When a car accident occurs in New Jersey or New York, it’s crucial to understand which insurance will cover your medical expenses. Both states follow a No-Fault Insurance system, meaning that regardless of who was at fault for the accident, your own auto insurance’s Personal Injury Protection (PIP) will pay for your medical treatment first. However, in New Jersey, drivers have the option to designate private health insurance as the primary coverage when purchasing auto insurance. Depending on which coverage is selected, the scope of benefits, deductible, co-payment, and subrogation rules can vary significantly. This column provides a professional comparison of how PIP and health insurance work in both NJ and NY, including legal rules and practical considerations, to help readers make informed and strategic decisions after an accident.
New Jersey: Policyholder Choice and Broad PIP Coverage
Under a standard New Jersey auto insurance policy, PIP covers up to $250,000 per person, per accident, for necessary and reasonable medical expenses. This includes hospitalization, surgery, doctor visits, and rehabilitation. In addition, up to approximately $10,000 in coverage is available for other losses, such as lost wages, essential services, and funeral expenses.
When purchasing auto insurance, policyholders can choose whether to make PIP their primary coverage or use their private health insurance as primary. If the health insurance option is selected, medical bills following an accident are submitted first to the health insurer. Only the portion not covered by health insurance is then submitted to the auto insurer for PIP secondary coverage. However, valid health insurance must be in effect at the time of the accident, and the policy must not explicitly exclude treatment for car accident injuries. Otherwise, the auto insurer will revert to applying PIP as primary and impose an additional $750 deductible.
Because of potential delays in treatment, increased out-of-pocket costs, and coverage gaps, many drivers still prefer to retain PIP as the primary source of coverage.
New York: PIP Is Always Primary by Law
In New York, PIP is always applied as the primary coverage for car accident-related treatment—there is no choice to designate health insurance instead. PIP generally covers up to $50,000 per person per accident for “basic economic loss,” which includes medical expenses, rehabilitation, 80% of lost earnings (capped at $2,000/month for up to three years), and $25 per day for miscellaneous expenses (up to one year).
Health insurance functions only as secondary coverage if and when the PIP limit is exhausted. Many health insurance plans explicitly exclude coverage for auto accident injuries while PIP is still in effect. Moreover, if a victim wishes to pursue non-economic damages (such as pain and suffering), they must meet the state’s strict “serious injury” threshold as defined by law.
Claim Procedures and Interactions Between Insurers
In New Jersey, the claim process differs based on the policyholder’s selected primary coverage. If PIP is primary, medical providers bill the auto insurer directly, and the health insurer does not get involved. If health insurance was selected as primary, providers must bill the health insurer first, and any remaining costs—such as denied items, deductibles, or co-payments—can then be submitted to PIP for secondary payment. This process requires precise documentation and proper coordination of benefits to avoid missing claims.
In New York, no such election exists. A No-Fault Application (NF-2 form) must be submitted within 30 days of the accident. Medical bills are automatically covered under PIP, and only after the PIP limit is exceeded—or if certain services are not covered under PIP—will health insurance provide coverage.
Subrogation and Legal Reimbursement Issues
In both NJ and NY, subrogation rights for PIP benefits are legally restricted. This means that even if an injured person later receives a settlement or court judgment against the at-fault driver, the PIP insurer cannot seek reimbursement for the benefits it paid. This legal protection exists to shield accident victims from losing their compensation and is a major advantage of using PIP.
In contrast, health insurers—especially Medicare, Medicaid, and private plans—can assert liens to recover payments made for accident-related treatment. If a third-party settlement is reached, the health insurer may demand partial or full reimbursement. As such, when medical costs are covered by health insurance, the injured person or their attorney must typically negotiate lien reductions before finalizing the settlement.
Case Example: $30,000 in Medical Bills
If $30,000 in medical expenses is incurred in New Jersey and PIP is the primary coverage, nearly all of it would be paid by the auto insurer, aside from the elected deductible and a small co-payment. The claims process is straightforward, with direct billing between the provider and insurer.
If health insurance is the primary coverage, the injured party must first pay their health plan’s deductible (e.g., $2,000) and co-insurance (e.g., 20%) out-of-pocket before seeking reimbursement for the remainder from PIP. This can create a cash flow burden and requires additional coordination.
In New York, there is no election. The entire $30,000 would be paid by PIP, assuming the claim is timely and the treatment is approved. Out-of-pocket expenses would be minimal. However, if total treatment costs exceed $50,000, the patient would then rely on health insurance or other remedies to cover the remainder.
Conclusion
Your choice of insurance coverage and how you handle claims can have a significant impact on your financial stability and access to compensation after a car accident. NJ drivers must verify their selected primary coverage on their policy declarations page, and if they’ve chosen health insurance as primary, confirm in advance that it covers auto-related injuries. NY drivers must promptly prepare and file all required PIP documentation and understand their coverage structure to manage future medical costs effectively.
Injured in a Car Accident? Song Law Firm Can Help.
To maximize your compensation as a car accident victim, prompt legal action is critical. At Song Law Firm, we have helped countless clients in NJ and NY protect their rights and obtain fair compensation through expert legal guidance.
If you’ve been injured in a car accident, call 201-461-0031 or email pi@songlawfirm.com to schedule a legal consultation today. Prompt legal intervention is the key to maximizing your recovery.
Disclaimer: This column is intended for general informational purposes only and does not constitute legal advice. For legal guidance on your specific case, please consult an attorney directly.
