Claire-ification

QUESTION:

Is it true that a Pennsylvania customer with Full Tort who is involved in an accident in New Jersey can’t sue the at-fault New Jersey driver?

ANSWER:

It depends. A Pennsylvania driver may be restricted from suing if his/ her insurer is also licensed in New Jersey. This provision stems from the New Jersey (NJ) Motor Vehicle code and is referred to as the Deemer statute or “verbal threshold.” It applies to all out-of-state residents who have an unrestricted right to sue in their home state’s auto insurance policy and are insured by a carrier licensed in New Jersey.

In Pennsylvania, drivers select full tort or limited tort, and that’s what determines their ability to sue an at-fault driver for non-economic damages (i.e. pain and suffering). It stands to reason they would expect this selection to carry over to an accident occurring in New Jersey.

However, under N.J.S.A 17:28-1.4 of the NJ Motor Vehicle code, the Deemer Statute applies to any out-of-state driver whose auto insurer is authorized to do business in New Jersey. So, if a Pennsylvania driver’s auto insurer is licensed and sells insurance in New Jersey, the statute applies and will deem that Pennsylvania driver to have the equivalent of limited tort, even if he/she selected full tort.

IMPORTANT NOTES:

▲ The restriction extends to carriers that are affiliated with each other or under common control, so using different “pup” companies will not be sufficient to circumvent the Deemer statute. Licensed insurance companies are usually identified on the NJ Department of Banking and Insurance’s website, so you can verify if your insurer is listed at this url: https://www. state.nj.us/mvc/pdf/Vehicles/ insurance_codes.pdf

▲ Just like limited tort in Pennsylvania, this “verbal threshold” can be overcome under specific circumstances described in the statute. These circumstances are the equivalent of the “serious injury” in Pennsylvania and include: (1) death; (2) dismemberment; (3) loss of a fetus; (4) significant disfigurement or scarring; (5) displaced fractures; or (6) permanent injury.

▲ Under the Deemer statute, the policy for the out-of-state driver also has to provide the same type of Personal Injury Protection (PIP) benefits as required under New Jersey law, including the $250,000 mandatory PIP minimum limit. So while the out-of-state driver may not be able to sue for pain and suffering, the out-of-state policy will be automatically reformed to provide the mandated level of coverage in New Jersey, even if it was written with a lower limit.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/ or any other government documents cited in this document.