Posted by: Blair Lane
April 11, 2007
Topic: Topics

Auto insurance companies crying wolf that the number of lawsuits would increase after a New Jersey Supreme Court decided DiProspero v. Penn in 2005, which made it easier for accident victims to sue for pain and suffering. Prior to 2005, if you had limited your rights to sue under your own policy by choosing the Verbal Threshold or lawsuit threshold you had to prove that (1) your injuries fell into certain categories and (2) that the injuries had a significant impact on your life.

In 2005 the NJ Supreme Court threw out the second prong and as a result auto insurance companies began crying wolf that the number of lawsuits would increase - well they did not and there has been no increases in auto insurance premiums as had been predicted by the insurance companies.

Do not be fooled about the claims that lawyers and lawsuits are bad. People injured in automobile accidents should be entitled to recover for their injuries.

Q: What is the Verbal Threshold?

A: All New Jersey residents involved in an automobile accident, depending upon their insurance selection, are bound by one of the following:

The Verbal or Limitation on Law Suit Threshold; or
The "0" Threshold or the No Limitation on Law Suit Threshold.
The "0" threshold permits an injured party to sue for non-economic damages such as pain and suffering without any limitation. The Verbal Threshold or the Limitation on Law Suit Threshold carries very different consequences and can restrict your rights in regard to filing a law suit for non-economic damages as a result of being involved in a motor vehicle accident.

Q: How did the verbal threshold come about?

A: Generally, the verbal threshold came about as a result of changes in New Jersey Automobile Insurance Law. In approximately 1983, the determination as to whether or not a person could sue for non-economic loss, i.e. pain and suffering, depended upon their selection of a dollar amount threshold associated with the amount of medical bills incurred in a motor vehicle accident. The lower the threshold selected normally meant that citizens paid higher insurance premiums were paid. The higher the threshold, the lower insurance premiums were paid. Essentially, what happened was that persons injured in an automobile accident that selected higher thresholds were allegedly over-treating to overcome their dollar amount thresholds in order to sue another driver for non-economic damage or pain and suffering.

In approximately 1988, the New Jersey Legislature amended the law and introduced the "Verbal Threshold" or "Non-Verbal Threshold". If a person had selected the Non-Verbal Threshold, that person was not restricted or barred from pursuing a law suit for non-economic damages against any other drivers involved in the motor vehicle accident. If the person selected the Verbal Threshold, generally, in order for that person to recover non-economic damages, that person's injuries must have met or fell into one of the following categories:

Type 1 - death

Type 2 - dismemberment

Type 3 - significant disfigurement

Type 4 - a fracture

Type 5 - loss of a fetus

Type 6 - permanent loss of use of a body organ, member, function or system

Type 7 - permanent consequential limitation of use of a body organ or member

Type 8 - significant limitation of use of a body function or system

Type 9 - a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute that person's usual and customary daily activities for not less than 90 days during the 180 days immediately following the occurrence of the injury or impairment.

As with any law, the Verbal Threshold has been subject to Court interpretation. Whether a person who selected the verbal threshold or restricted his right to sue could still file a law suit for non-economic damages or for pain and suffering, depended upon whether or not that person's injuries met any of the above-referenced injury types.

Under the new law, as of May 19, 1998, which is currently being phased in, the State of New Jersey has again changed the motor vehicle insurance laws and in an attempt to save drivers money on their insurance costs, has enacted "The Automobile Insurance Cost Reduction Act". The selection of the Verbal Threshold or lawsuit limitation threshold limits your rights to make a claim for pain and suffering. Under the new law, if you are subject to the Verbal Threshold, you may only be successful making a claim or filing a law suit in the event your injuries fall into one of the following six (6) types or categories:

Type 1 - Death

Type 2 - Dismemberment

Type 3 - Significant disfigurement or scarring

Type 4 - Displaced fracture

Type 5 - Loss of a fetus

Type 6 - Permanent injury

Q: Does the Verbal Threshold apply in all cases?

A: The answer to this question is generally "No." The Verbal Threshold or Limitation Law Suit Threshold does not apply to the following persons:

A named insured under a standard policy of insurance who elects the "0" threshold.

A spouse or child residing in the household of a named insured under a standard automobile insurance policy who has elected the "0" threshold, providing that the spouse or child is not a named insured under a different automobile policy.

A person who is eligible for PIP benefits, i.e. a permissive user of a motor vehicle, a passenger, a pedestrian or a non-immediate family member of an insured who is not required to maintain their own New Jersey Automobile Insurance PIP coverage.

A person who suffers an injury caused by a motor vehicle which is not an automobile covered by PIP insurance.

Out-of-state residents who are injured in New Jersey accidents and whose own insurance carriers are not qualified to conduct business in the State of New Jersey.

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