from more than one auto policy for the same accident.⁷

Pedestrians

If you are hit while walking, your PIP generally comes from your own auto policy or from a policy owned by a family member in your household.¹ If no one in your household has auto insurance, the New Jersey Unsatisfied Claim and Judgment Fund may provide PIP-type benefits to a qualified pedestrian injured by a motor vehicle, subject to its eligibility rules.¹² Our pedestrian accident page covers the rest of a pedestrian’s claim.

The choices on your policy

Your coverage selection form lets you trade coverage for a lower premium. These choices matter a great deal after a serious crash.

Medical expense limit

Insurers must offer medical limits of $150,000, $75,000, $50,000 or $15,000 per person per accident. If you never chose one in writing, your policy provides $250,000.² Some insurers offer more.⁴

Even with a lower limit, PIP still pays up to $250,000 for medically necessary treatment of permanent or significant brain injury, spinal cord injury or disfigurement.² The same applies to medically necessary treatment of other permanent or significant injuries at a trauma center or acute care hospital immediately after the accident.²

Deductible and copayment

Every insurer must offer a standard $250 deductible and a 20 percent copayment on medical expenses between $250 and $5,000.³ You may instead choose a deductible of $500, $1,000, $2,000 or $2,500 for a lower premium.² Deductibles and copayments apply per accident.³

Health insurance as primary

You can elect to make your health insurance the primary payer for accident injuries.² Your health plan then pays first and PIP covers what remains, up to your PIP limit. Medicare and Medicaid cannot be used for this option.⁴ Check that your health plan actually covers auto accident injuries before choosing it.

Excluding the other benefits

The law lets a policyholder exclude income continuation, essential services, death and funeral benefits.² If your policy excludes them, PIP will not replace your lost wages.

Basic and special policies

The basic policy is a low-cost option. Its PIP is limited to medical expense benefits of up to $15,000 per person per accident, with up to $250,000 for medically necessary treatment of permanent or significant brain injury, spinal cord injury or disfigurement.⁵ It does not include income continuation, essential services, death or funeral benefits, and everyone it covers is subject to the limitation on lawsuit option.⁵ See our verbal threshold guide for what that means.

The Special Automobile Insurance Policy is for people enrolled in federal Medicaid. It pays for emergency care up to $250,000 per person per accident and for treatment of permanent or significant brain injury, spinal cord injury or disfigurement.⁶ It also includes a $10,000 death benefit and carries the limitation on lawsuit option.⁶

Fee schedules, decision points and precertification

Medical fee schedules

New Jersey sets maximum fees PIP insurers pay for medical services. A provider may not demand payment above the fee schedule from any person, and you are not liable for charges that exceed it.⁸

Decision point review and precertification

Each insurer has an approved decision point review plan. At certain points in treatment, and before certain listed tests, procedures and equipment, your provider must notify the insurer and ask for review. These are called decision point review and precertification.³ The insurer must respond within three business days.³ These requirements do not apply within 10 days of the accident or to emergency care.³

The penalty for skipping this step falls on the patient’s coverage. If a required request is not made, or is not supported by clinical findings, you can face an additional copayment of up to 50 percent of the eligible charge for treatment given before proper notice.³

Providers submit these requests on a uniform treatment plan form.¹⁰ It is worth asking each provider whether your treatment plan has gone to your PIP carrier.

Denials and PIP arbitration

If the insurer denies or cuts off treatment, the first step is usually an internal appeal. Insurers may require only one level of internal appeal for each issue before a party asks for dispute resolution.³

After that, any party may submit a PIP dispute to dispute resolution.⁹ The Department of Banking and Insurance designates the organization that runs these proceedings, and the current administrator is Forthright.¹⁰ Disputes can cover medical necessity, the fee schedule and other PIP issues, and the dispute resolution professional’s decision is binding.⁹ Providers who take an assignment of benefits often pursue these cases themselves.

The deadline to sue for PIP benefits

N.J.S.A. 39:6A-13.1 sets the time limit for an action to recover PIP benefits. You must file within two years after you suffer a loss or incur an expense and know, or reasonably should know, it was caused by the accident, or within four years after the accident, whichever is earlier.¹¹ If PIP has already paid benefits, an action for further benefits may be filed within two years after the last payment.¹¹

PIP is not your injury claim

PIP is a claim against your own coverage, not a lawsuit against the driver who hit you. Your claim against the at-fault driver for pain and suffering and other losses is separate.

The two systems fit together in specific ways. Amounts paid or collectible under PIP, including deductibles and copayments, are inadmissible in your lawsuit against the other driver.¹³ But medical bills above your PIP limit are different. Even if you elected a medical limit below $250,000, the law now lets you claim from the at-fault driver the unreimbursed medical expenses your PIP limit does not cover, figured under the auto medical fee schedules.¹⁴

PIP rules depend on the policy in your household and the choices on it. If bills are piling up or treatment has been denied, a lawyer can review your coverage with you.