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As a no-fault state, New Jersey requires that all auto insurance policies provide personal injury protection (PIP) that will cover any medical expenses and lost wages in an auto accident if a claim is made, regardless of fault. However, in exchange, these policies will typically limit the right of victims to sue at-fault parties, leaving them unable to be compensated for certain damages. This is known as the lawsuit threshold, and it’s important to understand what it is when selecting auto insurance coverage, and when considering a lawsuit after an accident.

What Is the Lawsuit Threshold?

Covered in NJ Rev Stat § 39:6A-8(a), the lawsuit threshold is the limitation of one’s right to sue after an auto accident found in many New Jersey auto insurances. Also known as the verbal threshold or limitation-on-lawsuit-threshold, this provision prevents plaintiffs from suing for non-economic losses, such as pain, suffering, emotional distress, and loss of enjoyment of life. In exchange, insured parties will receive compensation for their medical expenses through an insurance claim regardless of fault, as a policy will incorporate PIP benefits, which are legally required to pay for these damages.

The intent behind PIP and the lawsuit threshold is to help prevent relatively minor claims from being filed in New Jersey’s courts and to reduce the cost of auto insurance in the state. Insurers will offer lower premium rates with policies that include the limitation as they are less likely to be sued by an injured party or their insurance company for compensation. On the other hand, victims will not face the financial and time burden of pursuing a lawsuit in the courts when they need quick compensation for their medical expenses.

When Does the Lawsuit Threshold Apply?

If your policy includes the limitation on lawsuits, then the threshold will apply in any auto accident that you and/or another named individual are involved in. Additionally, the threshold applies to any auto accident in which an unnamed individual who would be covered by your PIP benefits is involved. This primarily covers immediate family or household members, such as spouses or children, who do not have their own auto insurance policies and would limit both your right and their right to sue to receive compensation for their injuries.

A covered auto accident does not need to have you or another covered individual driving a vehicle when an accident occurs. Auto insurance can include many situations, such as when you are a passenger in another’s vehicle, a pedestrian, or a cyclist, and the lawsuit threshold would apply in these situations as well.

Additionally, New Jersey requires that the lawsuit threshold apply in several specific circumstances where your policy may not explicitly include a limitation on lawsuits.

• If you select a basic policy in New Jersey, and either you or a family member in your household is injured in an accident.
• If you fail to choose between a limitation on lawsuit option and a no limitation on lawsuit option in your policy.
• If you fail to maintain required PIP coverage.
• If you are injured as a passenger on a New Jersey Transit bus due to negligence on the part of the driver. If you attempt to sue the driver and New Jersey Transit, they are generally protected from liability by the Tort Claims Act as stated in NJ Rev Stat § 59.
• If you are an out-of-state resident injured in a New Jersey car accident with an insurance policy written by an authorized carrier in New Jersey. This is stated in NJ Rev Stat § 17:28-1.4, and it is confirmed in the case of Zabilowicz v. Kelsey, as discussed below.
• If you are a New Jersey resident covered by any of the above situations when you are injured in an out-of-state accident.

These circumstances can force the lawsuit threshold on a variety of cases which may not immediately spring to mind as necessarily being covered. For instance, Zabilowicz v. Kelsey saw two out-of-state residents become involved in an accident in New Jersey, with the plaintiff having an insurance policy written by an approved carrier in New Jersey. The lower courts originally granted the defendant’s motion for summary dismissal based on applying the lawsuit threshold to the case, and the plaintiff’s injuries satisfying the threshold. The Supreme Court reversed the court’s decision because the plaintiff’s injuries did satisfy the threshold, both enforcing the threshold’s application to such a case and allowing the plaintiff to pursue compensation.

Koff v.Carrubba also presents an interesting case where a motorcyclist’s auto insurance was used to apply the lawsuit threshold to his accident, even though his motorcycle insurance did not apply the threshold itself. The New Jersey Superior Court ruled that there were two tests for determining if the lawsuit threshold would apply, even if the insured was not using their insured vehicle at the time.

1. The plaintiff is, or is treated as if he or she were, the owner of a vehicle insured under a New Jersey automobile liability insurance policy which applies the lawsuit threshold.
2. The plaintiff is either required to maintain PIP coverage or has the right to receive PIP benefits under New Jersey law.

