New Jersey Offers Choice No-Fault Insurance

Risk Management and Insurance -- New Jersey's Choice No-Fault Insurance

What is no-fault insurance and what states have no-fault insurance?

No-fault insurance is very much what it sounds like it is: when a driver is insured with No-Fault insurance and has an accident, the insurance company pays for the damages no matter who is at fault. This eliminates the need for a driver whose car has been damaged by another driver to fight with the other driver's insurance company. There are twelve states that offer No-Fault insurance (including New Jersey). Choice No-Fault is very different.

Choice No-Fault insurance is offered in New Jersey, Kentucky and Pennsylvania; "Choice No-Fault" means that the automobile owner has a choice; he or she can go with the state's No-Fault policy, or go with traditional insurance. If the driver does go for traditional car insurance that means he or she can file a liability claim or sue another driver.

In New Jersey (not in Kentucky or Pennsylvania) when a driver takes the "No-Fault" route, he or she can go to court and sue only in certain situations: a) when the accident results in "dismemberment, significant disfigurement or significant scarring"; b) when there are "displaced fractures"; c) when there is the "loss of a fetus"; and d) when there is "permanent injury (other than scarring or disfigurement)" (Ryskamp, 2010).

The minimum requirements for auto insurance in New Jersey are as follows: one: the driver has to be covered for $5,000 per accident (and that doesn't include what it may cost to replace or repair the insured person's car); two: personal injury coverage must be at least $15,000 "per person per accident"; and three: drivers must carry a policy that provides $250,000 "per person per accident" in benefits when the injury involves brain or spinal cord injuries (Ryskamp).

In addition, a driver in New Jersey can add to his or her policy for bodily injury, for the motorist that is uninsured or underinsured, collision and comprehensive; these are all extras that the state doesn't mandate, but when a car owner can afford to add this coverage it is very smart to do so, Ryskamp explains.

Advantages of No-Fault Insurance in New Jersey

According to Allstate Insurance Company, one of the benefits of No-Fault coverage is that "…medical claims are paid quickly" and those involved in a contentious accident do not have to wait for a lawsuit to work its way through the court system. There is a Personal Injury Protection element in No-Fault insurance; this assures that not only are hospital bills paid, but any other "associated losses" will also be paid. For example, if a driver is injured and can't return to work, No-Fault insurance "may help foot the bill for lost wages" (Allstate).

The State of New Jersey Department of Banking & Insurance explains that for those without insurance, they are not only breaking New Jersey's law, they are going to be liable for others' pain and hardships when an accident happens and it's the fault of the driver without insurance. That uninsured motorist is responsible for paying: lost wages, economic damages, and personal hardships; moreover, "…your assets will be at risk, including the risk of having money deducted from your wages if a judgment is entered against you" (DOBI). Also, if another car hits the auto of an uninsured motorist, you cannot sue that person even if you suffered physical damages and had medical bills as a result (DOBI).