I’m sure you have heard the term “No Fault Auto Insurance” tossed around. But, do you really know what it means? It may be different than what you think.

If you’re involved in an automobile accident with another car and the other car caused the accident (the “tortfeasor”), you would expect that the tortfeasor’s automobile insurance to pay for the damage done to your car. You may also expect that the other driver’s insurance will pay for your deductible and rental car (whether you must pay it out first and later get reimbursed, or whether your own insurance will get the money directly from the other insurance company). Certainly, if you are injured from the accident and you were to sue the tortfeasor, it is the tortfeasor’s insurance company who compensates you for your pain and suffering, lost wages and other economic losses.

However, regardless of whose fault the accident is, in New Jersey, the tortfeasor does not pay for your medical bills arising out of the accident. Hence the term, “No Fault.” Each person is responsible for his/her own medical bills and must turn to their own automobile insurance policy for payment of those bills. If you do not have your own insurance policy, then the policy of any resident relative would cover your medical bills. If you do not live with any relative who has automobile insurance, then the policy of the vehicle you were in at the time of the accident would cover your bills.

“Standard” medical coverage (called Personal Injury Protection benefits on your policy) in New Jersey is $250,000. Many insurance companies offer a lower amount of coverage in exchange for lowering your premium. Be aware that since you are responsible for payment of your own medical bills, regardless of fault for the accident, it is important to maintain good medical coverage. Many health insurance companies are entitled to reimbursement for payment on bills arising from car accidents, if you are successful in recovering compensation for your injuries. It is for this reason, as well as being subject to the rules of your private health insurance (such as: choosing in-network providers and getting referrals) that you should choose the Personal Injury Protection (“PIP”) option as “primary” on your automobile insurance policy. With PIP, you do not need referrals and there is no network (outside of imaging centers).

With standard PIP, your auto insurance carrier will pay for 80% of the bill and you are responsible for the remaining 20%, up to a certain amount. This is applied toward your co-pay and deductible. Even if you have a personal injury lawsuit, this out-of-pocket expense of co-pay and deductible are not compensable.

If you are not sure what kind of medical coverage you are carrying on your policy, refer to your Declarations Page or call your adjuster. It’s important that you have adequate coverage, should you need it, if you are injured in an automobile accident.