Because Koff satisfied both of these conditions, the Superior Court ruled that his case fell under the lawsuit threshold enforced by his auto insurance policy. Therefore, he could not receive compensation for the medical expenses he incurred as a result of his injuries.

However, there are many instances where the lawsuit threshold will not apply and a lawsuit may be brought for the pain and suffering caused by an injury.

• If you are a named insured that chose a zero or no lawsuit threshold for a standard policy, you will not be held to the lawsuit threshold. This also applies to your spouse and your children who live in the same household as you.
• If you are a person eligible for PIP benefits as a permissive user, passenger, or non-immediate family member of the insured, but not required to maintain PIP coverage for accidents.
• If you are injured in an accident caused by a motor vehicle that is not covered by PIP benefits, such as a commercial vehicle.
• If you are a passenger on a New Jersey transit bus or another bus by another driver, who is not eligible for PIP benefits while not electing as a named insured for the verbal threshold. In this circumstance, you could sue a driver that collided with the bus without being subject to the verbal threshold.

What Injuries Meet the Lawsuit Threshold?

Under New Jersey law, there are six forms of injury that will meet the lawsuit threshold and allow you to pursue a lawsuit for non-economic losses.

• Death
• Dismemberment
• Loss of a fetus
• Significant disfigurement or significant scarring
• Displaced fracture
• A permanent injury within a reasonable degree of medical probability

These are all considered to have exceptional costs to one’s well-being and enjoyment of life beyond the medical expenses covered by PIP benefits, and the compensation required for them requires a court’s consideration to properly measure. As such, New Jersey allows personal injury lawsuits to be brought before the courts for these particular cases.

Be aware that all of these injuries require documentation by a medical professional who maintains the injuries were caused by the auto accident, and that documentation must be provided to a defendant within 60 days filing a suit. If this documentation is falsified, the plaintiff and any knowing medical professional will be charged with the crime of perjury and face a fine of up to $15,000, and 3 to 5 years in prison if convicted.

Additionally, as a court will involve analysis by a judge and jury, there is a measure of subjective consideration in regard to the pain and suffering one has experienced as a result of their injury. Death, loss of a fetus, and dismemberment are generally easy to prove as having a large handicap on one’s enjoyment of life, but significant disfigurement or scarring or a displaced fracture will require strong arguments to ensure you receive proper compensation. A permanent injury in particular includes a body part, organ, or both being shown to not have healed to the point of functioning normally, and with predictions indicating that it will not return to normal even with further medical treatment.

In order to avoid accusations of perjury and a failure to receive compensation for your injuries, it is vital that you speak with a legal professional before pursuing a lawsuit. An experienced attorney will be able to guide you through the process of documenting your accident and the resulting injuries, and they will be able to present the strongest arguments supporting the liability of the defendant for the suffering you have experienced. By doing so, they ensure that you receive the best compensation possible for your injuries.

How Does the Lawsuit Threshold Apply to My Policy?

This question primarily depends upon what you have elected for insurance coverage. In short, if you have chosen any policy besides a standard policy in New Jersey, you are subject to the lawsuit threshold and cannot normally bring a lawsuit for non-economic losses. If a standard policy was chosen when the policy was purchased, you were given two options that would determine if the lawsuit threshold applies to your policy.

• Lawsuit Threshold Provision: This is the default option for most insurance policies, which is expected to save you from higher premium at the cost of your right to sue. This option will apply all of the rules and regulations of lawsuit thresholds to your policy. If you fail to choose either of the options, the law will consider this as the default unless you speak with your insurer to change your policy.
• No Lawsuit Threshold Provision: This option allows you to purchase, through increased premiums, the unlimited right to sue after an accident. This means that any injury you suffer can be sued for, though you will still be eligible for PIP benefits.

You should take the time to review your insurance policy with a legal professional to familiarize yourself with the terms and conditions relating to the lawsuit threshold, so you know if you are able to sue for your injuries after an accident. It will also allow you to begin building a professional relationship with an attorney, who will be better able to argue your cases in the future if you continue to work with them.

Case Study: $4.4 million

What makes this case unique:Unusual circumstance of the meeting, strong determination of the victim’s wife, strategic purchase of annuities provided the victim’s family far more than the initial settlement.

Read The Case Study

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