Short answer: New Jersey Standard auto policies offer two lawsuit options. The limited right to sue costs less but allows pain-and-suffering lawsuits only for certain serious injuries, such as permanent injury. The unlimited right to sue costs more and keeps that right for any injury. If you don't choose, the limited option applies by law.
What the lawsuit option controls
New Jersey is a no-fault state for injuries: your own PIP coverage pays your medical expenses regardless of fault. The lawsuit option controls whether you can sue an at-fault driver for non-economic damages, meaning pain and suffering. You can still sue for economic losses not paid by PIP, subject to the law.
Limited right to sue
Under the limited option, also called the verbal threshold, you can sue for pain and suffering only if you suffer an injury that results in:
- Death
- Dismemberment
- Significant disfigurement or scarring
- Displaced fractures
- Loss of a fetus
- A permanent injury, as defined by law and supported by medical evidence
Because it limits lawsuits, it generally costs less. According to the New Jersey Department of Banking and Insurance, if you don't select an option, the limited right to sue is imposed by law.
Unlimited right to sue
Under the unlimited option, also called no threshold, you keep the right to sue an at-fault driver for pain and suffering for any injury, including minor ones. It generally costs more.
Which is right for you?
Consider:
- Your budget: the limited option lowers premiums
- Your tolerance for risk: with limited, you may not be compensated for pain and suffering from injuries that aren't permanent
- Your household: the option generally applies to you and household members covered under the policy
- Your other coverage: health insurance, disability insurance and savings
There's no right answer for everyone. Read DOBI's guide and ask your agent to show the price difference.
Basic policy drivers
The Basic policy automatically includes the limited right to sue. See New Jersey Basic vs. Standard auto policy.
Your lawsuit option doesn't limit claims against you
Your option affects your right to sue others. Whether someone can sue you depends on their policy and the law. That's why bodily injury liability limits matter. Consider higher limits and an umbrella policy. See how much umbrella insurance do I need.
Pedestrians and others
Different rules can apply to pedestrians and people without their own auto policy. Ask an attorney about specific situations.
Common scenarios
You choose limited and suffer a sprained back that heals in months. You may not be able to sue for pain and suffering if the injury isn't permanent.
You choose unlimited and suffer the same injury. You can sue the at-fault driver for pain and suffering.
You never selected an option on your application. The limited right to sue applies by law.
You suffer a displaced fracture under the limited option. That's one of the listed injuries that permits a lawsuit.
Key terms
- Verbal threshold: another name for the limited right to sue.
- No threshold: another name for the unlimited right to sue.
- Non-economic damages: compensation for pain and suffering.
- PIP: personal injury protection that pays medical expenses regardless of fault.
Questions to ask your broker
- How much would switching from the limited to the unlimited right to sue change my premium?
- Do I have health insurance that would cover injuries after my PIP is used?
- What bodily injury liability limits do I carry, and do they protect my assets?
- Would an umbrella policy make sense for my household?
- Which lawsuit option applies to each driver and vehicle on my policy?
Answers depend on your budget, health coverage and how you'd want to handle a serious injury. Review the choice at each renewal. See New Jersey Basic vs. Standard auto policy.
Bottom line
The lawsuit option is one of the most important and least understood choices on a New Jersey auto policy. Don't let it default without thinking. Compare the price difference, consider how a non-permanent injury would affect you, and make the choice deliberately for yourself and your household.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in New Jersey.
Frequently asked questions
What is the limited right to sue in New Jersey?
An option that lowers premiums but lets you sue for pain and suffering only for certain serious injuries, such as permanent injury.
What is the unlimited right to sue?
An option that keeps your right to sue an at-fault driver for pain and suffering for any injury, at a higher price.
What happens if I don't choose a lawsuit option?
The limited right to sue applies by law.
Does the Basic policy have a lawsuit option?
The Basic policy automatically includes the limited right to sue.
Does my lawsuit option stop others from suing me?
No. It affects your right to sue others. Liability coverage protects you from claims.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.