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Understanding PIP Insurance

Title 39 of the laws in the State of New Jersey sets forth the rules as pertaining to motor vehicles. The rules require all private passenger automobiles registered in New Jersey to be insured. The “insured” under such policy of insurance is the owner of the vehicle, his/her spouse, and any resident relatives who are not insured under their own policy of insurance. If an owner of an uninsured vehicle is involved in an accident while operating the uninsured vehicle, the owner will not be permitted to make any claims for damages against anyone in the accident.

Automobile Insurance Policies

There are two types of automobile insurance policies an insured can purchase in New Jersey: Special and Basic. The Special policy, also known as $1.00/day policy, provides coverage for an emergency room visit only. It provides no coverage for medical costs, wage losses, property damages, uninsured motorist or liability coverage. It is available only to Medicaid recipients.

The Basic policy is the typical policy issued by insurers in New Jersey. It provides coverage for many types of losses and various levels of coverage can be purchased. All of the basic policies provide Personal Injury Protection benefits (PIP) which includes coverage of the following: payment of medical/hospital bills incurred for treatment of injuries sustained in an accident. Other benefits may include Wage Loss benefits and Essential Services benefits. Different amounts of PIP coverage and deductibles/co-payments can be selected by the insured. The insured can also select to have their health insurance as primary for payment of accident-related bills. If the health insurance is a type of plan that allows it to be primary, then they will pay the medical bills incurred in an accident by the insured.

PIP Claims

The following discussion focuses on the most common type of PIP claims ( i.e. claims for injuries incurred in private passenger automobile accidents where the insured has a basic insurance policy of $15,000.00 PIP benefits, $250.00 deductible, 20% co-pay and PIP primary). New Jersey is a “No-Fault” State, which means that regardless of fault, when an insured seeks medical/hospital treatment for injuries sustained in a motor vehicle accident, the insured will make a claim for PIP benefits under his own basic policy. There is never an instance where an insured can make a claim for PIP benefits against the other vehicle’s insurance. A passenger or permissive driver of an insured’s vehicle can also make a claim for PIP benefits under the insured’s vehicle’s insurance, but only when they do not have their own automobile coverage or live with a relative who owns an insured vehicle. If the passenger or permissive user owns an insured motor vehicle or lives with a relative who owns an insured motor vehicle, they must make their PIP claim with that insurance company. And, like the insured, the passenger or permissive user can never make a PIP claim against the other driver’s insurance.

The claims processing begins with a notification to the insurance company (insurer) that a claim is being presented. This is often done with the help of an attorney. A claims handler/adjuster is assigned and a claim number is provided.  The claim number should be provided to all of the medical providers so they can submit their bills for treatment to the adjuster. An Application for Personal Injury Protection benefits (PIP Application) will be sent to the insured for completion. It should be completed and returned to the adjuster promptly. A claimant generally has two years from the date of accident in which to present a bill for payment to the insurer (certain exceptions apply).

Medical Providers

There is no restriction on which medical provider the insured chooses to treat with. The medical provider will submit a plan for treatment and pre-certification requests to the insurer. All bills are paid according to a medical fee schedule set forth in the rules and no medical provider can seek reimbursement for more than what the fee schedule allows. The insurer is allowed to periodically request that the insured submit to an independent medical examination by a doctor chosen by the insurer. Failure to attend this exam usually results in the PIP benefits being terminated. The independent examination doctor may conclude that certain medical treatment is no longer necessary, and the insurer will terminate further medical treatment or may terminate certain treatment but not all treatments. The insured’s treating doctor may not agree and file an appeal in an effort to continue certain treatment. A mediation process is available to help resolve most PIP issues. The insurer also has the right to request a statement under oath from the insured.

Treatment

If the treatment bills exceed the available PIP benefits amount, the insured will be notified that the PIP benefits have been “exhausted” and no further benefits will be paid by the insurer. If further treatment is necessary, the insurer must seek payment from any secondary insurance they have. If there is no secondary insurance, the medical provider will often accept a “Letter of Protection” from the attorney guaranteeing payment of their bill out of the proceeds of any settlement or lawsuit won on behalf of the insured. If there is no settlement or successful lawsuit verdict, the insured is still responsible for the reasonable and necessary bills incurred for treatment of related injuries.

The aforesaid is a broad summary of PIP medical benefits available to injured persons in motor vehicle accidents in New Jersey and is not intended to encompass all the nuances and variations that can occur in any unique situation, nor is it a substitute for competent legal advice that can be offered after a thorough analysis of the issues presented.

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