Limited tort in Pennsylvania or verbal threshold (AKA: limitation on lawsuit) in New Jersey is a type of auto insurance coverage which can prevent an injured driver or passenger from getting fully compensated for car accident injuries. In this article series, our Pennsylvania and New Jersey car accident lawyers explain the basics of limited tort/verbal threshold coverage, how they apply, etc.
In part one of this article, we discussed two of the most common scenarios – what happens when residents of each state are injured in car accidents that occur in their respective states, i.e., a Pennsylvania resident with limited tort gets injured in an auto accident while driving their car in Pennsylvania.
In part two of this article below, we discuss what happens when residents of each state are injured in accidents in the other state, i.e., a Pennsylvania resident is injured in an auto accident in New Jersey and a New Jersey resident is injured in an auto accident in Pennsylvania.
Pennsylvania Residents with Limited Tort, Injured in Auto Accidents in New Jersey
A Pennsylvania resident is driving their car in New Jersey and is hit by another car. The accident is caused by the negligence of the other driver, who is a New Jersey resident.
In this situation, the Pennsylvania resident’s insurance policy coverage, limited tort, does not matter. Nine times out of ten, a PA resident who is driving their car in New Jersey and gets into an accident will be subject to a special law in New Jersey called the “deemer statute.”
This law magically bestows verbal threshold on a Pennsylvania resident, so long as the at-fault driver’s auto insurance company is licensed to do business in New Jersey (and the vast majority of insurance companies are). A recent New Jersey appeals court in 2010 held that the deemer statute covered auto insurance companies which either 1. controlled insurance companies authorized to do business in NJ, or 2. were subsidiaries of other insurance companies authorized to do business in NJ. See Cupido v. Perez.
The deemer statute certainly seems unfair, especially if the PA resident had elected full tort on their own car insurance policy. Driving in New Jersey for work or for recreation shouldn’t subject responsible drivers to the limitation on lawsuit laws. But the idea behind the law was protecting non-New Jersey residents from large medical bills. The upside of the deemer statute is that non-New Jersey residents also get the benefit of $250,000 in PIP (personal injury protection/medical) benefits, which is mandated by NJ law.
It’s important to note that the deemer statute is an incredibly complex area of law and applies to specific situations. At least one NJ court held that the deemer statute did not apply to a PA resident who was injured in an auto accident that occurred in NJ while a passenger in a car registered and insured in Pennsylvania. See Karamisakis v. Blumberg (2005), an unpublished New Jersey Superior Court decision (an unpublished opinion does not carry any precedence, per court rules).
New Jersey Residents with Limitation on Lawsuit, Injured in Auto Accidents in Pennsylvania
Many New Jersey residents travel to Pennsylvania for work, family events or vacation. It’s not uncommon for a South New Jersey resident to travel to Philadelphia for a conference, a family get together or even a night out. Car, truck and pedestrian accidents are bound to happen. What happens when a New Jersey resident who has limitation on lawsuit is injured while driving their car in Pennsylvania? This is a very common scenario.
In many cases, a New Jersey resident who has limitation on lawsuit and is injured in an auto accident that occurs in Pennsylvania will NOT be subject to the limitation on their own insurance policy. The key is the status of the at-fault driver. If the other driver is a New Jersey resident, then the limitation is highly likely to apply. If the other driver is a Pennsylvania resident or a resident of any state other than New Jersey, the limitation is not likely to apply.
Usually, when a NJ resident is injured in a car accident that occurs in another state, the lawsuit will be filed in the other state. Accordingly, these cases are often filed in federal court. A recent federal court in Pennsylvania found that the plaintiffs, NJ residents who were injured in a car accident in Philadelphia, were NOT bound by their limitation on lawsuit tort election. The at-fault driver in the case was a Pennsylvania resident, and as such, the defendant could not raise the limitation on lawsuit defense. See Stern v. AAA Mid-Atlantic Insurance Co. (United States District Court, Eastern District of Pennsylvania, 2015).
For more info, visit our PA & NJ car accident law library.
**This website does not provide legal advice. Every case is unique and it is crucial to get a qualified, expert legal opinion prior to making any decisions about your case. See the full disclaimer at the bottom of this page.