The majority of New Jersey automobile policyholders have no idea what is meant by the term “verbal threshold.” In 1988, the New Jersey legislature enacted laws which directly impacted a New Jersey automobile policyholder’s right to sue for non-economic damages for injuries resulting from an auto accident. The law defines non-economic damages as those that arise from disability and impairment and pain and suffering. The law required that an auto policyholder had to elect between two “tort threshold options” at the inception of the policy. The policyholder could either elect to have a “no threshold” a/k/a “no limitation on lawsuit” policy or a “verbal threshold” a/k/a “limitation on lawsuit” policy. The former allows for the injured party to sue for non-economic damages for personal injuries arising out of an auto accident regardless of the permanency of the injuries while the latter requires the injured individual to prove a serious permanent injury as defined by the statute in order to receive money damages for disability and impairment and pain and suffering. If a policyholder fails to make an election on the policy at the policy inception, he will be automatically given the more restrictive verbal threshold.
In 1998, the law was later amended by the Automobile Insurance Cost Reduction Act of 1998 (AICRA). The legislative rationale behind this law was an attempt to reduce insurance premiums in New Jersey. As expected, the auto premiums did not go down but rather continued to rise while injured innocent victims of automobile accidents were deprived of their right to be appropriately compensated for their serious injuries. Consequently, AICRA served as a boon for insurance company profits in the New Jersey automobile insurance marketplace.
Currently, AICRA provides that an injured party who sustains an injury in an automobile accident involving a private passenger, non-commercial vehicle who has a verbal threshold/limitation on lawsuit policy may only sue for non-economic damages if the accident resulted in:
- Significant disfigurement or significant scarring;
- A displaced fracture;
- A loss of a fetus;
- A permanent injury, within a reasonable degree of medical probability, other than scarring or disfigurement.
The law requires that an injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment. If an injury does not fall within one of these categories, you are not able to sue for non-economic damages.
The verbal threshold also requires that in order to file a lawsuit that a Tort Threshold Certification of Treating Physician must be obtained whereby a treating doctor is required to certify, under penalty of perjury, to the permanency of the injury. This serves as an impediment to bringing these cases by making the process more onerous inasmuch as many treating doctors simply do not want to have any involvement in litigation.
Frequently, when buying insurance, the insurance company will present the two tort threshold options available advising that the selection of the verbal threshold results in a savings on premiums. The problem is that the savings tend to be minimal but the consumer gives up significant rights which they do not know they have forfeited until such time as they find themselves in an automobile accident suffering significant pain and suffering and disability and impairment resulting from someone else’s negligence.
The foregoing is an oversimplification of the issues of the tort threshold in the State of New Jersey. New Jersey automobile insurance law is a very complicated subject matter and is one that requires specific expertise. If you have been injured in an auto accident as the result of another’s negligence, I would recommend that you contact my office so that we may discuss your options and see what is available in regard to pursuing a claim on your behalf.