Photo of Bryan R. Gavin and Salvatore Imbornone Jr.

New Jersey

Personal Injury Attorneys

What is no-fault auto insurance?

On Behalf of | Sep 23, 2022 | Motor Vehicle Accidents |

The “work-from-home” revolution may have reduced the total number of vehicles on public roads, but the costs of accidents for drivers remains hard to calculate. Each state has enacted and updates laws concerning automotive insurance: minimum coverage requirements, liability and methods to recoup costs associated with an accident. Twelve states employ either a pure no-fault insurance system or a choice no-fault system.

How do you calculate compensation?

Drivers must purchase personal injury protection (PIP) on policies in an amount no less than $15,000. This stems from the premise that each driver’s insurance company compensates the insured for crash-related injuries, regardless of fault. The other driver’s car insurance contributes no money on injury claims. At-fault drivers remain financially liable for property-related damages. No-fault and at-fault states do require minimum property damage liability coverage. New Jersey sets its property damage minimum at $5,000.

 Who assumes liability in an accident?

At-fault states utilize a tort liability insurance system, in which the driver at fault compensates the other for both the injuries and property damage. The other driver submits claims for compensation to the at-fault driver’s insurance company for medical bills and injuries. Minimum coverage requirements apply in many no-fault states to uninsured motorist protection and third-party liability coverage. Additionally, PIP does not cover car damage to an at-fault driver.

What differs about New Jersey’s no-fault system?

New Jersey’s variation on no-fault, called choice no-fault, permits drivers to choose between the no-fault system and the full tort liability system. The latter option eliminates the restrictions on the right to sue the at-fault driver at the expense of increased premiums. No minimum threshold for injuries or medical costs exists in order to sue the other driver.

The changing seasons raise awareness of safety in motor vehicle operation. In addition to the emotional trauma of an accident, motor vehicle insurance coverage impacts your physical health directly. Attorneys who understand the relationship between auto insurance coverage and compensation for injuries can help.