New Jersey Auto Insurance PIP Rules To Be Reviewed

Saturday’s Post 11/12/11 –  Over the last few days, I have discussed Personal Injury Protection (PIP) and the two states in the U.S. which are responsible for the highest mandated amounts.  For some time now, New Jersey’s auto insurance companies have fled the state because of what they claim to be excessive PIP benefits  being  levied on car insurance companies to pay auto accident victims. These benefits, they add, are punitive for insurance companies and not good for business. This means it’s up to some in state government to decide how much an auto insurance company is responsible for paying when a person is seriously injured in an auto accident.  The `New Jersey Department of Banking and Insurance’, Division of Insurance, say that a number of changes are going to be made to the Personal Injury Protection (PIP) language in auto insurance rules that lays out the medical benefits that accident victims are entitled to from their carriers. The current minimum coverage of $250,000 for accident victims is the second highest in the country, after Michigan.

The recommendations for these changes were presented to the ‘Assembly Financial Institutions and Insurance Committee’ during a four-hour hearing. The current PIP rules guarantee the accident victims medical coverage without taking into consideration the party that was at fault during the accident. One of the proposed changes to be made is with regard to the rules used for arbitration after an accident.

The Department of Banking & Insurance also wants changes to be made to the rules that govern reimbursement rates from insurance companies and medical care providers.  For a long time, unscrupulous medical professionals and lawyers have used loopholes that exist in these rules, a practice that has in effect seen PIP rates increase. Insurance companies also make money by delaying payments for accident victims, as well as by denying those claims.

A director with the state’s Division of Insurance (DOI), says that his department feels that the current maximum PIP coverage that can be paid out by an insurance company to accident victims is not excessive. He, however, adds that PIP rules need some adjustments to seal off the existing loopholes. Mr. Wheeler points out that the high PIP benefits are beneficial in cases of accident victims who suffer extensive injuries and consequently require comprehensive medical care, which is expensive.

However, not everyone is in favor of making changes to these rules. Some industry players feel that most insurance companies are honest in their coverage of accident victims. What needs to be changed, they claim, is the fraudulent bookkeeping and auditing practices of some insurance companies which is intentionally twisted to misrepresent the true picture. Pain management professionals also claim that the proposed changes would end up hurting them, which would be unfair since most of them play by the rules. The Association for Justice of the New Jersey trial lawyers’ president is also one of those opposed to the new rules. He points out that if a proposed rule that requires appeals to be filed not more than five days after a ruling is implemented, many doctors will shy away from providing medical care for accident victims.

On a personal note, I do commend those New Jersey Officials whom encouraged the auto insurance rule changes made over the last few years.  These changes have made it possible for a number of new auto insurance players to enter the auto insurance marketplace and offer more choices to those in the Garden State.  In fact; another new major carrier which will be represented by InsureDirect will be entering New Jersey the first quarter of 2012.  Their rates were just approved last week and we know our friends in New Jersey will love them!


Michael E. Dortch
President &  Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
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