In theory, no-fault auto insurance lowers premium costs by reducing the number of claims insurers have to defend in court. Rather than force injured people and their insurance companies to determine liability before compensating them for their injuries, the idea behind no-fault insurance is that your insurer automatically covers you for medical expenses related to accident injuries.
This has not really panned out as planned.
According to the Insurance Information Institute, no-fault insurance costs in New Jersey have risen sharply since 2003, and are now the second highest in the nation. In fact, no-fault-related defense costs made up 16 percent of premium costs in New Jersey in 2009, as opposed to only seven percent nationwide. Why? Because an insurance company is just as likely to deny or dispute its own customer’s claim as it is someone else’s claim. You might think that paying your premiums on time for years would entitle you to some modicum of trust and fair treatment by your insurance company, but in fact the bottom line—taking in more in premiums than they pay out in benefits—drives no-fault insurers just like it does every other company.
Unfortunately, many car accident victims find that their no-fault insurer is just as reluctant to pay for their medical care as fault insurers in other states. This means that you may need to work with an experienced car accident lawyer to get the benefits you deserve from your insurance company.
Additionally, if you suffer more severe injuries and the other party caused the accident, you may need to sue that individual and that party’s insurance company will then have to incur the costs of defending and ultimately paying damages for that suit. In New Jersey, car accident victims who suffer permanent injury are automatically exempt from no-fault insurance’s restrictions on lawsuits, and may seek damages for pain and suffering from the other party’s insurance company, or even from their own if the other driver did not carry insurance.