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The Pitfalls and Limitations of New Jersey's Limitation on Lawsuit Threshold Selection

In 1998, the New Jersey legislature enacted the Automobile Insurance Cost Reduction Act (AICRA). AICRA was the final step on a long road to reform of New Jersey's auto laws. One of AICRA's significant changes was modification of the limitation on lawsuit or verbal threshold selection. This selection limits an injured driver/passenger's right to recover in a lawsuit. In exchange for a lower premium, the limitation on lawsuit threshold selection limits the injured person's right to recover for pain and suffering damages.

This selection applies not only to the policyholder, but also to members of the household, who are injured in car accidents or as pedestrians. It will apply to New Jersey policyholders who get into out of state accidents. It also applies to persons who are required to, but fail to maintain PIP coverage and to out of state persons driving their cars in New Jersey, so long as their insurance carrier is authorized to do business in New Jersey.

The limitation on lawsuit threshold does not apply to the following: (1) policyholders who elect No Limitation on Lawsuit and their household; (2) persons not required to maintain PIP coverage; (3) a person injured in an accident caused by a vehicle that is not required to maintain PIP coverage (i.e., commercial vehicles); (4) out of state persons driving their cars in New Jersey, whose insurance carrier is not authorized to conduct business in New Jersey.

There are of course, exceptions to the limitation on lawsuit threshold selection. AICRA adopted the following six exceptions: (1) death; (2) dismemberment; (3) loss of a fetus; (4) significant disfigurement or scarring; (5) displaced fractures; or (6) permanent injury. In most accident situations, if the injured person does not meet one of the first five categories, they will not be able to recover damages for pain and suffering. People are often surprised to know that a simple fracture will usually not suffice.

While the first five exceptions are easy to prove, the bulk of litigation occurs over the meaning of "permanent injury". There have been countless court decisions about the meaning of "permanent injury". In 2005, the Supreme Court of New Jersey in DiProspero v. Penn, 183 N.J. 477 (2005) and Serrano v. Serrano, 183 N.J. 508 (2005), eliminated the previously required 2-prong test which courts required to determine whether a person suffered a permanent injury. These two cases essentially removed the second prong-proving that the injury had a "serious life impact". Now, a plaintiff only need prove that a body part or organ has not healed to function normally and will not do so with further medical treatment. Types of injuries that may qualify as permanent injuries include traumatic brain injuries or tears in the shoulder/knee.

One final requirement AICRA imposes in limitation on lawsuit litigation is the physician's certification. After a lawsuit is filed, the plaintiff must file a physician's certification with 60 days of the filing of the defendant's Answer. That certification must be filled out by a treating physician and must state that the plaintiff sustained a permanent injury. More importantly, the certification must be based on objective evidence, like medical tests and those tests cannot be experimental in nature.

As complex as the limitation on lawsuit law is, it is always advisable to select No Limitation on Lawsuit or No Threshold. New Jersey policyholders are often surprised to hear exactly what the limitation on lawsuit threshold means in the context of serious injuries incurred in an accident. For example, the mother or father who fractures an arm or leg in an accident and has a difficult road to recovery, the limitation on lawsuit threshold selection means there is no recovery for pain and suffering.

If you've been injured in a car or truck accident in New Jersey, it is vital that you speak to a qualified, experienced New Jersey/Pennsylvania car and truck accident lawyer.  Our main offices are in Cherry Hill, Paramus, and Philadelphia and Conshohocken.  We serve accident victims in Pennsylvania and New Jersey and always offer a free consultation. 1-877-944-8396

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