New Jersey is a no-fault state – what that means for drivers

Because of the way New Jersey handles auto accident claims, you can get paid much faster than in other states for all related medical bills.

But you are less likely to seek damages from another person involved in the accident, even if that person is responsible for the wreckage.

New Jersey is a no-fault state, which means that each driver’s insurance company pays their own medical expenses following an accident, regardless of who is at fault. This coverage, Bodily Injury Protection, is an automatic part of any New Jersey driver’s policy and can cover passengers in your car if they don’t have their own coverage.

Fault is assigned for an accident, and you may want to know this outcome when dealing with vehicle damage claims. But you don’t have to wait for the end of legal proceedings or an investigation to get the coverage you might need for medical issues.

Advantages and disadvantages of no fault

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The advantage of faster payments is the most obvious benefit. Moreover, if you are the victim of an accident, even if it is an accident that you caused, you can be assured that your medical expenses will be covered by the insurance.

No-fault could also mean lower premiums for drivers. According to the Insurance Information Institute, the no-fault system aims to reduce the cost of car insurance by taking small claims out of court.

“The idea is that there is a reduction in costs because you don’t have additional lawsuits and overpayments, because it’s a much simpler process,” added Gary La Spisa, vice president of the New Jersey Insurance Board.

New Jersey first enacted no-fault insurance laws in the 1970s, and the rules have evolved over time.

With this faster process, however, injured drivers have a limited ability to sue who is actually responsible for an accident. Drivers with a routine policy in New Jersey only have the ability to sue for death or serious injury, such as dismemberment, displaced fractures, loss of a fetus, and other specific complications.

“In effect, you are giving up the right to certain opportunities to sue, to get better and faster care,” La Spisa said.

Does New Jersey require no fault?

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About a dozen states in the United States follow some kind of no-fault system. But New Jersey is one of the few so-called “no-fault pick” states.

Garden State drivers can opt out of the system, which would mean there would be no limitations on filing lawsuits after an accident, according to personal finance website WalletHub. You will need to pay extra to use this option.

According to a June 2021 report from the New Jersey Department of Banking and Insurance, nearly 97% of drivers stick to the no-fault system.

Dino Flammia is a reporter for New Jersey 101.5. You can reach him at [email protected]

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