PIP Coverage is Subject to Full Payment in NJ
In a recent New Jersey Appellate Division decision, the court ruled on the application of the statutorily mandated PIP limits. Birmingham v. Travelers New Jersey Ins. Co., 2023 WL 2719287 (N.J. Super. Ct. App. Div. 2023). In Birmingham v. Travelers New Jersey Ins, the insurer Travelers appealed the lower court’s decision to enforce Traveler’s obligation to provided PIP coverage with no reduction of the deductibles or copay obligations.
Both insureds sustained injuries in separate automobile accidents and sought PIP coverage from Travelers to cover medical expenses. Travelers issued policies to both insureds including a $15,000 PIP coverage with a $2,500 deductible and a 20% percent copayment obligation. Travelers later provided PIP coverage to both insureds, reducing the coverage amount by the respective deductibles and copay obligations.
Court noted that “nothing in the policies’ declaration pages, coverage grants or exclusions clearly communicated to either plaintiff that their statutorily mandated PIP limits of liability in either policy would be reduced by the amount of their chosen deductibles.” The lack of clarity resulted in the court’s decision that Travelers was obligated to pay the full limit of coverage with no reduction.
Specifically, Travelers instructed its insured under the “Limits of Liability” provision in the PIP section of the policy that “any amounts payable for medical expense benefits as a result of any one accident shall be: [r]educed by the $250 statutory deductible” or shall be “reduced only by the optional deductible” and are “[s]ubject to a copayment of [twenty percent] for the amount between the deductible that applies and $5,000.” However, the court was not convinced that such language alone was sufficient in informing the insureds that the limit of liability will be impaired.
Thanks to Yifan Lin for her contribution to this post. Please contact Heather Aquino with any questions.